Saturday, April 12, 2014

Multilevel marketing in American consumerism may offer hype instead ofhope

Hawaiian Noni juice is among those products that have been sold through multilevel marketing.

Carol Forsloff----Most people have been approached by a friend or relative to purchase a product or join a community based upon recruiting others to purchase and to become a member as well.  Many companies have flourished with multilevel marketing as the method of advancing sales, yet at the same time many have failed to meet the expectations of those entrepreneurs and others, offering instead more hype than hope.

Amway is one of the long-standing brands of the grand companies who have brought people together to sell goods across wide sectors of the population.  The offer to become one's own boss is an appealing one, as folks flocked to make it big on the bet they could sell products and recruit friends and relatives to become members of the Amway family.  The business has flourished, as many people have come and go, hopeful folks made happy at times with the income that could be made.  But still others found after awhile people lost interest, and the pyramid business began to dissolve or break apart for some individuals, even as the company prospered overall.

The old saying of "Be Your Own Boss" continues to be the motto for Amway, as the company maintains the market is not saturated; and there are plenty of opportunities to make money by working from home and offering a product line that folks have found now have real value.  Amway products are seen in factories, hospitals and in offices around the country, where its cleaning products have proven worth.

Some of these eager entrepreneurs have this to say about being an Amway distributor: "If you want to use the other 8 hours to make more money, but aren't sure where to start, I strongly suggest you look at Amway or even another network marketing company. Why? It is the easiest and quickest way to start your own business. You can read all you want about starting a business, but it's different when you actually have your own business."

Since Amway has been around since the 1950's, it has its fans and followers, even as it has expanded markets in other places outside the United States, like China, for example.  It took patience to gain a foothold in China, where the business model seemed suspicious at first to China's leaders.  In 2006, however, after China had dismissed the company's methods and business model, it has now allowed Amway to develop a distributor network that is making money for its members.  In fact, China is now its largest market with 237 shops and 160,000 distributors contributing to the annual income of the company in the country which Bloomberg reports at $3 billion.

But Amway has its detractors as well.  One of them had this to say: "Truth: You need to do your own price study to determine this for yourself. Whether it is termed "buying at retail" or "buying at wholesale" it doesn't really matter. What matters is the price you get for the quality and level of service you expect. My price study showed I would spend up to 43% more using the Amway network than by shopping at local Charleston, SC discount stores. "

Xango is another multilevel marketing group that is a bit late to the party for those interested in the concept of selling directly and becoming a distributor.  It has, however, been assertive in its efforts to entice customers, with some of its distributors describing mangosteen's anti-cancer benefits and others health benefits so strongly that the compay was sent a warning about making health claims that could not be substantiated.  It is often those health claims, and similar ones made by other companies touting vitamins, special juices and other products that the medical community has been concerned about.  In addition, there is usually a strong emphasis made by those selling these products that those benefits have been proven by users, as at meetings their stories of health problems and disabling conditions being turned around are the enticements for new members.

Xango's official response to the FDA warnings has been to remind people of its website statements: "Research shows xanthones possess potent antioxidant properties that may help maintain intestinal health, strengthen the immune system, neutralize free radicals, help support cartilage and joint function, and promote a healthy seasonal respiratory system," states XanGo Juice's web site.

This footnote is added: "These statements have not been evaluated by the FDA. This product is not intended to diagnose, treat, cure, or prevent any disease."

Problems related to multilevel marketing have caused some states to issue their own cautionary guidelines, to prevent distributors from making oral claims about benefits that supplement written material that overstate the benefits of particular products.  The Illinois Attorney General offers the following advice for anyone seeking to join a multilevel marketing organization:

  • Obtain the names of at least ten other investors and discuss with these investors their experience with the plan and the promoter.

  • Obtain specific proof of income representations.

  • Obtain specific proof that you will have a good market. Get all verbal promises in writing.

  • Ask for copies of the company's business and financial statements.

  • Determine all costs you must pay. Do start-up fees pay for such things as training, sample products, literature, or display materials?

  • Find out if the company will buy back your inventory if you decide to quit.

  • Talk to local business people who are familiar with the product and the market before you decide to invest.

  • Always consult with a private attorney or certified accountant regarding the specifics of the plan or concerns about the contract.

Given this guidance, and the experience of others, good business sense means to do the investigation of a company in advance, so when nephew Johnny tells you of the miracles of the product he is asking you to buy, then to join and sell yourself, you will be aware of the benefits as well as the pitfalls of the business and decide for yourself it is hopeful or simply hype instead.

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