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Can Joining Direct Selling Companies Make You Big Bucks?

The world seems to be heading towards recession. With prices of fuel oil, rice, flour, oil and other necessaties going up, the income that an average person earned could no longer cover the living expenses. After the late 90s, this is another tough period for all.
Then, one day, as you go out for a drink at the mamak with an old friend (whom you have not seen for years and suddenly called you out of a drink), you started pouring out all your grievences and explained how to increased standards of living are affecting you. Everything is so expensive now.

Your friend listened patiently to your rantings. After that, he proposed a solution for you- he give you a detailed plan on how you can make money through multi level marketing or joining a direct selling company. He showed you how by recruiting only 2 members a week, you can make up to $XXX and how much time you only need to spent. You have doubts- he proceed to explain to you how good and beneficial the product is.

The next thing you knew, you signed up the membership enrolment for to enroll yourself with the company. There’s always a catch- you have to purchase the welcome kit or some products first to sell. Sometimes it costs a few hundred ringgit. But your friend is so convincing and it really lifts your spirits. A few days later, he even brought you to a convention to talk to other ‘successful people’ who have opt for early retirement and is now living off their downlines.

These are the general modus operandi of direct selling companies when it comes to recruiting members. But do they work? Will you be able to make a living from passive income alone (once you’ve recruited enough downlines to do the job for you)?

Let’s try to examine some factors here:

Products- more expensive than other brands in the market

Direct selling products are generally more expensive than similar products sold in the market. Even though they insists their items are better value for money since the cost of advertising is saved, but the profit sharing between pyramid scheme and profit sharing basis requires the items to be expensive in order for the company to make money in the first place. Furthermore, a direct selling item may not go through stringent tests and may not be critically monitored as an item sold on the market place.
A dishwasher may cost up to RM20 or more if you buy from a direct selling company but will only cost RM5 from Carrefour. In such trying economic times, most people will start to opt for generic brands to save costs. So, you would likely find it to be very challenging to have people take up your products. In some direct selling companies, the only people buying their products are probably their members who hope that one day, they could sell the product.
For instance, Elken is well known for the Spirullina- initally we bought from a relative who is an Elken agent but since the Spirullina is so expensive, we have since sought cheaper alternatives from pharmacies. Friends who visit Australia also helped us to buy back- the dosage per pill is higher than those of Elken.

You may find your friends starting to avoid you or never return your phone calls/ emails.

No one like to feel as if they are your cash cow. If you were to take every single opportunity to get them to be your downline, you will make your friends feel that:
…. you are insincere or ‘fake’
…. there is always a hidden agenda when you are concerned
…. you do not value their friendship enough to stop talking about it despite being warned
hurt as your friend feel you never really ‘listen’ anymore
…you are trying to make use of them to get to know their other friends so that you can sell the idea to them. No one likes to be made to feel that way

Don’t blame your friend if he/she starts to avoid you. If you want to keep the friendship, you cannot be too pushy. Just let your friend know you are into a direct selling company but please don’t make the poor thing sit through one of your lengthy presentation unless your friend wants to give it a try.
I have friends who make it in the network marketing business. In fact, some are earning a reasonably good side income- and they have one common attribute- they are not pushy because they know that I am not interested. Because of their sincerity, I instinctively want to help them. So I do keep in mind of the product that they are offering. And when I come to know of anyone who may require the product, I immediately recommend my friend to them.
How much your initial investment and compulsory investment is going to cost you
You have to consider carefully how much the overall investment is going to cost you. I have seen people so taken over and ‘inspired’ by the presentation that they started spending the very little money they have to buy the products and stock them up. The products then sit in their storeroom after a few years and they are unable to sell them. Worse still if the items are perishable- it goes to a total waste. So, think very carefully before you stock up- don’t be led into believing that the items will sell themselves or buy in bulk just to get a slightly good deal. If you want to try out, buy one or two inexpensive item and see first.
Still, there are positive outcome that you can expect from your stint with a direct selling company:

You may pick up valuable skills along the way

If you show any level of interest, the uplines will be happy to teach you the skills on how to sell to potential clients. During the first few times, they may even accompany you to see potential clients and help you out when you run into problems. You will be surprised, the skills that you learn can be quite valuable.

I used to have a friend who have lack of confident and trouble expressing his feelings to others. Then he got involved with a direct selling company and began to improve his persuasion skills and he overcome his fears of rejection. What he learnt became useful to his career and personal life- he left the direct selling company and rather try to earn his money by getting a higher profile job. So, it’s not that bad idea after all.

Aside from that, there are lots of free lessons and tips on grooming, body language and right choice of words. Especially if the direct selling company sells make up, your upline will teach you all she knows about how to apply makeup.

As for me, I am never a sales oriented person- somehow, I can never sell someone’s else products. I can only sell an idea if my heart sincerely believes in it. Still, I would not say it is a bad thing- in bad economic times like this, and with extra time in your hands, there is no harm venturing. But make sure that you do not sabotage your relationships with others, do not believe what others say blindly (practice discretion and common sense). Also, you may want to do a search over the internet to find out the real picture about the company before you join- the internet has lots of information.

Still, be an informed consumer- to find out if there are complaints out there about the direct selling company that you wish to join, visit http://www.consumer.com.my/ and go to the Direct Selling section.
I will leave you with a funny advertisement that Elken (please, I am not an agent) had placed in The Star paper entitled: You find out your ex-boss has joined Elken. Full time. Even Elken knows what are the views of the general public when they are concerned (click to enlarge it):

OK, I’ve typed out the entire ad here as some may find that it takes a long time to open the ad:

You find out your
EX-BOSS
has joined Elken. Full-time.

Your first thought?
A. He gave it all up for this?
B. Tragic.
C. Sever all ties.
D. Why Elken? Why?

So where’s the mind you once respected?
The success you envied?

As it turns out, both are happily nurtured by Elken. Incidentally, Elken pays one of the industry’s top commissions.

That explains his recent big smiles & even bigger house.

Finally fulfilling his entrepreneurial potential.
All while building others as he built even further.

Thanks for Elken’s visionary leadership, strategic & global opportunities.

Sure there’s no fancy COO title anymore. But look at how much he has gained beyond that healthy glow, the flexible hours & big bucks. A thriving business that keeps building him to new personal heights. His own happy boss at last.

Guess Elken isn’t quite what we all figured.

Put aside assumptions & new possibilities appear.

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  • Ben Waugh November 3, 2008, 10:54 am

    I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you down the road!

  • LAWRENCE CHIN November 3, 2008, 10:55 pm

    You are damn right about MLM in Malaysia. Any corner, aunty, uncles, housewife, Government servants & so on are trying to sell you something that you don’t need. To my surprised, those claims are over the top lies !

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