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A look inside the world of Multi Level Marketing

Published: 
Sunday, January 21, 2018

Is the selling of products such as Organo Gold, Avon, Herbalife and other similar products just another “Pyramid Scheme” or is it a legitimate way to earn money selling merchandise of value in the marketplace?

This has been the debate worldwide—and here in T&T—for many years.

Companies such as these operate what is known as a Multi-Level Marketing (MLM) business model.

In this form of business, while a person can make money by selling the company’s products, monies are also made when others become recruits under this person and when they recruit others under them and so it goes further down the line.

It is possible to make money, but like most MLMs, the success rate is not very high.

Sunday Business spoke to some of the people involved in the local industry to get an idea of what draws people to this type of business, and whether they believed it to be a worthwhile endeavor.

NO MONEY MADE

Maria* told Sunday Business that she got into the selling of Organo Gold products two years ago and spent 6 months in the business.

Her experience was not a favourable one.

“I knew other people who were involved in it and they encouraged me. I made what is known as a level one investment and bought some of the products. But I didn’t start off with a big bang and didn’t become rich off of it.”

When asked why she was not successful, she replied she had other ventures she was involved in and could not devote all her time to the product.

“I know other people who have done well with this, but I guess it wasn’t for me. You also have to have learn the products and give the customers advice on the products, which I didn’t have time for.”

When asked if she would advise other people to get involved in the selling of such a product under that business model, she said it all depends on the individual.

“I didn’t make much and my experience wasn’t good. It wasn’t enough to make a living. But maybe if there are other people who put in more time into the product, maybe their success would be better than mine.”

LEGITIMATE BUSINESS

Christine Ram, supervisor at Herbalife told Sunday Business that their type of business is a successful one and it actually helps “saves lives.”

“This is a business that you do on your own. Your profits will depend on how much clients you have and how you market to your clients. We have one main warehouse in Trinidad where distributors go in and purchase the products.”

She said they do wellness profiles or “check ups” on persons who want to lose weight or gain weight.

“We also do a marketing part of the business for people who want to change their lives financially, we offer it as a business to them. What they do is that they register with the company, we have training that we do around the country. We have a big event every month and then we have our weekly meetings where we train people to go out and do the same. They become personal wellness coaches.”

She said their personal coaches examine people’s health and lifestyle in terms of what they eat, how they exercise and other related matters.

She added that the products are nutritional and are regulated by the Food and Drug Administration and there are doctors in the country who recommend the products.

She also said they do not treat or diagnose illness but using the products people see the results for themselves.

“We have great results for people who gain weight and also lose weight depending on their needs. That is how we market product.”

On the business side, she said that people sell the products and the company pays them.

“Every month the sales people are paid a cheque and they also get to purchase the products at 25 per cent off. They then go and look for people as well who want to lose weight and want a change in their lifestyle.”

Ram said people come and go every year, but estimates that there are “a couple hundred” sales people throughout the country.

She said that this is a legitimate type of business although not a perfect one.

“There are a lot of companies that have done network marketing but not in the right way. Our company has done network marketing and we have people who are in the company for 25 years.”

She even said that Jason Caesar, founder of the local branch of Herbalife is a “rags to riches” story.

“There are people who have turned their life around from nothing and done well. The founder here, who founded the company over 12 years ago in T&T is a rags to riches story. He was in financial difficulty and his wife had a lot of health issues. He needed things and sacrificed to start building the company here.”

MONEY TO BE MADE

Jenna* who used to be involved in the selling of Organo Gold products but is no longer in the business, said that it was good while she was in it and she has a full time job now.

She started selling about three years ago and stayed in the business for one year.

“My reason for not doing it any more is for lack of time. But when I was promoting the product it was very successful for me. I had no real problems selling the product.”

She said there are different packages and she started off by buying the cheapest which was TT$ 3,000.

“It all depends on what you want to invest in and how much products you get. This would have been the coffee, soaps, tablets, and information package on how to do the business. It is something that you ordered from outside but you could get it locally form people who have it in stock. Then there is the networking part of it as well.”

Jenna confessed that the $3,000 was “well invested” as she sold out the products in a very short space of time.

“I did make a profit. The investment determines the volumes of products you received. I sold out my products almost as I got it. It paid well.”

She said selling the products involve meetings on how to sell the products and it could be time consuming and she now has a full time job so is no longer in that business—at least for the moment.

AVON CARIBBEAN FAILURE

The closure of Avon’s operations in 2015 gives a glimpse into the sustainability of businesses in the MLM world.

In 2015, the direct-sales beauty company closed all its offices in the Caribbean and ceased operations.

The company, which was the fifth largest beauty company at that time and second largest direct selling corporation in the world, decided to cease all of its operations in the Caribbean on January 29, 2015.

Lindsay Fox, spokesperson for Avon at that time told Associated Press that the move was made to “focus on improving the US business.”

Sales persons throughout the region were affected by the abrupt closure.

According to a 2015 news report, Tricia Sinarine, an Avon independent sale representative in T&T, listed the affected countries as: Antigua and Barbuda, Aruba, the Bahamas, Barbados, Belize, Bermuda,

Bonaire, Curacao, Dominica, Grand Cayman Island, Grenada, Guyana, Haiti, Jamaica, St Kitts and Nevis, St Lucia, Suriname and T&T.

PYRAMID SCHEMES

Unfortunately, not every multilevel marketing opportunity is a legitimate business opportunity.

Many pyramid schemes - frauds designed to part the unwary from their money - are disguised.

Like multilevel marketing, pyramid schemes depend on recruiting people to become distributors of a product or service.

The big difference between multilevel marketing and a pyramid scheme is in the way the business operates.

The entire purpose of a pyramid scheme is to get an individuals money and then use them to recruit other individuals.
* Names have been changed

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