Pyramid or MLM?

When sharing the Young Living business we get asked a lot if this is a pyramid scheme. Well I’m going to try and explain the difference here. 

People, who do not know the difference between network marketing and pyramid schemes, mistakenly believe the two are one and the same, due to lots of bad publicity that MLM and network marketing critics have generated and cultivated throughout the years. Although superficially the two resemble each other, a closer inspection and a little digging under the surface, will quickly show which enterprises are legitimate, and which are scams. 

This was one of the first things I researched once I learned of the MLM oils companies. I was learning about how the business opportunity worked and how I would get paid. At first it did look a little like a pyramid but then if you look at any other retail companies they are structured like that as well. They just may not have as many distributors. The telltale sign for me was that you actually get some awesome products for the starter kit that you can either just use for personal use or you can use to start sharing oils with everyone. 

It’s important to remember – especially for those just starting in the network  marketing business – that your beginning sales will likely be to your “warm market’ which consists of friends, family and people in your inner circle. If you’re like me, I was so excited about these oils, that actually worked, that I wanted to share with everyone I knew. But before putting one’s credibility on the line, it is important to be sure what is being sold is a legitimate product, and safeguards are in place for both buyers and sellers. Especially for beginners in the business, making sure the company being represented is a legitimate one is important. 

Like I said before, I did a lot of research on all the different oils companies and particularly the MLM’s. I had tried a couple of oils before I invested my $160 for my starter kit. This product is amazing and it works. Plus, it’s half off the retail value and it gives you an opportunity to turn it into a business if you so choose.

The following are areas you should look at when looking into a company to see if it is legitimate:

  • Initial Investment: Most companies require some start-up fees, or investments in the form of demonstration kits or sales kits. These are acceptable and normal fees, provided that they are not excessive, but pyramid schemes will require larger sums of money, oftentimes referred to as ‘inventory charges’. If these charges are large, and the company does not offer a buyback policy of at least 80% be careful.
  • Young Living: a Mere $160 for a starter kit where you get products to use or share is all you invest. This should be a sure sign that this company is legitimate because you get a product, it does not break the bank and its your choice if you want to turn this into a business. Plus you get wholesale pricing for life as long as you spend $50 in a calendar year to keep your membership active. This is a very low cost…you spend more money on daily household cleaning or personal care items in a year. Why not spend the $50 on pure chemical free items to use and help you stay above the wellness line.
  • Product: Is the product useful, valuable, in demand, and able to be sold reasonably easy? Before becoming a distributor for any company, it is important to understand what the product is, and if there is a market for it. What guarantees and customer service programs does the company offer? Is the product competitively priced? Does the company offer refunds? If the answer to these questions is no, then the company does not respect its customers, and probably does not respect its employees. 
  • Young Living: The products are amazing and they can replace all of your household cleaning, personal care and supplements products and many more. They are very valuable because of all the benefits they give to us. The products sell themselves. As a Young Living distributor I just educate people on what oils are and how to use them and they sell themselves. Young Living has the best customer service that I have come across. They are always willing to help you and make things right if something is wrong. They offer a money back guarantee if you are not satisfied with their products as well as returns or exchanges. The products are competitively priced with other MLM oils companies. Young Living for sure respects its customers, distributors and employees.
  • Inventory Requirement: If the company requires large, up-front purchasing of goods, it is like a pyramid scheme. ‘Inventory loading’ is when distributors buy their own goods to quality for the commissions by ‘selling’ the goods to themselves.
  • Young Living: This is non-applicable. The only thing you purchase is the Premium starter kit that comes with 11 oils, a diffuser and a few samples of other products and a lot of literature.
  • Training: Does the company offer quality training for its distributors, and are the trainings different for novices, intermediate sellers, and veterans? Do they provide training materials? If you have to purchase them, are they reasonably priced.
  • Young Living: This company offers a lot of training. They have a lot of free online training as well as books you may purchase if you so choose. Your upline is always offering training for free…at least in my upline they do. We have an amazing Diamond leader who is so generous and has training every single week.
  • Focus: What is the focus of the company – recruiting or selling? If recruiting is the company’s major goal, beware. Pyramid schemes are based on getting lots of people to sign up and pay their money, legitimate MLM is based on sales of products or services. Many Pyramid schemes use products and services to give the appearance of legitimacy, but really are just built around recruiting. Also, look at the pay scale. If the company offers commissions for recruits, or offers more money for recruiting than from sales, it is likely a pyramid.
  • Young Living: The focus of this company is selling oils and products to individuals to help them. This is a very caring company who loves and wants the best for everyone. This company does not pay for recruits. It pays commissions on products sold. 
  • Sales: What constitutes a sale? Beware if personal use items are considered a sale. Retail sales are defined by selling to customers, not to one’s self. Also, are distributors required to actively participate in the company through the care, cultivation, and management of their networks? Companies that highlight real participation in selling, and in bettering the company and individual networks are more often legitimate.
  • Young Living: This company is a direct ship company. You educate a person on the oils and they go directly to the Young Living website, sign up and purchase their own products. We as distributors just spread the word and knowledge of these products…not necessarily sell the products. Although we can purchase products at wholesale and resell unopened items at retail if we so choose. But by no means can you repackage a product and sell it. You cannot open an oil, mix it with anything or make a DIY and sell it. That is prohibited.
  • Earnings Representations and Expectations: Does the company over-hype income potential? Does it make outrageous claims as to the success of its distributors? All income should be verifiable, and legitimate companies should have documentation, statistics, and an easily demonstrable tract record of how much distributors of all levels, have earned and should be able to earn. The numbers shown should be sourced, and have a historical basis. The company should freely offer average sales figures and average earnings. 
  • Young Living: We has a public income disclosure. They are not hiding anything…they do not over hype how much you WILL make if you join YL.  They show lowest, highest, median and average incomes for all the possible levels you can reach in this company. 
These statements are updated frequently but this is the latest picture of one that I have.

As the General Counsel for the Unites States Federal Trade Commission, Debra A. Valentine, gave a speech in Washington, D.C. to the International Monetary Fund entitled, “Pyramid Schemes” in which she explained, among other things, what a pyramid scheme is. She stated:

Some people confuse pyramid and Ponzi schemes with legitimate multilevel marketing, multi-level marketing programs are know as MLM’s, and unlike Pyramid or Ponzi schemes, MLM’s have a real product to sell. More importantly, MLM’s actually sell their product to members of the general public, without requiring the consumers to pay anything extra or to Join the MLM system. MLM’s may pay commissions to a long string of distributors, but these commissions are paid for real retail sales, not for new recruits.

If you are being recruited into a network marketing business, keep your eyes open, and ask for and read as much literature about the company as possible. If the company seems to be hesitant to give you hard facts and does not seem to conduct itself in a professional manner, or if it makes outrageous claims about how much money can be earned, chances are that it is not a legitimate company. Do not be fooled by big names either. Just because a big company may be recruiting you, does not mean they are above poor business practices.

Recruiters should answer all questions, and make sure all prospects understand all the rules, and what is required of them if they choose to participate. Successful network marketing and MLM can make members feel like they belong to a big family, and they are being supported throughout the journey to success, self-employment, and happiness. However, joining a pyramid scheme, having money stolen and being used is a bad experience, but one that happens all too often by unscrupulous companies looking to make a quick dollar, rather than run a legitimate business. Being informed and prepared is the best way to make sure you know what to look for, and lessen the chance of having a bad experience.”

Many MLM/Network Marketing Companies have joined the Direct Selling Association (DSA). This association has existed over 100 years and their mission is to set a high standards of ethics, promote good business practices, consumer service and the industry itself. Young Living is a member of the DSA.  Young Living is in deed a member of this association. They are also part of the Better Business Bureau (BBB).

Many people look down their noses at MLM’s and network marketing and feel that all companies who practice this sales model are out to turn a quick profit, and nothing more. While a lot of people see that ‘pyramid’ structure of the model, and automatically see it as a pyramid scheme, it is simply not true. In fact, most franchises and retail enterprises practice a similar model, with sales people, getting commissions, sales managers getting a percentage, regional managers, vice presidents, and so forth all getting a percentage of sales. 

Detractors also point to the fact that there are upfront charges made to people wishing to participate. But wait! Do other franchises like Starbucks, McDonalds, Subway, and others not charge a fee to get started also?

With network marketing, these fees are a mere fracture of what fast food restaurants, coffee chains, gyms, and other brick and mortar franchises charge.

MLM businesses can be thought of as mini-franchises, and looking at the broad strokes, are often set up to run in a similar manner as large franchises, but with greater freedom.

But another nice aspect of Young Living is you can stay a retail customer if you would like and NOT join the membership to purchase at wholesale prices. 

I would encourage all of you to do your own research of the oils companies. Come to your own conclusion as to which one you would want to do business with. What I would encourage you to do it always research the quality of the oils they sell. Can they guarantee they are the Purest, NEVER have any pesticides or GMO’s or Herbicides used on the plants or the soil where the plants grow. The Seed to Seal Guarantee with Young Living does prove this over and over again. That is why I chose Young Living! 

If you have any questions comment below OR if you know you’re ready to jump on this oily wagon and help your health and your families health click HERE.

Here are a couple of websites to show you more about Seed to Seal.

https://www.youngliving.com/en_US/discover/seed-to-seal

http://www.seedtoseal.com/en

Sources:

  • Jonathan Street. “ The Secrets to Succeeding in Network Marketing Offline and Online…How to Achieve Financial Success Selling Network Marketing Products and Services”
Categories Recipes

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