No, I am not going to talk about some social networking concept or a job-related rigmarole here. Recently and very accidentally, i got acquainted to a form of marketing called multi-level marketing. Most of you would have come across the brand Amway at some point or another. This brand has its fair or maybe unfair share of negative flaks drawn around it. But apart from the fact that Amway is not everyone's everyday choice, i didnt have much idea about it, until recently. And yes, perhaps you must be aware, Amway is a multi-level marketing company.

If you are wondering why the heck Iam talking about Amway now, well i can assure you, in this case of your wonderment, you are not alone. Some time back, I met a high-spirited person at AAB, who introduced himself as, Nah, Iam not going to reveal his name. He was very cordial and after some little talk, he got my contact number and we parted ways. Then he contacted me few days later, asked me if I was interested in a part-time job and consider a offer he wanted to make. He wanted to come to my house for a chat and I didnt refuse. So he came to my house and started right away on his business plan. Apart from this part-time job, he is a software engineer too.

He briefed me on how Mc Donald's business model works. Mac D works on franchise management model. The company gets its profits from the rent and royalties paid by its franchise, apart from the profits the company-operated outlets make. After a slew of more marketing-garble, he explained what he had in store for me. He works for a motivational organisation called BWW. This BWW actually trains the operatives under Amway. Amway as i said earlier is a multi-level martketing distributorship, which means they recruit distributors who in turn recruit other distributors and the chain goes on. The distributors are not paid much by the company, instead they get money from the profits accrued by the distributors under them by selling Amway products. Along with the profits that the distibutors down under makes they have to pay the training fees to the distributor who hired them. These distributors are given a variety of expensive training materials to get them started with Amway These training materials are supplied by BWW and the distributor gets charged for those materials. To cut a long story short, this business model works well for people who has got that innate ability to influence others. And BWW does exactly that, they train people to influence others. So the network is like this -


I was interested in finding out why multi-level marketing companies face so much controversies. I learned that most of the companies were deemed illegal because they come under the purview of a non-sustainable business model called Pyramid scheme. In pyramid scheme, people "pay" to get into a scheme alone, they do not get any products or services in return for their payment. So in a network of distributors, the distributors down under has to pay an apprenticeship fee to the distributor above them. The distributor at the top manages to the swindle his followers but the ones at the bottom has to pay the subscription fees and do not have any profit on their own.

So When you recruit a friend, and the friend pays his fees and buys his products, you begin receiving additional bonuses for products that the FRIEND buys, tacked on to your own as a reward for expanding the blob-like Amway corporation. And when your friend recruits his friends, you get a profit on them also. Thus, if your own bonus is $100 per month, and you recruit ten friends who recruit ten friends, and each of them causes you to receive an additional $100 per month also, they could theoretically net you more than 10,000 dollars every month! Astounding, isn't it?

For one thing, this marketing model IMO, has a lot of psychological effects on the distributor. In extreme cases, every person this distributor meets, will be seen as a potential recruit for his network. Its business everytime, 24X7. Oooh, thats a scary thought. Imagine someone who doesnt have friends outside his distributor network. The worse thing is, there is a huge false motivation for people to enter into the network. For the economically challenged, they are lured in the pretext of making easy lucre. "All you got to do is recruit some more people and you'll earn money" is the advise they keep falling for. A majority falls in the bottom of the chain and they make very less money considering the effort they must put.This kind of referral system should work when the services considered are for free, eg GMail. When there's money around, their greediness knows no bounds. A person recruits two people, but it just wont be enough. He would want to recruit two more, and more and more. This greed takes control of his mind. Pathetic.. So the bottomline is, well, do you really expect one??

*All that i have written here is a matter of personal opinion.