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Let me first explain what Multi Level Marketing it not. It is not a Pyramid scheme. It is not some get rich quick scheme, although many people would like to tell you that it is. It is not some fly by the night scheme where companies jump into MLM and make a bunch of cash and jump out. It is not illegal. It is not unethical.
MLM is a glorified term for direct selling. In order for a company to be an MLM it has to have a solid, verified product or products that it can sell. Normally these products are consumable so they need to be purchased month after month. The better companies have better products and are typically leading edge innovators.
Why MLM is attractive to many people is because of the infinite money you “can” make. In a traditional Business you have a manufacturer who sells the product to a wholesaler. The wholesaler then sells the product to a retailer. The retailer then sells the product to a consumer. The manufacturer takes their cut, the wholesaler takes their cut and the retailer takes their cut. For the manufacturer, the wholesaler and the retailer they all have huge overheads, they need to maintain factories / retail stores, they need to employ staff etc. This means they need to place large markups on the products in order for them to not only meet their costs but to also make a profit, so a product that may have cost a few cents to make will end up being sold for many dollars.
MLM only has the manufacturer and the consumer to deal with. This means the products are shipped directly from the manufacturer to the consumer eliminating all the costs for the other two parties ( wholesaler and retailer ). Since this is a much better method of selling which means the products can be sold at a much more realistic price. The problem comes with the company not being able to find enough people to sell their products too. This is where the MLM opportunity originates from. The MLM opportunity offers great incentives for consumers to introduce other consumers to the products.
This is the business side of the MLM . Typically when one consumer introduces the products to another consumer, the first consumer gets rewarded for this introduction. Then when the second person introduces another consumer to the products the second person gets rewarded and the first person also gets rewarded but normally at a smaller rate. This goes on infinitely so the massive advantage with MLM is the power of leverage. If you introduce the first consumer to the products and teach this person how to introduce another consumer to the products then the process has started and will continue on down the line. This is how people generate massive wealth in this industry but it is NOT a get rich quick scheme.
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Source by Darren Neff