I believe in some basic concepts behind Network Marketing:
1. The opportunity to own and operate your own business with very little start up costs.
2. The opportunity to help others start their own business.
3. The opportunity to build a business in your spare time outside of your regular job or traditional business.
Sadly, I don’t see many MLM companies on the market today that believe in the same basic concepts. Companies and systems within companies may pay the concepts lip service, but for the most part the individual associate is left to the vultures.
Here are some of the major problems associated with MLM/Network Marketing today:
1. Expensive Products
2. Expensive Training, (books, tapes, meetings), with questionable results at best.
3. Questionable Leadership, (leaders based on attaining a level - when the level could be attained without any leadership skills)
4. Confusing compensation plans
One of my goals is to make a positive change in the MLM/Network Marketing industry. I believe people are tired of being mislead and they are tired of empty promises of riches through MLM.
Jeff on December 8th, 2005 at 3:14 pm
I like your objectivity to network marketing to which I am relatively new participant. I have just a couple of thoughts on your post.
1. The products are too expensive.
Companies that manufacture and sell products the tradional way (i.e. manufacturer/distributor/retailer) all have so much overhead and manufacturing costs to cover at every level that it forces them to find the cheapest direct materials available so they can sell a product like a package of vitamins at a target price of say $8.99 so that price sensitive consumers will pay for them. So companies like USANA create excellent vitamins that they are able to sell through network marketing at a premium because they are able to get the very best ingrediants on the market. (I’m am not in any way affiliated with USANA - I’m just using it as an example).
Granted, networking markting companies still have to pay out commissions which will inflate the prices of their products so I guess there is a tradeoff.
Ty on December 8th, 2005 at 10:10 pm
I have never tried USANA products, but I would guess that they may not be that much different than GNC in quality, but aren’t they double the price?
Jeff on December 9th, 2005 at 11:44 am
I’m really not sure what the price of USANA Essentials is, but I believe it’s about $40 for a one month supply. My brother swears by the vitamins and while taking them he says that he never got sick once in a 3 year period and then decided to stop buying them because they were exepensive. He then started buying some cheap box store type vitamins and got sick twice in a 6 week period. So, he went back on the USANA product and has been on it since and has never been sick and says he feels great.
Are you involved with any network marketing companies?
Ty on December 9th, 2005 at 4:02 pm
Jeff,
I am involved with Oasis LifeSciences. (www.whatsetsusapart.com) As a matter of fact, I just toured the U.S. headquarters.
Good luck with your business!
Ty
Willaim Wang on February 12th, 2006 at 4:31 pm
The perception that network marketing products are more expensive is wrong and misleading.
I am a financial analyst by profession, I downloaded the annual reports (income statements) of USANA and another major nutritional supplement company in Australia which use traditional distribution channels, and then compared the cost structure of the two companies.
If you consider the retail markup (on average 30% for those using traditional channels) by the Australia company as marketing cost, the cost structure of the two companies are actually very very similar, the cost/price ratios are both close to 25%, i.e. if a consumer pays $1, it takes the Aussie company about 25 cents to produce the product, and it is the same for Usana, just that if consumer pays $4 to buy the Usana product, Usana has actually spent $1 to make it. The implication is that at the end-useser (final customer)level, even though the Usana product is more expensive in absolute terms, it is not more expensive in relative terms. This is why the Usana product is of better quality.
But if you take consideration that Usana’s marketing expenses is actually paid to its associates (consumers as well), then people can actually benefit a lot more, i.e. by becoming an Usana associate, people has the chance to be paid the marketing cost and therefore reduce the cost of using Usana product by a great amount (and maybe even earn some/a lot money depending how serious he is to promote the product).
Happy to share with you my analysis, if interested.
destiny on April 5th, 2006 at 9:02 am
Hey William,
Thanks for the insight! Just wondering if you could tell me the name of that company in Australia?
Agung Sedayu on April 20th, 2008 at 9:26 pm
Hello all, just asking here, i would like to know where should i find australian network mlm forum??? thanks all god bless you