MLM advocates say that there’s never been a better time to recruit sellers. | Getty Images
“There’s never been a more opportune time,” says one MLM advocate.
“If you want to keep away from working around crowds of people and you’re looking for a way to earn money from home ~~ I’ve got an excellent opportunity for you!…Avoid exposure to the Corona Virus and still provide for your family in such an amazing way.”
So begins a comment posted to a Young Living Essential Oils group page on Facebook. The post went up on March 7, with the offer of “working away from crowds” coming in response to the spread of Covid-19, which in the weeks following has become a global pandemic, causing social distancing to become the de-facto law of the land, and rightfully so. What this poster, and others like her, are presenting is an opportunity to start a business that doesn’t require any social contact at all. That business model is known as multilevel marketing, or MLM.
Young Living Essential Oils is one of many MLMs, also known as network-marketing companies. Some of these businesses sell leggings, others diet shakes, others makeup, and others essential oils. What they’re really selling, however, is the idea that you can start your own business, be your own boss, and make a lot of money doing it, all from the comfort of your home. As a startup that requires little more than your cell phone or computer and social media, it sounds like the perfect business for social distancing. However, MLMs are often compared to pyramid schemes (although MLMs vehemently reject this idea), and distributors rely on recruiting new distributors in order to earn money, making this tumultuous moment an ideal time to look for new sellers.
“There has never been a more opportune moment”
Attached to the above Facebook post was a video by veteran network-marketing consultant Eric Worre, titled “CoronaVirus [sic] what it means for Network Marketing.” As people across the globe stock up on canned food, Skype with relatives they can no longer visit, and take fitness classes on Zoom, the multilevel marketing community sees opportunity.
“People are concerned about coronavirus,” Worre says in the video, which appears to have been shot with his camera phone on the terrace of a very nice house. “People are being sent home from their workplaces. … There has never been a more opportune moment for people to work from their homes than right now … using technology, connecting consumers to valuable products, and drop-shipping those products to the consumer’s home. Never, ever has there been a better time to say to people, ‘How would you like to be able to work from home?’”
It might seem insensitive or downright opportunistic to use the Covid-19 pandemic as a way to recruit people to a business. Worre doesn’t see it that way.
“My intention was not to be opportunistic,” he told Vox. “It’s more along the lines of saying, ‘In the face of this circumstance, we have a unique benefit that other entrepreneurs don’t have, and you can help people looking for help working from home.’”
Indeed, most of the United States and Europe is getting sent home or laid off from work. Some will still be able to work from home, but for the waiters, the Uber drivers, the salespeople, a profitable way to work from home could be a lifeline — especially in the US, where these jobs don’t necessarily come with paid time off.
To those uninitiated to the MLM world, a new remote job might sound like a logical proposition. However, according to Robert FitzPatrick, president of Pyramid Scheme Alert, who has consulted on The Dream podcast and Last Week Tonight with John Oliver’s episode on multilevel marketing, using the novel coronavirus as a recruitment strategy wouldn’t be the first time MLMs have seized upon a crisis or trend to recruit new members.
“Covid-19 is the latest in a long series of scam come-ons telling people that this MLM scheme will fulfill their needs,” FitzPatrick says.
He points to other trends that MLMs have capitalized on, such as more jobs moving from steady, full-time employment to contract or “gig” work, stay-at-home moms looking for a way to make income, and college grads with student debt and few job prospects. He even points to Amway selling bomb shelters in the 1960s during the Cold War.
All this might be fine if MLM businesses were profitable, but FitzPatrick (and many others) argue this is not the case. One study found that on average, most sellers earn less than 70 cents an hour. A 2018 AARP survey of 1,000 MLM participants showed that only 25 percent of those questioned made a profit. However, a 2017 report from the Consumer Awareness Institute found that 99% of MLM participants either don’t make money at all or actually lose it. (However, it can be difficult to get comprehensive data, since the MLMs themselves are not very transparent.)
What makes these companies MLMs as opposed to traditional retail businesses is that the payment structure incentivizes people to recruit new sellers. The more sellers one has in their “downline,” the more money they stand to make.
“The only way anyone could ever make money from an MLM is not from direct selling,” FitzPatrick says. “But I could make enough money if I could recruit people below me, because I’ll make money when they purchase products, and they have to purchase products.”
Worre sees it a little differently. According to him, many of the people who don’t make money either join and then don’t really try to sell, or they just join to get discounts on the products.
“Like any business, the vast amount of people who get involved are going to be tourists and are not going to be business professionals,” he said.
For example, brand ambassadors for Stella & Dot, an MLM that carries accessories and skin care products, get discounts of between 25 and 50 percent (with a buy-in membership that costs $199), as long as they purchase some inventory throughout the year. In theory, a person could sign up without ever trying to make an outside sale or recruit distributors. Worre argues that many of the people who don’t make money from an MLM are just there to buy the products for themselves. However, there are many stories of sellers who lost money while trying to sell MLM products externally and make a business out of it.
Using the coronavirus to sell products
Beyond using Covid-19 to entice people to join MLMs as distributors, some sellers are also touting the health benefits of their products in the face of this global pandemic.
Last week, a seller for the essential oils brand doTERRA wrote on Facebook, “Just received a new batch of doTERRA On Gaurd essential oil, so I am ready for you Corona Virus, it’s so important to beef up your immune system, so what is the main benefits – Supports immune system’s natural defences, Provides antioxidant benefits, Energising and uplifting aroma [sic].”
At the same time, a Young Living Essential Oils distributor in Australia named Nat Mann also posted on Facebook, “As the world panics with Corona…sales for Thieves (Essential oil) are skyrocketing!!!…If you are travelling or you are simply concerned about your family and exposure to Corona…protect yourself and your family …support your wellness and contact me pm and I can show you how [sic].”
And it’s not just sellers for essential oil companies. Distributors for Isagenix, a wellness company that sells meal replacements, smoothies, supplements, and skin care products, have touted the need to “nourish your bodies” with protein shakes and herb products during the coronavirus pandemic. Some Herbalife sellers for are saying that their supplements can boost immune systems.
These tactics are not explicitly promoted by the companies themselves. A spokesperson for Young Living Essential Oils wrote in an email, “We are taking this situation very seriously and working closely with our members regarding proper communications specifically when it comes to our Thieves line. We do not claim and would never encourage members to claim ANY product ‘kills’ coronavirus or can prevent COVID-19. We specifically prohibit members from making these types of claims.” However, because the selling structure of these companies is so decentralized, it is hard for companies to police these assertions.
Mann, an herbal nutritionist and yoga teacher, said she posted her comment after attending a symposium where she was excited to learn that Young Living’s sales in the Asia Pacific region had tripled in February.
“This was not because people had gone out and sold more product, but rather the new customers had been reaching out to the distributors,” Mann told Vox in a Facebook message. “This is something that does happen but is not so common in the direct-selling field.” She said she believes in the antiviral properties of essential-oil ingredients such as lemon, clove, and rosemary.
According to Young Living’s website, its Thieves cleaning and sanitizing products, which contain 65% denatured alcohol, are currently sold out. DoTerra also has a sanitizing spray containing 64% alcohol. However, its essential oils do not contain alcohol, and they have not been scientifically proven to combat Covid-19 or any other virus.
So if companies like Young Living and doTerra are selling out of sanitizers, does this mean that joining an MLM could actually be profitable during the coronavirus pandemic?
“The public at large does not turn to MLM for anything,” FitzPatrick says. “On the face of it, the idea that you’d be able to sell hand sanitizer from home by yourself as one of 10,000 salespeople doesn’t make sense, but you [as the distributor] could be talked into stocking up on it.”
As the coronavirus pandemic continues to throw day-to-day life off course, threatening the already fragile economic security of many workers in the US and around the world, MLMs may seem to some like a good way to make money while cooped up at home. This temptation, unfortunately, stems from a system that has so far been unable to support its most vulnerable workers during this period of instability. And based on the research, nearly everyone who opts to join a multilevel marketing company in these uncertain times will never see a profit.
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