Network marketing is a growing business over the world. But some countries ban this type of business(the UK and some countries). This has been criticized by many researchers and countries. Because there are a lot of issues in network marketing or Multi-level marketing(MLM). The major problem is the pyramid scheme.
What is a pyramid scheme?
A pyramid scheme is a way of making money that cannot continue for a long time. In this scheme investors promising people payment and services for enrolling other peoples into the scheme. It does not supply any real investment or sale of products or services to the public. or other words Pyramid scheme is that recruits members via the promise of big payments for push enrolling into others. It creates a problem. Cause, pyramid schemes are unsustainable and instability and some lawsuits.
Pyramid schemes are not only illegal. Network marketers are a waste of time and money. Because pyramid schemes rely on the recruitment of new members to bring in money.
The pyramid scheme is the main issue in network marketing.
eg. case 1:
Pyramid schemes are unsustainable. In some companies, people may not even come and join. So the revenue of the entry fee gets less. So now the company gets into big trouble financially. So now, put a higher entry fee to fix this. Currently, the number of people coming to work is very low. So the entry fee is again increasing. So the salary that was promised to the existing network vendors cannot be paid. This will greatly affect the new vendors who are currently paying the entry fee and not making any profit. So that entry money is a loss to new workers. This is cheating.
They kept telling new vendors that you could make more money by joining the work. But now they not giving him to his entry fee and they couldn't give him profit. So It's illegal.
case 2:
Suppose the company runs very well. So more people are joining. What happens next? look at the picture.
Look at the picture. The picture tells all. In the first level there are only six people but on the thirteenth level more than the population. This is a very serious problem. In this case, the new vendors just pay an entry fee only and no one makes money. Because a lot of people work on it. So no more people to join so no work for vendors so no money.
Inconsistent income
The network vendor's salary is based on the company's growth. So the salary rate is inconsistent. This creates a problem. Because of other jobs where you earn money better than network marketing. In other jobs where you feel secure about getting your salary.
Some other issues in network marketing
- Scam Ideas - Some people, telling people to work for a company that doesn’t exist
- Limited funding.
- Rejections.
- Long waiting time - You can only make money after you go to a certain place, but it takes a long time to go to that place.
- Inconsistent income - This does not include the monthly income available in other jobs so your income will be inconsistent. And you get paid based on how many people you have added.
- exploiting relations - You will force your relative to join in this field. Thus your relationship is likely to be affected.
So guys please beware. There are many problems and many frauds in this business and many issues in network marketing. If you like to join this business please analyze the terms and conditions and privacy policy and history of the company which you join. Think many times if you think correct then you should go.
0 Comments