I’ve had a number of dealings with multi level marketing in the past (actually when I mean ‘dealings’ I mean just friends approaching me to sell their wares). Gone are the days of Avon and Tupperware parties, now multi level marketing is so entrenched with so many different companies that it’s hard to keep track and hence you become unsure if you are dealing with an MLM sales pitch in the first place.
To be honest, I’m a little AntiMLM. I’m not to the point that I would post on the Reddit antimlm form or anything like that, but when I am approached to buy something from an MLM-selling friend, I tend to bit a little off put by it and don’t usually buy what they are selling. My multi level marketing tolerance factor has decreased over the years, proportionate to my ability to say no more easily as I get older.
What is Multi Level Marketing
Multi level marketing is big business, in the US and in Canada. Even John Oliver did a show about it on his talk show as mentioned in this great article by Vice on how to get a friend out of an MLM.
According to Investopedia, multi level marketing is a strategy where product distributors are asked to recruit new distributers and are paid a percentage of their recruits sales. MLM is not illegal but many MLMs end up looking more like a pyramid scheme (which are illegal). In pyramid schemes, people at the bottom don’t earn much money, and most of the money goes to those at the top. MLMs are known NOT to be profitable for the distributor (e.g. your friend selling their MLM wares). Relatively few distributors earn meaningful incomes from their efforts.
Here are some encounters I have had with friends and acquaintances and their attempt at marketing to me.
One of my first encounters with multi level marketing was at a Silpada party. If you haven’t heard of Silpada, Silpada sells sterling silver jewelry at expensive fancy-ish prices, for example, their hammered hoop earrings are $39, not too bad I guess, most are under $100. The friend was my colleague, she is really lovely and she invited me and a few other coworkers over to her house with a disclosure that there would be some jewelry on display.
I went because I wanted to connect with my coworkers and I also wanted to see what her home looked like, haha (I’m nosy like that). I actually ended up buying a few pairs of earrings as Christmas gifts to my friends, back when my friends and I were doing physical non-minimalist gifts. I think the reason why it “worked” and I went to the multi level marketing party, was because my coworker is genuine and isn’t the sales-y type of person. She also wore a lot of the Silpada jewelry herself and it looked nice.
Silpada ended up being acquired by Richline Group in 2016, which coincidentally is owned by Berkshire Hathaway, so now Warren Buffett owns Silpada and I’m a shareholder too! I’ve come full circle I guess, to supporting myself, lol!
The next encounter with multi level marketing was less favourable and has a less positive memory for me. I had not heard from a colleague for years. She had moved away and started a family. I get a random text from her asking how I am doing and wondering if we could chat and catch up. I thought this was very nice of her to reach out. We start chatting and she updates me on how her life is going and I update her a bit on how my life was going. Then she slips it in, the segue into her sales pitch.
She talked about how she wanted to be her own boss, earn passive income, work from home, and for herself, and claim work from home expenses and she found a way to do that. She said I could too if I was interested and it only required about 30 minutes of my time and she wanted to show me a video. I thought hey, why not I’ll have a peek, if anything it would make a good topic for a blog post.
Her passive income scheme was through Lyoness, and she has been making and saving money. Lyoness is a multi level marketing company originating from Austria, you earn cash back from shopping at their retail partners. The majority of this company’s income though, comes form the multi level marketing aspect, where marketers who are wanting to have their own business, pay membership to Lyoness to try and recruit more Lyoness memberships and earn money this way.
After I watched the sales-pitchy video, I told her that this sounded like an MLM company and that I wasn’t interested and find investing for dividends is a better way to earn passive income. I felt a bit betrayed that she contacted me out of the blue not to see how I was doing, but actually just to try and do a sales pitch. I had an email a few weeks later from her asking if I was interested in joining. I said I wasn’t. I haven’t heard from her since.
DoTERRA Dark Side
Finally, I have a friend who periodically sends out messages to a group chat that I am in, asking if we were interested in putting an order for more DoTERRA essential oils. She says they are great and it has helped her sleep and insomnia, and that the essential oils are great for purifying the air, or preventing colds etc. etc. I can’t remember the ‘benefits’ of the DoTERRA essential oils that my friend touts, I usually tune those text messages out. A few of my friends already bought some DoTERRA oils but I haven’t because I am not convinced that super expensive essential oils are a panacea for life’s ailments…and because I am somewhat antimlm.
DoTERRA is an essential oil company founded in 2008 and according to Wikipedia, in 2015, generated more than $1 BILLION in annual sales.
Wow. That’s a lot of money.
Lazy Man and Money has a detailed post on whether DoTERRA essential oils are a scam. Many DoTERRA supporters (and marketers I suppose) are in disagreement with him. Personally, I have tried smelling DoTERRA oils at a local convention, and the essential oil I tried did actually smell really nice, but it wasn’t life changing, unfortunately for the sales lady at the booth.
Should Friends Sell To You?
Although the idea and premise behind multi level marketing is nice- ideas such as financial independence, working at home, and flexible hours, and female ’empowerment’ (83% of MLM direct sellers are women, in Canada) according to an article from Flare magazine, titled Multi Level Marketing: Empowering or Exploitive?
Even more interesting, Flare states that a lot of MLM direct sellers become direct sellers when they enter motherhood, the social outlet, and ability to contribute to their household finances doesn’t feel like a burden at all and the side income supplements their regular day job income. Working full time and having kids is definitely hard to manage.
I’ve had a few experiences with multi level marketing and being an Antimlm type friend. My experiences range from being supportive and purchasing the goods they were pitching, to not being supportive and not really wanting to talk to that acquaintance again.
Have you had friends or acquaintances approach you to sell their MLM goods?
Where do you stand on the pro MLM or antiMLM spectrum?
How do you manage their requests?
GYM is a 30 something millennial interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for blog updates, a free dividend yield spreadsheet, and the free Young Money Bootcamp eCourse.