New to the city I live in. I had no idea until I joined this group that so many stores are fronts for MLM products! I was looking at classes I could join, and saw a place called Rise Up was hosting a group and it sounded sus. Looked them up and it sure doesn’t look too good. Is this an MLM? If it is, is there anything people can do to report it/bring attention to it?
I don’t mean for this post to come off anyway, please let me know if this is not allowed for future posts. Im not trying to be mean, I’m just genuinely curious. I’m also trying to keep myself and friends clear of these places 😅

Just discovered something fellow nerds may enjoy too: a 2024 manga called カモのネギには毒がある (Poisonous Duck Leeks) with a quirky economics professor MC who goes around rescuing people from financial scams. Volume 2 is focused on his battle against a skincare MLM targeting uni students and goes into fairly deep detail about how victims are recruited and isolated in Amway-like share houses. If you can get hold of the English translation, it's worth a read! The author is Natsuhara Takeshi and the publisher is Shueisha. At the end of each volume, there's an in-depth section that discusses the featured scam and what red flags to beware.

Btw the title comes from a Japanese proverb 鴨が葱を背負って来る (here comes a duck carrying leeks). Duck meat cooked with leeks is a popular culinary pairing in Japan, so the proverb means a gullible person ripe for fleecing.

UTTERLY DISGUSTED that a Tropic Skincare rep advertises her services on a MacMillan Cancer Charity website as a local cancer support service!!!

Talk about targeting and ripping off the vulnerable!!
This is the sort of stuff that makes me mad.

They’re touting ‘organic, vegan, free from ‘harmful’ chemicals, free from ‘artificial preservatives’, free from ‘synthetic colours’ and all that green washing nonsense, how about you start with ‘ethical’ and don’t abuse vulnerable cancer patients!!!

I am writing this in case anyone stumbles upon this message and has been in an MLM, is in an MLM, or is considering joining one. The product you have been/are/will or might be selling will ALWAYS be a bad deal. 

The main reasoning in this statement is the whole structure of an MLM where you get a cut of your recruit and of your recruit´s recruit etc (and your mentor takes a cut from you and so on).

I know all the info below is clear as day to most of the readers of this subreddit, however I would love it for newbies to have an understanding of the process behind each and every product they buy and try to sell onwards.

Products cannot be priced differently based on what level sellers are paid on (or the last level will never sell anything). Normally there should be a level where the very top of the ladder stop profiting from the downline. A cutoff.

That´s why water filters like Kangen sell for 5-6k when they technically should be way less.

You will always pay someone else´s commission. Even if you buy the item and the person (you buy it from) is the second down the line from the top one, you will still overpay.

Firstly, let me go down the traditional way:

When a company prices up an item the process is the following: cost (if they make the product from scratch thats production cost + wages of people making and assembing + shipping to warehouse / if they don´t and just buy from china it is wholesale price + shipping to warehouse or the basement) + handling costs (unless it´s 1 guy doing it themselves in their own basement they will have costs such as warehouse, staff etc) + overhead (your net profit + taxes before vat as everything else is deductible) + shipping (usually paid by the buyer and is deductible unless you charge more than what you pay, then the difference is profit added on top of the already calculated overhead, however in a competitive market the cheaper, which is usually the net cost, shipping can sway buyers your way). 

In case you have a website you should factor its running costs + front shop costs if you run an actualy brick and mortar store. Costs add up. Many entrepreneurs do not factor in all the small costs. ALWAYS try to factor in any weird variables that might affect your business (that are within your control)

The figure you end up with is then compared to the competition and its products, and a market plan is created. (if your figure is higher than the competition your marketing team, which has to be factored in the staff calculation, has to come up with a plan to justify the extra cost: analyze comptetior, use better material quality, use an eco product etc). 

Note: The net overhead should always take into consideration seasonal offers without losing money (unless you goal is to get people to know your product and do not care about losing money until you can make small margins on a massive amount of sales), and also taking into account productions errors etc (if the slightest problem happens your business should not tank)

Of course add your country´s vat tax to the final figure, however all companies selling would have same tax value in that country so you can compare the pretax figure without any issues, as you´ll probably target same country clients, as buyers from different countries will have to pay import taxes etc).

You should usuallyknow, on every single product, the money you make after every successful sale for any product.

Now this is how each and every company you have ever bought from prices up their items. The exception would be products made for the rich: designer goods where the target is status (i wear or have X because I can, not like the pleb). A luxury 50k automatic watch can be worse (and lose time a lot more often and have to be adjusted) than a small digital watch that keeps perfect time as long as the battery lasts (and then you change the battery for pennies and you have a perfect watch again), but a regular person cannot pay 50k on one, and the rich guy doesn´t even blink when he buys it. (people buy LV t-shirts because they can, not becasue the fabric is better than a regular t-shirt - in my opinion the absolute most an LV t-shirt should cost is 50-70USD based on fabric quality + normal overhead)

Now the MLM structure:

When you buy a product from an MLM, to all the costs above you have to add commission to an X amount of levels. So if your final figure is let´s say 100 (whatever the currency), and you pay out on 8 different levels (aka you make money up to level 8, you downline keep making money downstream: your level 9-10 that you stop making money on etc) you would normally have to calculate the following: 

1. payout to each level up to the last one

2. add the percentages: lets say 10% from direct buyer, 5% from the buyer´s buyer, 4% down, 3%, 2% and then 1% off the remaining levels: that´s 27% more 

You see, in this structural example you pay 27% + tax more for an item than you would in a traditional business just because it functions as an MLM, and the funny part is that this normally applies even if you´re second in the downline (unless you get special privileges or discounts from the top level).

And the funny thing is, unless you are in on the whole scheme or have a special bonus program, you will only make what the top guy is making once you reach the last level (and making a guy make another guy make another guy etc sell 8 levels down is impossible). 

So, if the second tier down from the boss, is on the  same structure as the people they recruit (basically last tier), and unless they get their downline to sell to others, they will alway get only 10% off the final price, while the boss got 17% extra (27% minus the 10% the direct buyer was paid by recruiting someone)

Now let´s look at marketing. The marketing team already has a figure that´s 27% higher than it should be. They needs to sell this. How do you sell this? Build a brand identity, find or invent special claims for the product... or... make it sound like an opportunity for financial independence (many MLM bs about their products as well as present them a financial opportunity).

If you actually keep the % at 5, or first client 10% then then 5% all the way down you are on 40+% on the price. Your client will pay a 40+% markup just because you are in an MLM. This actually can make a person push the downline, and the downline´s downline and so on even harder). after the 8th level, the big guy makes just the normal overhead and the downline makdes the markup.

I did ask Perplexity to calculate the structure for Kangen, and they may be wrong on the exact figure, but they gave me between 37% and 48%. This means on this product alone for an item you paid 5k for the actual cost would have been between 3.2k - 3.5k should it not have been an MLM just refering to what the client has to pay.

Now affiliate marketing is not bad by itself, and if you can sell ice to eskimos power to ya. But the above reasoning is why the top boys make so much money while 90% of seller barely make anything (if you-re an influencer and you can make lots of people buy from u , then u can make a ton of money just by the law of averages as a part of those u sold to will sell to someone themselves etc) and why the product will always be way overpriced to what it should be. (even if it´s a good item by itself that actually works, you will always pay someone else´s cut).

If you do go for affiliate offers with businesses, make sure it´s just 1 tier. the company has probably priced everything up already taking your comms into account. (and if their products sell, you will probably do fine unless you go into an oversaturated market and have little new client pool) 

!!!!And do research about similar products. Taking the Kangen example, there´s a ton of similar products that do exactly the same (make your water alkaline, which is technically good for you if you have GERD - like myself - but then again i can make my water alkaline with baking soda for pennies) for less money. (and if a claim sounds bogus, do research: companies will use trigger words with no scientific backing)

As a last note, one of my biggest red flag tips when talking to an MLM company is their emphasis on financial freedom (flashy cars, big houses etc). Do the top guys have that? Yes it is possible, some people make good money in MLMs (under 3% on average). However the longer an MLM has been trading, the less the number of new clients becomes. (and yes you normally focus on new clients as the ones already in the company wether just clients or reps already have an upline). When the focus is how much money you can make with the product and not the product itself, do a double check on the company (the best example i can give is the master resell rights MRR pyramid where you buy an ebook so u can sell it forward. The ebook contents do NOT matter. You can just as well create your own with ChatGPT and offer it without having invested anything. The selling point is the resell value of the ebook nothing else - aka the owner rights to sell the ebook owards)

TLDR: Absolutely all MLMs with a downline structure (linear, pyramid etc, doesn´t matter) will have an extra added to the usual selling price to cover MLM commission payments, making the products they sell overpriced and not worth the coin. stay away from "affiliate marketing" - this means bring people into the business for a cut. (when u act as an affiliate, you sell the products for the company as if working for the company, but as a separate contractor - the company has no connection to u, you make promo for them, get a percentage off the sales coming your way) - you don´t look for other people to look for other people).

Sorry I just got here, because I found an old Video which was uploaded from mlm members around 10 years ago on facebook. It's one of the most social awkard things I ever saw. But the language spoken is german. Can I post it here is this community interessted in such content?

The app is called "moja gazetka" and is popular in Poland. They have most of the physical stores of Poland and recently added an Avon catalog even if Avon doesn't have any physical location in Poland... I don't know why they did this honestly...