Multi-Level Marketing

The aging Queens of multi-level marketing are Avon Products, Mary Kay Cosmetics and Tupperware, all still around. Multi-level marketing means you buy products like cosmetics or leggings or kitchen ware, and re-sell to your friends and neighbors through house calls or parties or now, online through Facebook groups. But more than retail selling, you make money by signing up other people to sell. You then get a cut of what your signees sell as well.

Companies like Avon and Mary Kay were more successful in the past, when cosmetics were sold through department stores, and largely inaccessible to women who lived in the suburbs and rural areas. Department stores were downtown. Avon and Mary Kay were a ticket to the middle class for woman who couldn’t work full time, had some sales moxie, and had a large circle of friends. A woman who blew out the numbers with Mary Kay got a pink Cadillac with the Mary Kay logo on it — I remember seeing one in Rochester decades ago.

Being successful at multi-level marketing, especially these days, is rare:

Of these second-wave MLMs masquerading as women’s empowerment, LuLaRoe is queen. More than 80,000 women have paid around $5,000 for several boxes of low-cost clothing and worked as much as 80-hour weeks to outfit hundreds of thousands of suburban women in multicolored polyester. But according to a report that studied the business models of 350 MLMs, published on the Federal Trade Commission’s website, 99% of people who join multilevel-marketing companies lose money. Depending on how you look at it, it’s either a brilliant business model or a predatory practice—or a little bit of both.”

With the odds so stacked against you, why would any woman plunk down a hard-to-come-by $5000 to join a multi-level marketing network? Hope. A lack of other opportunities. The lure of being part of a sisterhood. Why do they keep putting money down to buy more inventory, even as they can’t sell what they have? Psychologically, it’s hard to admit you’ve been duped.

When I was doing Executive Coaching in Rochester, I always saw a few clients pro-bono, and one was sent to me by a friend who said someone from her church was struggling to get her small business off the ground and could I offer a couple of sessions to help. The young woman was a high school graduate, ex-military but with no particular skills, and had been unable to find a job. She’d maxed out a credit card to enter a multi-level marketing group, and was $12,000 in the hole with product inventory that she couldn’t sell. She was brimming with company slogans about why she was going to be successful — it was just going to take time, and more inventory so she had a broader array of things to offer. After we’d talked for an hour about what she had tried and what else might remotely work, I urged her not to incur more debt to buy more inventory. I suggested that she sell what she had for whatever she could get for it, cut her losses and get out. She was furious, and left saying I’d been no help at all.

I wonder how much debt she finally accrued before the dream died.

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