It is a business that promises increased income, freedom and a happy life, a reality that many dream of but find it hard to attain. This business has caught on like a wave in Zambia, with companies opening their doors and inviting people to the prospects of this good life. The business is Multi-Level Marketing (MLM) or popularly known as network marketing. Despite its elaborate promises, there are some that believe that there is more beneath the business than is currently presented.

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Most people are more familiar with the companies that are involved in network marketing than the term itself. Edmark, Forever Living, Amway, Avon and Angel Lifestyle are among the popular network companies that have entered the Zambian market. Network marketing can be described as the supposed income opportunity, in which persons are recruited and incentivised to buy products and to recruit others in endless chains of recruits, all of whom must buy products and/or recruit others in order to qualify for commissions and to advance upward through multiple levels.

 

For a country where over 60% of its population live in poverty, some people will always be looking for ways to escape the grip of poverty or find other sources of income to supplement the ones they get from their jobs. This is what makes network marketing very appealing to many people because it not only offers a source of income but it can be done according to an individual's schedule. In as much as network marketing has many supporters, there are many who have questioned its fundamentals.

 

The Pitch

Most network marketing companies present themselves as direct sales opportunities. Some scholars have said that network marketing is not your typical direct sales companies. Where traditional direct sales companies will give you their products to sell on their behalf network marketing companies require you to purchase the inventory. Therefore, whether or not you manage to the sell the products the company would have already profited from the purchase of their product. This has led to some people having inventory that they are unable to sell. One of the reasons for this is the business model which also is one identified flaw.

 

Business Model

The model survives on an endless stream of recruitment of new people to sell the products. Likewise the recruited individuals are empowered and incentivised to recruit other participants, without regard to market saturation. In typical business models there is the acknowledgement of the laws of supply and demand which network marketing seems to ignore. As the constant recruitment continues it would soon lead to saturation where there are no more people to recruit. Individuals who sign up with the companies have to recruit new sellers are a means advancing up the multiple levels and this also comes with commissions. The person who recruits an individual partakes of the commissions that will follow in the event that the individuals do their own recruitment too. The commissions are not continual but dependant on the recruit continuing to place orders and remain at an active status in the company. Hence, this is the reason why network marketing has often been regard as a pyramid scheme.

 

Products

The products that are typical of network marketing companies are generally pills, beverages, and lotions. The pills and beverages will purport to have some health benefits as a result of a special ingredient.  The consumables will be attesting to provide multiple benefits if they are consumed regularly. Since supplements are not considered as drugs, hence, they are not regulated by the pharmaceutical regulatory body. The products are designed in such a way that it would generate repeat business. The products are also supposed to be relatively easy to sell. The prices for these products are usually high priced and require to be purchased either from the company or the person who recruited them into the programme.

 

Success Rates

For all that network marketing promises to be there is very little show for it. There are very few people who have actually made something out of it. These are the individuals who make up the top 1% who have made it to the top. Unfortunately, for the majority who are at the bottom levels network marketing is still a struggle. There have been reports of people who have invested their savings in the network marketing companies' products which they are unable to sell. Network marketing will usually blame the lack of success of people in their programme due to poor marketing skills and will attempt to sell other programmes to improve this. 

 

Network marketing will have its praise-singers and its doomsayers. There those who support it and those that are against, this makes it difficult for people who are contemplating to join. Of course there are success stories to show for network marketing and there have been failures. The failures definitely far outweigh the success stories. This is not a business you jump into because of the promises made, but it requires sufficient market research and looking beyond the gold being dangled. 

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