It is now 2016, and as usual, positive thinkers are already out hating my blog posts already.
First reader comment of 2016 starts with:
The fact that he somehow thinks that "MLM Cult" refers to his chosen profession is rather amusing, isn't it?
But really, let's throw around some REAL numbers, compiled by Direct Selling Association (DSA.org) and the World Federation of DSA (sort of global DSA), the industry lobby group. It's too early for 2015 numbers, but here's the 2014 factsheet, as published by DSA (US).
The key figures... 34.47 billion USD in 2014 US Retail Sales... by 18.2 million people "involved".
That's less than $1900 sold per "involved" person PER YEAR. ($1894 if you want to be exact)
And since people are joining faster than actual retail growth sales (8.3% vs. 5.5%), average retail per person per year is GOING DOWN. This is despite the PR spin, i.e. "more individuals generated more revenue in 2014 than any year previously".
And remember, that's retail sales, NOT PROFIT. Actual profit will be FAR LESS. Even if you estimate a margin of 20% AFTER expenses, that is $379 per year.
It is difficult to estimate profit in MLM, since a participant earns two ways: actual retail profit, and commissions from downline sales (which goes by variety of names: override, bonus, commission, incentive, etc.) And there are various ways to manipulate the system, such as buying just enough products to remain "qualified" to earn the commission (and make NO retail profit) assuming one has sufficient number of downlines to make the commission worthwhile despite lack of retail profit and real expenses of the merchandise.
(And obviously this assumes a legitimate MLM, not a product-based pyramid scheme)
I'm not going to get into a debate on what constitutes "active", as there is no industry wide definition of "active" vs. "inactive". Individual companies have their own definitions, usually based on amount of purchases per month. However Amway's definition, which also includes any registered presentation and/or attended a company event as being active, seem to be fairer than most. Still, keep that thought in mind as participant's numbers may be exaggerated somewhat due to "inactive" participants and drive down the average. However, can you really dismiss all the "inactive" participants as being lazy... or did they quit because they can't afford to keep up? What do they know that you don't?
A few relatively honest MLM companies do publish commission reports... Just not for 2014, but you can get some ideas:
Amway
Approximately 53% of IBOs in the US were considered "active". The average monthly gross income for "active" IBOs was USD $183 (in the US). 2013
This suggests that actual gross monthly income for all IBOs would be under 100 per month, or 1163 a year. However, I have to actually dig to find what's the caveat for this... turns out this does include retail, as this was the disclaimer at the bottom of such:
Herbalife
Herbalife's income disclosure 2013 stated that 88% of Distributors received no payments from Herbalife during 2012 (source here) i.e. no commission. Yet in 2014 Herbalife's annual report stated that they paid out over 1.47 BILLION dollars in commission that year... to 456000 "sales leaders".
Assuming the sales leaders are the 12% that did get paid by Herbalife... and numbers didn't change by a MAJOR amount from 2012 to 2014... (it's an estimate, okay?) that comes out to... 3.8 million Herbalife members. Divide 1.47 billion by 3.8 million and you get... average commission of $387 per year.
Add that to estimated average retail profit and you get $766 per year... average yearly profit (both retail and commission). Let's say they grew a bit. Let's call it $825 by 2014. Probably overestimated, but then...
So in conclusion...
According to MLM's own numbers (both DSA and major companies like Amway and Herbalife)... your ANNUAL income will be about 900 or so. That's obviously with a lot of estimates and average and so on, as I have no idea how are your expenses or how many hours you may work.
But if you are just starting, you are starting BELOW average. In fact, it'll probably take you a few years to go above average.
And this profit margin is UNLIKELY to change much... ever.
If you are trying to decide whether to make MLM a career... choose carefully, not based on some rah-rah cheerleading by your fellow MLMers, but study the facts, the actual numbers, and get at the truth yourself, rather than having distorted facts spoonfed to you to distort your thinking.
No doubt some "positive thinkers" consider this plea for sanity "negativity" to be avoided...
But consider this: I don't give a **** whether you join them or not. If you get something useful out of this blog, good for you.
But they do care whether you join them.
Choose wisely.
First reader comment of 2016 starts with:
You loser ...obviously couldn't make it in any MLM's - most likely your attitude and shallow thinking.Hahahahaha. This is the sort of typical potty mouth positive thinker type comment, though in this instance he was reacting to my comparison of "MLM Cult vs. ISIS".
The fact that he somehow thinks that "MLM Cult" refers to his chosen profession is rather amusing, isn't it?
But really, let's throw around some REAL numbers, compiled by Direct Selling Association (DSA.org) and the World Federation of DSA (sort of global DSA), the industry lobby group. It's too early for 2015 numbers, but here's the 2014 factsheet, as published by DSA (US).
 |
| DSA factsheet 2014, http://www.dsa.org/docs/default-source/research/research2014factsheet.pdf |
The key figures... 34.47 billion USD in 2014 US Retail Sales... by 18.2 million people "involved".
That's less than $1900 sold per "involved" person PER YEAR. ($1894 if you want to be exact)
And since people are joining faster than actual retail growth sales (8.3% vs. 5.5%), average retail per person per year is GOING DOWN. This is despite the PR spin, i.e. "more individuals generated more revenue in 2014 than any year previously".
And remember, that's retail sales, NOT PROFIT. Actual profit will be FAR LESS. Even if you estimate a margin of 20% AFTER expenses, that is $379 per year.
It is difficult to estimate profit in MLM, since a participant earns two ways: actual retail profit, and commissions from downline sales (which goes by variety of names: override, bonus, commission, incentive, etc.) And there are various ways to manipulate the system, such as buying just enough products to remain "qualified" to earn the commission (and make NO retail profit) assuming one has sufficient number of downlines to make the commission worthwhile despite lack of retail profit and real expenses of the merchandise.
(And obviously this assumes a legitimate MLM, not a product-based pyramid scheme)
I'm not going to get into a debate on what constitutes "active", as there is no industry wide definition of "active" vs. "inactive". Individual companies have their own definitions, usually based on amount of purchases per month. However Amway's definition, which also includes any registered presentation and/or attended a company event as being active, seem to be fairer than most. Still, keep that thought in mind as participant's numbers may be exaggerated somewhat due to "inactive" participants and drive down the average. However, can you really dismiss all the "inactive" participants as being lazy... or did they quit because they can't afford to keep up? What do they know that you don't?
A few relatively honest MLM companies do publish commission reports... Just not for 2014, but you can get some ideas:
Amway
Approximately 53% of IBOs in the US were considered "active". The average monthly gross income for "active" IBOs was USD $183 (in the US). 2013
 |
| source: Achieve Magazine, published by Amway, August 2014 issue, from AchieveMagazine website |
This suggests that actual gross monthly income for all IBOs would be under 100 per month, or 1163 a year. However, I have to actually dig to find what's the caveat for this... turns out this does include retail, as this was the disclaimer at the bottom of such:
"Gross Income:" means the amount received from retail sales, minus the cost of goods sold, plus monthly bonuses and cash incentives. It excludes all annual bonuses and cash incentives, and all non-cash awards.So bottomline: Amway average income is approx. $1163 a year, TOTAL, and that's assuming the IBO is active EVERY MONTH (probably not). At this level, there's probably no annual bonus or such. People who achieve such bonuses are in tiny numbers. The actual profit number is likely lower, under $1000, probably 9 months out of 12, or just under $900.
Herbalife
Herbalife's income disclosure 2013 stated that 88% of Distributors received no payments from Herbalife during 2012 (source here) i.e. no commission. Yet in 2014 Herbalife's annual report stated that they paid out over 1.47 BILLION dollars in commission that year... to 456000 "sales leaders".
Assuming the sales leaders are the 12% that did get paid by Herbalife... and numbers didn't change by a MAJOR amount from 2012 to 2014... (it's an estimate, okay?) that comes out to... 3.8 million Herbalife members. Divide 1.47 billion by 3.8 million and you get... average commission of $387 per year.
Add that to estimated average retail profit and you get $766 per year... average yearly profit (both retail and commission). Let's say they grew a bit. Let's call it $825 by 2014. Probably overestimated, but then...
So in conclusion...
According to MLM's own numbers (both DSA and major companies like Amway and Herbalife)... your ANNUAL income will be about 900 or so. That's obviously with a lot of estimates and average and so on, as I have no idea how are your expenses or how many hours you may work.
But if you are just starting, you are starting BELOW average. In fact, it'll probably take you a few years to go above average.
And this profit margin is UNLIKELY to change much... ever.
If you are trying to decide whether to make MLM a career... choose carefully, not based on some rah-rah cheerleading by your fellow MLMers, but study the facts, the actual numbers, and get at the truth yourself, rather than having distorted facts spoonfed to you to distort your thinking.
No doubt some "positive thinkers" consider this plea for sanity "negativity" to be avoided...
But consider this: I don't give a **** whether you join them or not. If you get something useful out of this blog, good for you.
But they do care whether you join them.
Choose wisely.
