Is MLM (Network Marketing) Legit?

Having listened to different controversial stories about multilevel marketing (MLM), you will likely contemplate if network marketing is legit. Of course, there are many people and businesses out there that prey on your finances unnoticed. 

So, is network marketing legit? Precise answer – YES. Network marketing is a legit and ethical business model where an independent salesforce gets a commission for selling products of a company directly to people. Notably, not all MLMs are legitimate. 

Considering that we are living in an internet-driven, fast-paced world, it is imperative to know what is legit and what is not. For this reason, you need to check the legitness and worthiness of any MLM before investing your hard-earned money in it. After all, all MLMers, whether participating in a legitimate business model or scams, come with nice promises, which makes the whole thing look unrealistic. 

In this post, you will learn what network marketing is and what network marketing is not. The article aims to give you substantial information so that you make an informed decision before joining MLMs. Keep scrolling!

What is network marketing?

In essence, network marketing is a legitimate business model that involves direct sales. The strategy is used by many companies to eliminate intermediaries in the distribution of their products while reaching a broader audience. This definitely means that participants (distributors) in network marketing sell the products directly to the consumers. 

Notably, network marketers operate independently, which means they are a non-salaried workforce. 

The structure of MLM network marketing resembles a pyramid, which is the reason why many people confuse them with fraudulent pyramid schemes. 

In MLMs, there is making money. Network marketers make money through the products they sell. They also get a commission on sales made by people they recruit. 

Is multilevel marketing legit?

Yes, network marketing is legit. 

Even so, many people, up to today, confuse MLMs for pyramid schemes. To help distinguish them and help proponents not lose money, a lot of research has been done to shed limelight on their differences. 

At this stage, it is worth saying and noting that not all MLMs are legit. Similarly, MLMs aren’t necessarily pyramid schemes. 

All the same, MLMs and pyramid schemes share certain characteristics, which makes it hard to differentiate them. They all have a structure that looks like a pyramid, but one is a legitimate opportunity while the other is a complete fraud. 

The easiest and usual way of distinguishing the legit MLMs from illegal and fraudulent pyramid schemes is by examining their compensation structure. This is very much true considering that both programs have a closely related compensation structure. 

So, how do you differentiate legit MLM from a fraudulent pyramid scheme?

Notably, MLMs and pyramid schemes encourage participants to recruit new distributors, who form the “downline.” 

Although MLMers can make money through their recruits’ sales, they focus on selling products with inherent value. Simply put, they can make money from sales only. On the other side, pyramid schemes do not involve any physical products, and if any, they have little to no value. The only way to make money in pyramid schemes is by convincing more people to join the programs, which eventually collapses when no more people can join. This is the primary way to differentiate MLMs from pyramid schemes. 

If you earn a based on the valuable products that you sell to individuals, the odds are, you are working with a legitimate company. On the contrary, if you earn with respect to the number of people you enroll, it might be a scam, the pyramid scheme.  

It is so frustrating to realize that participants of both programs, more often than not, use hypes to lure potential recruits. Distributors, including those representing legitimate companies, use lies because more people in their network may translate to more earnings. 

If the person inviting you to join an MLM gives weird and unrealistic promises, it sends a red flag, especially if compensation is only through recruiting others. 

The legitimacy of multilevel marketing 

The functionality and credibility of an MLM may be seen from how it operates. Distributors sell valuable products as their primary way of making money. However, when they recruit more people downline, the cumulative commission earned may surpass the income from their own sales. 

That said, the issue in determining the legitimacy of MLMs is whether the company sells its products primarily to consumers or not. 

How to identify pyramid schemes

MLM is one of the most feared and misunderstood home-based business startups. Knowing how to distinguish them considering their compensation structure is not enough, considering that they prey unnoticed. 

Before joining any multilevel marketing programs, do your due diligence when researching the opportunity and keep an eye on the following signs of a pyramid scheme. 

• No or low-quality products: This is the most obvious sign. Some pyramid schemes offer low-quality products to persuade recruits that it is a legitimate MLM business opportunity.
• High-pressure sales tactics: High-pressure tactic is a hype to make money from “useless” products. This habit is more evident in new MLMs, which you should avoid as well. 
• You’re pressurized to buy and stock inventory even when you have enough or can’t sell what you have.
• Expensive training sessions
• Deceptive advertising practices: Although MLMers working with legitimate companies may use hypes to lure new recruits, it is a common habit with pyramid scheme participants. These distributors give unrealistic promises that they themselves haven’t achieved. 
• Poor company communication: If anyone invites you to see their MLM opportunity, don’t be afraid of asking hard questions. The answer you get will automatically tell if what you want to join is legit or not. 

Conclusion

If you need a job that will allow you to enjoy all your freedom and pride of being your own boss, then you should consider joining an MLM. Overall, it is an excellent and legitimate opportunity for parents who wish to spend most of their time with kids. As a network marketer, you will have enough time both for work and policing your small ones.