I got an e-mail a while back from reader Brianna Simpson asking that I discuss the idea of multi-level marketing and how it could be good or bad for college students looking to make some extra money while in school.
Multi-level marketing (MLM) endeavors aren’t great ways to make money and have little to no staying power in the future. Further, while not being illegal, these companies go far into the moral grey area of selling false hope to the people working for these triangle-shaped sales schemes (we can’t say pyramid!).
So what is an MLM business? Essentially, you become your own boss (cool!) and are tasked with selling a specific product for a company. The more of the product you sell, the more money you make. Simple enough, right?
If only life were so simple. The power, and subsequent grey area, of MLM comes with selling the ‘dream’ to other hopeful entrepreneurs. These companies will downplay this aspect, saying that each level of employee can make money on how much volume they sell.
This is 100 percent true, and I do not fault them for using this logic. But at the end of the day we ALL know why anyone would want to join a MLM company (hint: it’s not so you can stay at the bottom).
Some popular products of MLM companies include Avon and Mary Kay makeup supplies, Herbalife weight-loss supplements, Vector Marketing’s Cutco knives, and Amway with its multitude of products to sell.
There’s a myriad of issues with these products, but I can’t think of the products when I’m sitting dumbfounded at the business model.
Market saturation is a thing, and it exists in every market in the world. Yet, if you were to sit in on a pitch from an MLM company, they don’t seem to take this concept into consideration, even though it is the crux of why you would want to work for them- to make as much income as possible.
So say you’re a new employee for Avon. After a few months of hard work you have ten people selling Avon under you. When those ten recruit ten people, you’ve got one-hundred people making money for you.
One more round and you have over a thousand people under you. Then ten thousand after that. It sounds great, but it’s not mathematically sustainable.
There’s just not that many women out there that want to buy Avon makeup, even if it were the best makeup product in the world.
Yet these companies are still telling every single hopeful that they, too, could have hundreds of people working for them before they know it — if they just believe! So avoid the trap and turn away if you see an offer that looks too good to be true.
How can college students benefit from these MLM companies? I can’t think of a scenario. I feel there are many other opportunities for students to make money while at school that don’t involve getting mixed up with these tricky marketing schemes.
MLM jobs are for individuals who believe that while 99.9 percent of their fellow workers will fail, they will succeed. If you enjoy being that risky, you would have much better success as a stock broker on Wall Street!
