Long Post Aheadexcept it isn't so sweet.
i have been recently approached by a friend,
who offered me a
business opportunity.
Didn't tell me what it was.. until when i reach the company
then i soon realise that its MLM.
i've gt to admit its my first contact with MLM,
and i had totally no clue what it was before this..
only to know that it's something bad.
actually MLM is a very effective
advertising tool rather than a business tool. The fact that the information that Company So-and-So is selling this product travels faster and freely among people than when using conventional advertising methods is enough to prove that! It is, however, lacking in the aspect of promoting the product.
after being swayed here and there,
one thing i didnt like wasthe rushing of things.
if i was going to invest a few thousand(that's 50% of my current assets )': ),
then i need time to consider.
true, opportunity only come by once..
but i believe most opportunity lasts at least some time.
so in the end i rejected the offer..
mainly because i feel that MLM is actually using ur frens to earn money.
how does it work?
Person A can have some downlinks aka slaves,
for my case is 3.
every member is a distributor.
every product you help the company to sell you earn points.
your monthly pay = ~10-15% of ur own sales + ~4-8% of (sum of your total points and everyone below you)
to have the 4~8%, you can either start off by slowly selling to get that elevated status, or you can attain it by buying a complete set of products yourself, that is ~2-4k dollars. <- This adds to the total points earned by you and ur uplinks for that month. So its not hard to realise that the faster and more practical way of breaking even(assuming you paid 4k at the start) is to get ur friends to join as ur downlinks. to get back 100% of 4k, you will need - (100 - 15)/4 = ~22, -> at least 22 person under you. Of course ur frens can find other friends too, so makes it easier.
1->3->9->27.
by 3 levels down you should reach.
this makes a disturbing trend..
when u get into this hot soup, you get ur frens to join in order to break even, or even profit. yours friends are in turn made to get into the same soup and to find more friends, while u earn money from this.
it all ends when ur friends and friends' friends'+++ are already member.
when you find urself at the bottom of this tree,
you are theorically a salesman.. while millions of people above you will earn money while doing nothing.
what are the problems for this
business tool?
if everyone ie. singapore, joins this company.. everyone is a distributor.. so everyone will buy for themselves.
let price of a product be Y.
for every product a person in the lowest of this tree buys, the company have to pay cuberoot (sgPopulation) x 8% x Y + 15% x Y.
take sgPopulation = 5million,
company has to pay 13.83 times of Y to the members! Charity?
bad reputation of the MLM helps!!
assume ard 30% of the population joins the company..
for every product a person in the lowest of this tree buys, the company have to pay cuberoot (0.30 x sgPopulation) x 8% x Y + 15% x Y.
company has to pay 9.30 times of Y to the members!
assume ard 10% of the population joins the company..
for every product a person in the lowest of this tree buys, the company have to pay cuberoot (0.10 x sgPopulation) x 8% x Y + 15% x Y.
company has to pay 6.50 times of Y to the members!
so for the company, how to at least earn 20% of Y? (assuming 20% is cost price)
100 - 20 = 80% <- max amt of money going back to members. 80 - 15 = 65% <- max amt of money going back to uplinks. 65/8 = ~8.1 <- max number of layers above the seller. for a 9 level mlm, 1+3+9+27+..= (1-3^9)/1-3 (GP) = 9841 people that is 0.19682% of the population!! If you are a company boss which would u choose? 9841 people max of "salesman" which you can only get back 20% of selling price, or infinite number of salesman you can hire, which you can get back 85% of selling price? In addition, what i was showing was a best case scenario where the tree is a full 1-3 tree. what if the people form an overly extended tree, i.e. to say, every people only haf one downlink (which therefore makes it a linear line..) then
the max no of salesman the company can afford (to earn back 20%) to hire is 1 + 85%/8% = 11.6 --> 11!!!
In conclusion, (of cos im not the first to find out) my humble opinion is that MLM is just mathematically impossible for the company to profit substantially and even outperform conventional methods of sales. It's a mean and cold method which requires you to make use of friends to gain profit(sounds familiar?) while at the same time forcing them to your same predicament.
please correct me if i have any calculation mistakes!
sidenote: many other aspects are not covered yet, but this is enough to say no to MLM. Like many times in real life, the danger signs are often quite hidden. (there is actually a Long Entry Ahead warning in font colour
white at the start of my entry!)
Probably instead of this i will buy one super good camera, probably a Digital SLR. I want to keep things alive, especially my memories. But memories will eventually fade away. Bytes won't! At least with today's technology it won't be so fast.
what do you think of when you see this?
