When people need to understand the approach to direct selling, various questions come up during the MLM consulting meetings. So, here’s a list of the most commonly asked questions.
How does a Direct Selling Business Operate?
A direct selling company usually sells a product and offers you an option of joining the pyramid scheme. However, you needn’t purchase the product unless you use it for your personal benefit. For instance, if you have opted for joining the distribution network and individual ‘A’ wants to start selling the products, then he or she can be part of the distribution network. He can either enroll without paying anything or a small amount for the business information kit. Once he purchases the product, you as well as ‘A’ receive a commission equivalent to a percentage of the price.
After getting trained, the sellers who get added to the network can earn sufficient income through effective product sales. As compared to the normal job, direct selling helps individuals to sustain if a distribution network is worked upon. They can move along the hierarchy and attain a position along with a bonus once the targets are met. Finally, the selling concept depends on the efforts you put in promoting the products.
What is the Difference Between a Direct Selling Company and a Pyramid Scheme?
Most of the times, people are confused with direct selling and a pyramid scheme. Just like a triangle, in the pyramid scheme many individuals are towards the bottom while a few are at the top. Every person strives to pay money to move up the apex. They encourage new people to join the pyramid. But, as the base grows ahead, the entire network structure collapses. Just a few individuals are able to make money through product selling.
The case is very much different in direct selling. These are built with a prime objective of enlarging the network through the individual’s engagement. Moreover, people are trained to be direct sellers so that a range of products are sold. Direct sellers earn money through payouts and additional bonus in case they are recognized for their achievements. You gain monetary returns with the ones you have selected. Unlike the usual job opportunities, the earned income increases as you build the distribution network.
Why do Direct Selling Companies Shut Down as Time Passes by?
There are many reasons why direct selling companies in India shut down within 3 to 36 months. While extensive research is not carried out, marketers are not sure as to why they had chosen such a kind of approach. Just as any other venture, direct selling can either be tough or help earn returns successfully. An individual requires patience, a well thought business plan and thorough knowledge of the investment. Moreover, the fate of the marketing organization depends on the quality of services / products. It actually doesn’t work when you go about promoting inferior items and attract people to join the network.
Does Direct Selling Help in the Development of the Country?
Direct selling helps those living in remote areas and towns. While there’s nothing to lose, the business is lucrative and ethical. Even someone like an uneducated homemaker or a retired working professional can earn a good amount of money once he creates a network. Furthermore, such individuals can join with an investment as low as Rs. 1500. Apart from striving to earn a bonus, people join with the sole reason of meeting people possessing different personalities and skills.
Can an Individual Earn Without Adding People in the Distribution Network?
Yes. The basic objective of direct selling is selling items and earning a payout. However, if buyers like the products they can buy the items all by themselves. Over a period of time, they also start availing discount and offers. Later, they can make up their minds to join a team as direct sellers. This gives them an opportunity to earn a good amount of compensation.
For making the right decision, we suggest you to go through the questions listed below.
How to Recognize Whether the Direct Selling Company is Trustworthy?
You can judge the direct selling company through its dealings as soon as you join. Usually, the firms charge a nominal amount as the start-up fee to cover up the costs of the business information kit. But, the case differs with pyramid schemes. These charge a huge amount of money during enrollments since they know that the profit is earned only through the initial fees. On the other hand, a person can opt for a free enrollment and purchase some products just to qualify for earning payouts.
Does the Organization Take Back Unsold Inventory?
An authentic company takes back unsold inventory and offers you refunds on the business information kit. However, unreliable companies never accept the unsold stock while the items are tagged with a high price and are low in terms of quality.
Are the Products Sold to the Customers?
Products are sold to customers when dealings are associated with a direct selling company. However, pyramid schemes offer less commission with the aim of offering more to the ones at the top of the network. Besides, commission can be availed only when people bring in their acquaintances to join the business.
You shouldn’t bank on companies that persuade people to purchase items in large number. Honest organizations focus on marketing supreme quality products at an acceptable price.
What Ethics You can Expect from a Direct Selling Company?
It’s a wrong misconception if you have heard that people at the root only benefit while others work hard but get little profit. Direct selling companies ensure that everyone in the network gains returns to a substantial amount. After joining the network, financial incentives are offered and people can start selling the items independently. Besides, the individual earns profit depending on the efforts he puts in. Once you include others in the network, the people under the main seller receive commissions while the one at the root gets the lion’s share. Besides, individuals are enrolled only when they are satisfied with the product and desire to try another range. Business grows through publicity and the conviction to recommend others.
Even when the topmost person is not selling items, he or she can still earn a bonus once people under him are busy selling and consuming the products. Moreover, simply recruiting people doesn’t work. The recruiter should impart training and consistently motivate and elaborate effective ways to sell products.
What are the Legal Aspects Related to the Direct Selling Company?
Before you chose to be a part of the distribution network, you should always check parameters. Business models that work on a direct compensation or a single level plan are nothing but Ponzi’s, Pyramid or Money circulation schemes. If you notice a direct seller who buys products simply to join the company or be apt for drawing an income, then you should be alert. You would then be a part of the Pyramid scheme. Your reputation is at stake when friends join the network. You would have to answer back when things don’t move on as promised earlier.
What should an Individual do if He or She doesn’t Know to Sell or Build the Network?
Whenever the individual is not aware about the operations, the direct selling company offers training to the new joiners.
References:
https://www.strategyindia.com/direct-selling-mlm-consulting.html
https://www.entrepreneur.com/article/159394
Arahan Seth 