A lot of the money in MLM seems to come from the consultants themselves, without them realising it. I haven't done any research here, these are simply my observations as someone who was involved in a home-based business.
Most people seem to get involved in MLM because they like the products. I used to drool over the craft catalogue and had a huge wish list of yummy things that I'd like. Being a consultant I could get all these products at a 20% discount...that *HAD* to be good, right? I was saving money by buying the products as a consultant.
Not really. The best way to have saved money would have been by not spending it, but that catalogue was way too tempting. There were new product releases every three months with ever more wonderful things inside them. Periodically through the year products would be "discontinued" and replaced with a similar product but of a different brand. As the company was no longer offering that product for sale, consultants were encouraged not to use it any longer, but to replace the old product with the new.
As an example, when I began with the company they used the Carl brand of cutter for scrapbooking. Around the time that I left the Carl cutter was discontinued and replaced with the Cutterpede. My Carl cutter was relatively new and I had no intention of replacing it. there was no pressure as such to buy the new cutter, but it didn't take a genius to figure out that sooner or later customers were going to ask why you weren't using the cutter advertised in the catalogue.
A second example concerns scrapbooking albums. When I started with the company they were offering scrapbooking albums in two formats: 8 1/2 x 11 or 12x12. Three months or so in, they discontinued the entire line of 8 1/2 x 11 products. Albums, papers, everything. If you had that size album in your kit, then it was completely redundant and no longer of any value at all and you would be obliged to change the format to 12x12 which of course involved "investing" in new albums, papers, album covers and more products to create albums with which to demonstrate.
The company seemed to make sure that products were 'sunsetted' at regular intervals, resulting in a continuous process of consultants updating their kit. At first I didn't mind too much as I'd have a beautifully resourced craft room at the end, if nothing else.
That argument didn't work. The experience left such a bad taste in my mouth that I couldn't bear to look at the products in the craft room. They represented so much heartache and unhappiness that I couldn't stand having them around me. I tried to sell them to other consultants and on eBay but no one else wanted them either. Some things I eventually gave away and the remainder got thrown away. It hurt to throw them away as we had spent so much money (that we didn't have) on them, but I was left with no other choice. The products were simply unsaleable, except at party plan.
The upper levels of the pyramid were making money from products that "sold themselves", but it seemed to me that the only people they were selling them to were the consultants.
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