Can you make money from MLM?

This article is a guest post from Doug St.George who has been making money online for more than 10 years

MLM stands for Multi-level marketing.

You sign up with the intention to sell product and make a commission. 1st Level.

You sign up others, and they also sell and receive commission. 2nd Level. You also receive part of their sales.

They sign up others, 3rd level. You also receive part of their sales.

And so on. As there is only so much commission on any sale, the usual deal is a decreasing return, so that your 1st Level direct sales might make 20%, 2nd Level 6%, 3rd Level 4% and so on. A good MLM marketer will try and sign up as many new agents as he can, in the hope that he can retire and live on the passive income generated by the many levels of agents working away under him.

Amway are probably the biggest MLM operator in the world. The heavily promoted goal of 'Diamond Level' suggests that you can reach $US 72,000 to $150,000 passive income in 5 years. Websites such as http://www.cocs.com/jhoagland/ are written by people who found otherwise. You may well be able to make some money selling their products and attending their motivational seminars. You will probably need to sign up quite a few people and it is quite likely that three-quarters of those you approach won't be interested and indeed might become ex-friends.

Some companies set up website schemes with a good product to sell, with a reasonable commission, and a couple of extra levels that allows you to introduce others and you can get a small part of their sales as well. An example of this is the Shop New Zealand affiliate program :aff where you receive 9% of your sales (Tier One) , 4% on Tier Two and 2% on Tier Three. While this is also MLM, it does not come with the promise of huge returns, there is no entry cost and you don't have to convince all your friends to sign up.

Some years back in 2001, I became interested in an MLM scheme with nine levels that was marketing Visa debit cards and paid spotters fees if you introduced customers from your website, as well as an ongoing commission from their spending through a rebate system. This company was called Visa Rebates, but was hastily renamed Viva Rebates after Visa (the real credit card company) told them they did not have permission to use their name. They still have a website at "http://vivarebates.atlasmall.com/" but as far as I can tell, they have only signed up MLM members and never issued any cards that actually did what they promoted. They are heavily listed as scammers these days. I did receive about $US60 from them when they started and I didn't have to pay anything so I can't really complain.

There is a good summary of MLM in Wikipedia

If you are thinking about joining one of these schemes, make sure there is a proper product to sell, with a reasonable commission, and the scheme does not rely on your signing up other agents, especially with entry fees payable.