Is Network Marketing A Big Fat Scam?

Is Network Marketing A Scam?

Are you looking for a business opportunity and considering going into network marketing? But then, you have this burning question of whether network marketing is a legit business or straight-out scam. 

Well, I applaud you for doing proper due diligence because the truth is that there are lots of scammers out there and you want to be a victim. 

Let me just tell you right off the bat,  Network Marketing is not a scam. Network marketing is a business model, an umbrella term that refers to a certain type of business. Just like we have other business models like:

• Affiliate marketing
• Retail business
• Manufacturing
• Ecommerce
• Franchise
• Etc.

However, it is important to note that within network marketing as in any other business models there can be scams. Just like the world is full of humans, some are good while others are bad. We cannot generalize and say all humans are bad. Similarly, it won’t be fair to say network marketing is a scam.

Now that we have clarified this issue lets have a closer look at network marketing as well as examine the differences between this business model and other related models. Just to clear any confusion that may exist.

What is Network Marketing?

Network marketing is a business model where product manufacturers sell their products through distributors directly to consumers. The distributor is not necessarily an employee of the product owner.

The whole idea of using distributors is to save on the costs of hiring the sales force which will have to be paid monthly salaries regardless of how much sales they brought in. 

By using independent distributors, the product owner saves money and is able to reward his distributors by paying them commissions only on the products they sold. 

What Is The Difference Between Network Marketing & Multilevel Marketing (MLM)?

Network Marketing and Multilevel Marketing are often used interchangeably because they basically follow the same model. Some people say MLM is “Network Marketing on steroids”.

With MLM, product distributors are encouraged to recruit other people in order to expand the commission earning sales force. 

So, as a  distributor, you will earn commissions from the sales you make from your own product inventory as well as the percentage of the commissions from the sales made by all the distributors you have recruited. 

These people are called your “Downline”. They also recruit their own downline and you earn % commissions from that level too and so on depending on the structure of the company. 

Is Network Marketing Legal?

Network marketing / MLM business is a legally recognized business model. Some people have made lots of money from MLM business.  Others have made very little or no money at all with this business. There are widespread claims that only 5% or less of individuals in a legitimate MLM make money while 95% or more make close to nothing or nothing at all. 

Multilevel Marketing Vs. Pyramid Scheme

Whereas MLM business is legal, pyramid schemes, on the other hand, are illegal entities. Pyramid schemes are scams. Most of the time it may be difficult for people who join pyramid schemes to know that they are involved in a scam.

This is because the owners devise ways to hide behind legal business models like MLM. 

Joining a pyramid scheme can cost you and your “downline” usually your family and friends. You will lose money and destroy your relationships. 

Pyramid scheme promoters will often tell you that if you sell their products you will make insane amounts of money, your life will change and you can even fire your boss.

They will even flaunt their own extravagant lifestyles and tell you that’you too can achieve all that. That’s a blatant lie. it is their way of luring you in to make money off you and everyone you recruit. 

In the pyramid scheme, recruiting others is paramount. Your earning potential is tied to the number of people you can bring in and less on the number of sales.

Usually, their products are inferior and you will be forced to invest in more products at regular intervals even if you still have inventory. 

That’s often the case due to the poor quality of products peddled by pyramid schemes. You and your downline will be stuck with substandard products that keep piling up because people won’t buy them. 

Before you can be eligible to receive payments and bonuses, you must first buy products. In addition to that, you will have to pay regular expensive fees for additional training, promotional materials, etc. 

You will be promised rewards if you work harder: expensive cars, exotic holidays, designer jewelry and other expensive enticements. These are usually hard to attain if you don’t meet sales requirements.

Only a few people will qualify. They are used as “examples” you must break your bank and back to emulate. 

 That’s how you lose all your money. Constantly trying to meet the requirements,, you keep buying and recruiting. You run out of money and go into debt until you cannot borrow anymore. You are left with no choice but to quit.

How Can You Spot Pyramid Schemes?

Watch this short video, learn how to spot pyramid schemes and stay fay away from them.

What now?

Multilevel Marketing Vs Affiliate Marketing (Which One To Go With?)

What is Affiliate Marketing?

Now that you have an idea of what multilevel marketing is all about, let take a look at Affiliate Marketing. This is my most preferred business model and I highly recommend that you follow this path if you want to make money from home.

Affiliate Marketing is another business model where you can make money by promoting other people’s products. Usually, affiliate marketing is done online.

You sign up free with an affiliate network like ClickBank, JVzoo, Amazon Associates, Share-a-sale, etc. to be given permission to promote products of your choice from their vast product marketplace. 

You get approved and given unique links (with your unique ID) that will trace back the sale to you. When people buy rough your links you are paid a commission. Commission percentages vary from network to network but will be somewhere in the ranges of 2-75%. 

There are different ways you can promote products and each network has its own set of rules on permitted and prohibited promotion strategies. 

You can promote through paid traffic methods or free traffic methods. It is up to you and how much you are able to invest.

Please note that using free traffic methods does not mean you will through your links anywhere as you please. You can do that on your website/blog and rely on free traffic from your own SEO ( Search Engine Optimization) efforts. 

 Unlike in MLM, with affiliate marketing, you don’t have to bulk buy products and sell them directly to the consumers. You actually don’t have to carry any inventory at all! That’s the beauty of Affiliate Marketing. 

For more information on Affiliate marketing read this article

If you would like to learn how to do affiliate marketing with a website I recommend you enroll with this any of these  2 Affiliate Marketing Training platforms.

In my opinion, they are the best in teaching you both free and paid promotion methods. You just choose 1 that you like.

1. Wealthy Affiliate – Read this Review to find out more on this platform.

If you don’t have time for that simply

Create Your Free Account here and try out without paying.

2. Project 24 by Income School – This one has no free trial but I can tell you they are very good. 

Check out their review here

Wait…

What if affiliate marketing is a scam?

Nope, not a scam. But there will be scammers who hide behind  Affiliate Marketing. Just as there are scammers who hide behind Network Marketing and any other business model.

Thanks for reading. I hope you got answers to all your questions. I wish you all the best in your quest to start your own business. 

Be careful out there.

As a way to say thank you for reading, please accept my gift…

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Hoping to see you real soon!