Why are CERTAIN Products Sold Via Multi Level Marketing? How do the makers decide? The Answer Tells you a Lot You Should Know Before you Buy Them...
A: Multi Level Marketing is just one way to sell products and it is an usual method. The majority of products including nutritional supplements are NOT sold via Multi Level Marketing (MLM).
MLM is generally considered a less reputable way to sell products, because many products sold via MLM are of low quality. It is often called "pyramid selling" because it has the same structure as a pyramid scheme. Some MLM programs sell products or services of now value at all, in which case they are literally pyramid schemes where the "product" is just a vehicle for the scam.
It is therefore worth considering what factors would cause a company to CHOOSE to market a product using MLM? Why not just sell like most high quality products are sold and distributed: on the shelf of reputable retailers. That's where most consumers buy products. Why miss out on that distribution channel, which by the way is much cheaper? The cost of distribution via retail outlets is lower than the cost of distribution via MLM, but the way.
In a nutshell, there are a few reasons a rational business would choose to market the product via MLM. Multi Level Marketing is needed by companies WHEN:
- They NEED people to pressure people they know including friends and family to buy the product. It won't just jump off the shelves in a retail store. In a MLM program, people have a financial incentive to convince people they know to buy the product, leading to aggressive "product evangelism."
- Respectable retailers WON'T put the products on the shelves, because they don't want to associate the product with their brand and reputation. For example, when Whole Foods chooses to sell a certain product on their shelves, they are essentially endorsing the product as good quality and worth buying. If consumers discover later that it's worthless, they will blame Whole Foods, which is why some products just can't get sold in stores....which makes MLM a better option.
So MLM is an expensive way to distribute products, in the sense that a large percentage of sales revenues are paid out in commissions. But if your product "doesn't sell itself," if it won't jump off the shelves at Whole Foods (or if Whole Foods won't even stock it) then MLM becomes the right option.
As a result, the type of product available via Multi Level Marketing tends to be lower quality, less reliable, and less reputable. Some may do what they claim....many don't. I hope the summary has helped you understand some of the reasons why this is.