At least you seem a reasonable person. Maybe you can tell me how MLM can work. To me it seems inefficient and a waste of resources. I don't see why anyone should pay Rm2K to someone to start a business when they can use the 2K as working capital. Even if they pay nothing, what is the advantage of MLM over sole proprietorship?

Lots of people in the "garage sale" section have stuff that cost less than 2K, and they're not selling pisang goreng or keropok lekor of course, the more money you have the easier it gets   I've never said that the MLM system was bad or anything, it's just that I can't see why it's better than sole prop

Note: For the purpose of all my replies in this section, I am assuming that MLM refers to what most of you would consider to be direct selling companies ala Cosway, AMWAY, Herbalife etc.


Dear wodenus,

     Good to hear from you again old friend! How are you doing lately? It's nice that we've met up again on this thread. Okay, apparently there's been a number of responses already after mine, but I'll answer the non-overlapping ones first:
1. Inefficient and waste of resources: Probably yes for some people, but not a yes for most. The idea of the original concept of MLM was to help support individuals that wanted to earn money but didn't have a clue. So based on your example, the 2k is pretty much an "education fee", to put it bluntly. Problem is, while the system is purportedly "perfect", the teachers are far from it. The level of teaching varies greatly based on how well your mentor picked up his/her lessons in the first place. So therein lies the problem of MLM quality. If strictly arguing about the teachers alone, they can very strongly influence whether you have a good time with MLM or not.

2. 2k as working capital: I can only assume that when you refer to 2k as paying someone, it means that the money is completely gone? Usually the money that is involved often gets you something, a base product that is given out to you either for self use or for sale to others. By right, the money should be seen as paying for the right to use the system the way it is intended for. Even if you were to start your own business, you'd still need to buy the raw materials or ingredients etc.

Some businesses do require the mammoth structure and leverage of size/sequencing that large MLMs offer. Imagine trying to start a business selling perfumes right off the block with just a RM$2k set up? Not impossible, but tough, especially when you don't already have a brand name to build on.
3. Advantage of MLM vs. sole proprietorship: The most obvious one would be: Accountability. As in partial loss to total loss. In sole proprietorship, in the event of a dispute or lawsuit, you stand to lose everything owed to the third party all the way up to the house and car (and even pet cat too j/k). For most MLMs that are done up properly, they have a proper legal structure that protects them from such lawsuits. Even if one were to get through to them, you as the 3rd party vendor would be shielded under the coverage of the associative protection laws granted by the MLM itself. Only relevant if you were actually selling their products and not trying to mix it up with your own of course... in which case you might expect a lawsuit from the MLM itself!
Hope that answers your questions for the meantime. Time to address Zaypher's comment!

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Added on August 22, 2009, 6:00 pm

Wow Zaypher!

             That's quite a long reply! Haha... finally I have found my match. Okay... let's see:

1. Problem with salesmen: The major problem is having to put up with their BS. EVERYONE is right about this. A lot of overenthusiastic youngsters and tai-tais forget the MAIN focus of a REAL MLM. That is to build a proper working business structure streamlined such that everyone gets to benefit (whether from someone else's effort or not is debatable).

      A lot of people forget the main focus of the MLM and end up focusing on the fluff, money and worse... recruitment. I keep telling people time and again, the main core of the business should literally be about the business. About selling so damned good, that even you would want to buy, consume or wear it yourself. Something that is almost so good that it'll sell itself, and your only role in this big picture is just to share with your friends and family what is so good about it.

A lot of amateurs overdo this part, which is really very sad, in my opinion. They should sell their products to people who genuinely need it or can improve their lives as a result of it. Unfortunately, due to aggressive market tactics these days, the "feel good" way of marketing has been replaced with hard sell methods which you have so aptly described.
2. Your 2k explanation: Sorry to say Zaypher, but that is a very, very dangerous way to describe MLMs. In fact, that kind of explanation causes the misunderstanding that results in people hating MLM in the first place. Again, as I have stressed in another thread vs. ChatWarrior once before he got shut down was that MLMs are not = pyramid schemes. Having said that, pyramid schemes work fundamentally on the basis of rapid recruitment. So much so that once the engine slows down, the whole thing comes crashing down.

The major difference between RECRUITMENT SCAMS and MLMs are the products. So, the lesson here is:

If the company does not have a genuinely trustworthy and reliable range of products that even you (as the average consumer) believe in, then don't buy into it!!



3. 2k business: You can obtain a partial license for Ramli burgers. I have an interesting revelation for you guys later on about this if you choose to follow up on it. Bet you guys are going to go