Thread: Direct Selling VS. MLM's, is there a difference?

So, in one corner we have some Direct Sellers:

Avon
Tupperware
Virgin Vie (a new one I've seen suggested by our friend Chris Doyle)
Pampered Chef

In the other corner, we have some MLMs:

Yoli
Numis
Amega Wand
Vitamark


Now, is there a difference between these 2 slippery slopes? Is one better than the other? Does one side in fact make their money selling product rather than the opportunity? Are both legal scams that prey on the gullible? Are they both OK in your eyes?

What say YOU?

There are direct selling companies that I really like that I think offer good products. I think what makes a company a scam is not only it's business model but it's products. For instance, I think Lia Sophia is a bit scammy. People rave about their necklaces and I guess their jewelry is OK (even though it's outrageously overpriced). What makes them resemble a scam in my opinion is that they make outrageous claims that aren't true. They claim that the average party is $700 in retail, yet I have been to several Lia Sophia parties and even hosted my own and are only aware of 2 people who have hit that mark. One was a former rep who tapped out everyone she knew (and she knows a lot of people) to hit that average. The other person had a wealthy mother in law who ordered over $600 in jewelry at her party. I think the average party retails more around $150 or less.

On the other hand, I own several Pampered Chef items and each one was completely worth the money I spent on it. I have one of the apple slicer/corer things. I use this almost every single day and have had it for close to 3 years now and it still works just as good as it did on day one. The other product I use almost daily is a measuring cup that allows you to change the amount you're measuring up to 1 cup. It's been used a TON and is still in really good condition. I have a couple of cookbooks as well that I got from them that I've used on several occasions, they're good recipes.

So I guess for me it's a combination of things - not just the product(s) or their comp plan. I think you have to evaluate it company by company. Some direct selling companies can definitely be scams, but not all of them.

All MLM companies are Direct Sales companies. MLM companies are a subset of Direct Sales companies.

There's also a huge number of other Direct Sales companies that aren't MLM companies at all (such as many financial services companies, home improvements manufacturers, furniture suppliers and countless others).

Direct Sales companies are just companies selling directly to the public without a retailer/store being involved.

MLM companies are Direct Sales companies with sponsored networks of agents and commissions divided between them according to who sponsored whom.

I can only single out Pampered Chef as being "different", and that's strictly from a close second hand experience, my wife. We have several Pampered Chef products; all do what they were promised. So they do offer solid products, one of which we've never seen another like it (Apple peeler/slicer). Secondly, never once was she told she needed to "get in on this business" in any way form or fashion. In fact, she wasn't even pressured to buy anything. She got what she liked, nothing else. A refreshingly positive experience according to her. Maybe she's been lucky so far, I don't know otherwise.

If it's opportunity first, product secondary. Run.

An email I received from Virgin VIE, a direct selling company based in the UK. I sent a generic email asking if they were an MLM or a Direct Selling company. This is their response:

Dear Ryan,



Thank you for your email. We are pleased to hear of your wife’s interest in joining VIE at home as a self employed Consultant.



We wish to advise we are a 'Direct Selling Company', rather than a 'MLM' (Multi-Level Marketing) Company.



As a Direct Selling Company we offer our product range for sale via self-employed Consultants, across the UK and selected Countries in Europe and the Middle East . Our Consultants sell our product on our behalf via 'party plan', that is asking friends and family to invite their friends to their home to watch a VIE at home product demonstration, with the opportunity to purchase our products. VIE at home is a great excuse for a 'girls night in' as our parties are so much more than just selling; our Consultants are fully trained to ensure they offer a fun and informative evening giving skincare and make-up advice, which usually forms the main focus of the demonstration. Customers get to 'try before they buy' in the comfort of their own home, among friends and with the security of a 30day money back guarantee on any purchase they make. Our Consultants are special as they offer their Customers a personal shopping experience, and if they run their businesses in line with this ethos, thereby establishing a loyal Customer base, combined with effective business practise, the opportunity exists to create a profitable one too.



The Consultant earns a percentage commission on any product sales at the party, less business running costs such as post & packing, hostess gift incentives. Full details of our self-employed party plan opportunity are available before sign up and we always recommend the potential new starter has an informal interview with their prospective Branch Manager. This is a no obligation interview, but will give the potential Consultant all the information needed to allow them to make an informed decision as to whether VIE at home is right for them. A contract is signed should the new starter decide to join us and this contact commences from the date of signing. Consumer protection rules do apply, which gives the new starter a 14 day cooling off period in which to cancel the contract should they subsequently decide not to join us; all monies will be returned as long as the 'cooling off' criteria is met (as detailed in our Contact).



Once in receipt of a Starter Kit and training has been attended, the Consultant then conducts her self-employed business in the way she feels best suits her personal circumstances, and she may just be content to continue to sell our product earning commission on those sales.



The opportunity does however exist, for Consultants to further build their business by offering the self-employed Consultant opportunity to others, and therefore build a personal Team. This would launch the Consultant onto the VIE at home career path, securing status promotions eg Branch Manager. Promotions would be achieved based on both the number of self-employed Consultants the individual has introduced into her business and volume sales from the team, from which also additional commissions can be earned. This may be described as a form of MLM but is not in any way, the main focus of our Company, as I trust I have demonstrated above. Usually the main drive of an MLM Company is to insist on the introduction of others into the business, and without that growth your MLM business would not thrive. VIE at home certainly do not operate in that way, and we have many extremely successful Consultants, who have decided only to sell our product range and not embark on the VIE at home career path by building, leading and managing a successful VIE at home team.

End email

It really seems like they are intent on labeleing themselves as a Direct Selling comany. MLM advocates will say that MLM is a part of Direct Selling, and so the debate lives on.

Originally Posted by Mike!

I can only single out Pampered Chef as being "different", and that's strictly from a close second hand experience, my wife. We have several Pampered Chef products; all do what they were promised. So they do offer solid products, one of which we've never seen another like it (Apple peeler/slicer). Secondly, never once was she told she needed to "get in on this business" in any way form or fashion. In fact, she wasn't even pressured to buy anything. She got what she liked, nothing else. A refreshingly positive experience according to her. Maybe she's been lucky so far, I don't know otherwise.

If it's opportunity first, product secondary. Run.

I agree. I've been to a couple Pampered Chef parties and they were actually really fun. The other company I know and really like is Scentsy. Their products are very reasonably priced and they are good. I actually was a Scentsy consultant for awhile when it first started - I sold well over $3,000 before I let my contract expire. The biggest problem with continuing was that within a few months of signing up most of my customers switched to a family member who was selling. In Utah that stuff spread like wildfire and soon there were so many reps that it was ridiculous. I had made back my initial investment, though, and when I did my taxes at the end of the year after all the expenses I think I still brought in something like $150. Nothing amazing, of course, but not bad.

I haven't been to a Creative Memories party since I was a teenager, but I do know that they're also another company that's very much products first. In fact, when you go to a Creative Memories party it's typically scrapbooking and you're allowed to use a lot of stuff that the consultant brings with her for free. There are definitely direct selling companies that put selling the products first. There are some where it's more about the opportunity of recruiting.

Originally Posted by Porkchop Express

So, in one corner we have some Direct Sellers:

In the other corner, we have some MLMs:

Now, is there a difference between these 2 slippery slopes? Is one better than the other? Does one side in fact make their money selling product rather than the opportunity? Are both legal scams that prey on the gullible? Are they both OK in your eyes?

What say YOU?

There sure as hell is a difference between these "2 slippery slopes".

Direct sales is an honorable profession with a long history. How else do the majority of manufactured goods move without some salesman going out and contacting the retailer?

Avon & Tupperware started out as direct sales companies, but recently added an MLM structure. How better to expand their sales force at little to no cost to the company?

As for MLM, that's a tough one to define precisely. Some say it's more a compensation plan than an actual marketing method.

Doubt if we can get an unanimous agreement on exactly what it is.

Maybe we should invite Chris Doyle over here to enlighten us.

This is what MLMs claim: "MLM is direct selling, which has a long history of independent selling by door-to-door selling and of selling to friends, neighbors, and family members. It is this person-to-person relationship selling that is one of its great strengths." -

MLM should more properly be considered chain or pyramid selling, as few sales are made to customers outside its network of distributors. MLM promoters have sought legitimacy by joining the Direct Selling Association (DSA), which lobbies to promote the interests of MLM. It is like a farmer marching his pigs into a horse corral so he can sell them as horses to get a better price. He then advertises them as horses because they are in the horse corral. We should not accept an MLM as a legitimate direct selling company when compensation plans reward recruiting a downline far more than selling to non-participants – even if the MLM is a member of the DSA.

The DSA (Direct Selling Association) was once an organization dedicated to advancing the interests of what were then legitimate direct selling companies like Fuller Brush, Tupperware, Cutco Cutlery, etc.

The MLM industry has virtually taken over the Direct Selling Association (DSA) and used it for intensive lobbying for anti-pyramid scheme laws which would exempt MLM's from prosecution as pyramid schemes, at the local, national, and international level.

So the effect of the legislation is to make the worst pyramid schemes legal. What MLM promoters and the DSA fail to acknowledge is – what legitimate direct selling is NOT for example, - an endless chain of recruiters recruiting recruiters, which they call distributors, but are in fact their primary customers.

What legitimate direct sales programs do NOT do:

Recruit participants in an endless chain of participants recruiting more participants (as primary customers),
Specify advancement by recruitment, rather than by appointment,
Require or use powerfulful incentives for ongoing purchases in order to qualify for commissions and to advance in the scheme,
Pay overrides on more levels of managers than are functionally justified (most corporations have found the entire country can be covered in four levels of sales managers), and–
Offer excessive incentive to recruit, combined with inadequate incentive to sell products to bona fide customers. In nearly all MLM’s, there are few legitimate customers outside the network of “distributors.”

IM(very)HO asking such broad questions will only lead to more of the same ol', same ol' backward and forward arguments as those which have confused people for years.

IE,

Is an apple "like" an orange ???

In many ways, it is "like" an orange. It's a fruit containing seeds, its' round and comes from a tree.

is a Volkswagen "like" a Porsche ??? Of course it is. Both are automobiles with four wheels and are rear engined and are produced primarily in Germany.

But an apple is NOT an orange and a VW is NOT a Porsche, now matter how "alike" they may be.

A smart talker may even be able to convince someone with little or no experience that apples and oranges are sufficiently alike to be considered the "same" and the ability to put people in "Volkswagens" at "Porsche" prices has for many years been the mark of a "good" car salesman.

However people may rationalize things, MLM can only ever be as "like" direct selling as an apple is "like" an orange.

Originally Posted by A Life Aloft

What legitimate direct sales programs do NOT do:

Recruit participants in an endless chain of participants recruiting more participants (as primary customers),
Specify advancement by recruitment, rather than by appointment,
Require or use powerfulful incentives for ongoing purchases in order to qualify for commissions and to advance in the scheme,
Pay overrides on more levels of managers than are functionally justified (most corporations have found the entire country can be covered in four levels of sales managers), and–
Offer excessive incentive to recruit, combined with inadequate incentive to sell products to bona fide customers. In nearly all MLM’s, there are few legitimate customers outside the network of “distributors.”

And I might add that legitimate direct sales programs don't have some incomprehensible pay plan that would baffle most accountants

I've been in direct sales a good part of my life and I knew what my commission structure was. There never was talk about Triple Diamonds, being paid 5 levels deep, or being on auto ship to maximize my commission, etc. etc.

You go out and sell and move product and you get paid.

Simple.

Originally Posted by Doc Bunkum

And I might add that legitimate direct sales programs don't have some incomprehensible pay plan that would baffle most accountants

I've been in direct sales a good part of my life and I knew what my commission structure was. There never was talk about Triple Diamonds, being paid 5 levels deep, or being on auto ship to maximize my commission, etc. etc.

You go out and sell and move product and you get paid.

Simple.

I think folks may be confusing terminology here. You can work for the ABC company, who hires sales reps who have a territory and customers that they sell to. They are truly (as far as I know) employees of the company, and not independent contractors. They pay nothing to play and receive benefits. They may even receive a bonus for bringing someone into the company, but only if the company has an opening, based on market conditions. (But I have never been in sales, so feel free to correct any faulty statements I have made).



However, Direct selling:

Direct selling(also called Multi-level marketing) is a retail channel for the distribution of goods and services. At a basic level it may be defined as marketing and selling products, direct to consumers away from a fixed retail location. Sales are typically made through party plan, one to one demonstrations, and other personal contact arrangements. A text book definition is: "The direct personal presentation, demonstration, and sale of products and services to consumers, usually in their homes or at their jobs."

Originally Posted by Porkchop Express

So, in one corner we have some Direct Sellers:
Avon
Tupperware
Virgin Vie (a new one I've seen suggested by our friend Chris Doyle)
Pampered Chef

While lots of folks (especially women) enjoy socializing with the "gals" at home parties, I believe they are becoming more and more outdated as women continue to join the work force, and shuffle their children to activities--there are only so many hours in a day.

I believe that some of these companies have either already morphed into more recruiting, either due to the above fact or more competition from big box stores and Internet shopping.

Pampered Chef has its own forum, but limits reading unless you register or continually dump your cookies. link

Avon and Tupperware already seem to be changing their emphasis:

Pink Truth - Avon

Pink Truth - Tupperware: Same MLM, Different Name

Pink Truth - Tupperware sucks too

tis quite simple...if they have a multi level compensation system they are a multi level marketing company.

What you have described as non mlms are mlms most use the party system to distribute products and find distributors...

of course lately for Avon is the stickers on the windows of their cars..."To BUY or to SELL Avon products call 555....

good article to be read...thanks for sharing it

Uh Oh

Looks like somebodies' upline told them it's only a matter of leaving a card or a link and people will be busting down your doors trying to participate in the MLM du jour.

Young "marketing" is probably at home waiting for all the signups and counting his expected millions as we speak.

Originally Posted by littleroundman

Uh Oh

Looks like somebodies' upline told them it's only a matter of leaving a card or a link and people will be busting down your doors trying to participate in the MLM du jour.

Young "marketing" is probably at home waiting for all the signups and counting his expected millions as we speak.

Chirag is going to be very disappointed with his marketing efforts here. I zapped all his links and encouraged him to actually respond to the topics here. Shucks!!!

Soapboxmom

Originally Posted by Porkchop Express

So, in one corner we have some Direct Sellers:

Avon
Tupperware
Virgin Vie (a new one I've seen suggested by our friend Chris Doyle)
Pampered Chef

In the other corner, we have some MLMs:

Yoli
Numis
Amega Wand
Vitamark


Now, is there a difference between these 2 slippery slopes? Is one better than the other? Does one side in fact make their money selling product rather than the opportunity? Are both legal scams that prey on the gullible? Are they both OK in your eyes?

What say YOU?

Ohhhhhhhh,
Our good friend Chris Doyle, with friends like that who needs friends, we would all be starving in the street while he was eating in front of us.

I believe it’s essential to get this information out to consumers, since law enforcement is essentially asleep on this issue. For example, the Federal Trade Commission, the nation’s consumer watchdog, has proposed a Business Opportunity Rule that would require sellers of business opportunities to disclose average income of participants and provide a list of references to prospects. But the FTC is yielding to pressure from the DSA (Direct Selling Association – the chief MLM lobbyist), to exempt MLM companies from having to disclose information to prospects that would help them make an informed decision about buying into a program.

For the same reason, victims seldom file complaints with the Better Business Bureau (BBB). Also, consumers are not informed that they may not be getting an unbiased report on an MLM from the BBB. Prominent MLMs and the DSA are “corporate partners” of the BBB. These factors could explain the A+ rating for Amway and other major MLMs, even though (according to research findings) tens of millions of MLM victims suffer aggregate losses totaling tens of billions of dollars every year.

Dr. Jon M. Taylor of the Consumer Awareness Institute found in his analysis of over 350 MLMs that they all depend upon unlimited recruitment into an endless chain of participants – all of whom are incentivized to buy products in order to qualify for commissions and advancement in the scheme. And all of their compensation plans are top weighted, meaning a few TOPPs (top-of-the-pyramid promoters) profit handsomely at the expense of a revolving door of recruits, approximately 99% of whom lose money. To get your questions about MLM answered by a qualified independent analyst download his new eBook at no cost at, The truth about MLM, or multi-level marketing, based on solid research and world-wide feedback

Stephen Barrett, M.D., is one of the most prolific independent investigators of health quackery and related fraud on the web. MLM Watch
404 Not Found – A classic article on MLM/network marketing, “What’s Wrong with Multi-level Marketing?” is written by Dean VanDruff

This recent, well researched article answers the question asked in the thread title quite nicely:

Has MLM Corrupted Avon?

In particular, the section Direct Selling versus Multi-Level Marketing.

Worth reading also is the section What’s Wrong with Multi-Level Marketing?.

That alone should be required reading for any prospective MLM recruit.

Avon? That reminds me... a recent email spam from an Avon representative showed up. By itself, that wouldn't have been more than a click "delete" and ignore it, except that the representative ("Elder" Ronald Fulford) was an active cash gifter of the prosperity gospel mold a few years ago.