Busting Direct Selling Myths: Illegal Pyramid Schemes VS Legitimate Direct Selling

THE GLOBALDirect Selling

Industry

“Direct Selling is the marketing of products and services directly to consumers in a face to face manner, away from retail locations”- World Federation of

Direct Selling Association

(WFDSA)

Exclusively available from

- WFDSA represents 61 countries and more than 91 million independent direct selling distributors

- The global direct selling industry totals approximately USD 153 billion in annual retail sales (DSA, 2012)

International Direct Selling Statistics


Global Direct Retail Sales 1998-2011

In Billions of U.S. Dollars


Source: WFDSA

Global Salesforce Size 1998-2011

In Millions of People

Source: WFDSA


“ …..Your industry gives people a chance to make the most of their own lives. And to me, that’s the heart of the American dream…..”

Reference: http://www.youtube.com/watch?v=SvSv0Ic8se4


http://www.youtube.com/watch?v=SvSv0Ic8se4

- Network Marketing (NM) is an important component of Direct Selling, where the company and its products are marketed directly through word of mouth

What is Network Marketing?


“Network marketing is a legitimate business. First, it's based on providing people with real, legitimate products they need and want at a fair price. While some people do make a lot of money through network

marketing, their financial benefit is always the result of their own dedicated efforts in building an organization that sells real products and

services.”

- Entrepreneur Magazine

Read more: http://www.entrepreneur.com/article/35744#ixzz2POeXqqWO

What is a typical network?


- Downlines are encouraged to build a network of distributors and have equal opportunity as their Uplines. Hence, not everyone at the top necessarily makes the most money.

- Marketing system where one can start at the bottom and rise to the top to become a top achiever by building his/her own business.

- Promotion & financial growth usually comes from encouraging downlines to achieve the same. This is in stark contrast to the corporate world, where a promotion usually threatens the higher positions within the company.

“Network marketing has proven itself to be a viable and rewarding source of income. There have been some remarkable examples of success, earned through diligence, enthusiasm and the right product combined with timing. As with so many issues, there are tangibles and intangibles involved, but success is not a total mystery, and that applies to network marketing as well”

- Donald Trump Leading American

Entrepreneur

Ref: http://www.professionalnetworkers.com/pdflibrary/WhyNetworkMarketing.pdf


Prof.Mohd.Yunus –Father of Microfinance & Nobel Peace Prize Winner 2006 opened his keynote address at the World DSA Congress in Singapore in 2008 with these memorable words…

“ ….. I was not sure how we are related to each other and this morning sitting with leaders of the industry I was amazed how much overlap we have in our work and even the way we work is so similar. But we got involved in it in a different way but since (our) objective was in the same direction we somehow came very close to each other. And that way it would sound familiar to you what I am going to talk about today …..”


Benefits to Direct Sales Professionals

− Can choose when, where and how much one wants to work

− Earnings and profits in proportion to efforts

− Option to use direct sales as a full time business or as a supplementary income source


Benefits to Direct Sales Professionals

− No barriers of age, education, experience, etc.

− Good way to meet people and socialize

− Access to innovative products not found in retail outlets

− Convenience and service provided (Demo, delivery, etc)


Direct Selling - an alternative source of income during the economic crisis.


− Companies are downsizing and laying off staff

− To start a traditional business requires substantial capital investment.

− People choose to purchase necessities and consumable goods from their business partners, colleagues, family and friends.

Misconceptions about Direct Selling− 99.9% of people lose money.

− Most NM companies are pyramid schemes.

− Recruiting is the key to success in NM.

− NM companies are unregulated.

− Requires inventory purchase. Drop-outs are stuck with what they have purchased.

− Everyone in NM wants an easy way to make money.

−


“Network marketing is the big wave of the future. It's taking the place of franchising, which now requires too much capital for the average person”

- Jim Rohn(millionaire mentor of Anthony Robbins)

Picture ref: http://www.ronhenley.com/


http://www.ronhenley.com/

Legitimate NM is not a ‘get rich quick’ scheme

Right from the beginning most NM companies will promise you results and financial freedom only if you work hard, think smart & put in the due efforts to succeed. Any company that promises you an easy way to get rich quickly (especially through membership building) is probably a scam.


Network Marketing vs. Pyramid Schemes – Contd.

Legitimate NM companies provide business tools

A regular NM company will help distributors keep track of purchases, commission earnings & product delivery status while offering full customer support. They also equip distributors with regular product bulletins, marketing collateral and promotional offers to help boost business and income.



Legitimate NM companies have a solid training system

Regular NM companies place a great deal of emphasis on training and boast a large number of qualified trainers with knowledge & experience to help you understand the business and products better, and have the ability to mentor and steer you in the direction of success.



Legitimate NM companies have proper policies, procedures and ethical marketing codes

You can tell a legitimate NM company from a pyramid scheme based on the fact that their business policies and procedures are clearly stated, binding every network marketer to strict regulations and agreements. Any serious breach of company code, policies, and procedures will result in action taken against the involved. Most NM companies believe in achieving strong long-term growth and stability by creating a culture of ethical marketing.



Legitimate Network Marketing Companies deliver quality products or services.

Unlike Pyramid Schemes, where you get no legitimate products/services for initial investment, NM companies spend millions on research & development to create or develop exclusive, innovative & high quality products to meet the lifestyle needs of people across the globe



NM Distributors earn commissions by selling the company’s products & services.

Network Marketers are rewarded mainly for selling products. In a pyramid scheme, there is no financial return unless you have successfully recruited others into the company.






NM companies have restrictions in their compensation plans

Most NM companies apply fair and reasonable Compensation Plan restrictions in their Distributor’s earnings to create equal income opportunities for all. Contrastingly, in a typical pyramid scheme, those who came in first make all the money while new members lag hopelessly behind because they were recruited much later.



NM companies don’t encourage product overloading

Legitimate NM companies allow distributors proper methods of dealing with inventory & do not encourage product overloading. This allows focus on proper networking and not any distributor having to sell excessive products or worry about overloaded inventory.

Direct Selling & The World Economy

1. Socioeconomic Impact Study in USA by WFDSA

− The industry’s contributions to jobs, income, investment and research increased tax collection for government

− Taxes generated $716 million ($488 million direct, $228 million indirect)

2. Socioeconomic Impact Study in South Africa by WFDSA

− The industry’s contributions to jobs, income, investment and research increased tax collection for government

− In 2007, taxes generated R 588 million (direct & indirect)


“Many network marketing companies are really business schools that teach values not found in traditional business schools. Values such as the best way to become rich is to teach yourself and other people to become business owners, rather than to teach them to be a loyal employee working for the rich”

- Robert Kiyosaki(Author of Rich Dad Poor Dad, the #1 best-selling

personal finance book of all time)


− Entrepreneur Magazine

− Network Marketing Business School

− Business School for People Who Like Helping People (Robert Kiyosaki)

− Why do you want to be Rich?(Donald Trump & Robert Kiyosaki)

− World Federation of Direct Selling Association

References

