5 Must-know things about the famously infamous “MLM”
Multilevel Marketing, Chain Marketing, Free Online Business and all the first cousins and second cousins of such money-making schemes have always been a topic to ponder upon, isn’t it? In this blog team E-Cell takes you through the hows, whys, pros and cons of this everintriguing topic. So, let’s begin with it:
What is Multilevel Marketing?
A scheme, idea, technique of promoting or marketing a product on individual level and increasing the scope of this marketing by adding more individuals to do the same work. This majorly involves door-to-door marketing in the residence locality as well as with other acquaintances. Now this depends upon the person involved whether for him it’s a side business/job or a full-time prime income source.
How does one make money out of MLM?
The income source involves selling the products of the company and earning a firsthand profit as well as earning a commission/share from the profit of the people who you have added in the chain. This commission can range from 10% to 30%. For example, if you make 3 people join the chain which in turn make 2 people join, so now 9 people are under your chain point and you will be earning profit from them too according to the decided shares.
Is MLM legal in India?
Yes, network marketing is legal in India. However, these companies generally function by finding the loopholes in the Government Resolutions and Legal documents. What is illegal in India, is money rotation! Money rotation of any direct or indirect form is always under the scanner of the government bodies and is felonious because of the financial hiatus it possesses. An example of money rotation includes lending, holding money. Assume a case where you have ordered products online or from an agent and you receive them after 20 days of payment. For you as an individual this time might seem insignificant but when implemented on a larger scale the person can at times hold thousands of rupees and hence create lapses in finance. (Something which Harshad Mehta was doing in initial days). Most of these companies work on the blueprint of product rotation which again is a form of exploitation of the loophole.
Which companies generally opt for MLM?
Based on general observation of the market and on account of past experiences, one can broadly classify them into two groups.
- The first one being companies which have products which are supremely authentic and are in accordance with the directorate guidelines and abide by the legal standard. These companies effectively operate this maneuver (keep track of the finances) and the agents they recruit are well-educated, well-informed individuals. eg- Tupperware.
- The second group of companies are the ones who want to circumvent the general public eye and their target audience itself is the middle-class and lower middle class. The reason being the questionable authenticity of their products!! These products at times do not have the administrative hall marks (ISI mark, AG mark, etc.) which makes it quite obvious that the products lack a sense of originality. These companies (second category) do not want immense or large profit but just profit which will be enough for them to live a luxurious life.
Which companies have successfully operated the pyramid scheme of marketing?
Tupperware: — An epitome of efficiency in operation of the chain marketing scheme is achieved by this company. Debuting in India in 1996, as a reader I would ask you….” Have you ever seen an Indian household without those Tupperware bottles or tiffin boxes?”
Amway: — A dominant force in chain marketing since 1995, Amway is also at par with Tupperware. Its protein supplements, self-care products, skin-care products were a rage with the middle and upper middle class in the early 2000’s.
Oriflame: — Making an absolute mockery of the other cosmetic companies since 1996, Oriflame too is a company which embodies this marketing scheme. With Bollywood going gaga over fair skin back in the day, Oriflame and its products spread like wild fire!! From compacts to foundations, from lipsticks to eye liners, Oriflame has it all and the standard is second to none!!!
So, do you know of any famous or infamous MLM techniques or achievements of companies in the world? If yes, do let us know in your comments!
Credits : Nikhil Patil — Team E-Cell ABV-IIITM Gwalior
