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Network Marketing Needs A Miracle

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Network Marketing Needs A Miracle

Post by ramcem » Sun, 13 Aug 2006 4:13 pm

Dear all,

I was doing some research on industries turnover and chance upon some statistics which I hope to highlight especially on the network marketing and discount retailing.

These are my personal research and could have contained errors. If there are indeed errors, I would apologize for any inconvenience caused.


Network Marketing Needs a Miracle
by Ramcem

Network Marketing also known as Multi-Level Marketing started officially in the late 1940s with a company called Nutrilite. Amway is currently the world's largest MLM company. Network marketing is also considered a form of direct selling.

Wal-Mart started in 1962 by Sam Walton with discount retailing in mind. Started slightly later than Amway, let's see what the whole of network marketing industry & Wal-Mart, which is just one of the companies in discount retailing, has achieved.

Based on reliable statistics for the last 5 years, the whole of MLM industry has an average turnover of US$90 billion. Wal-Mart alone has an average turnover of US$250 billion, almost 3 times the whole MLM industry combined. (I just checked that Walmart has broken the US$300 billion mark for FY ending 31st Jan 2006. The exact figure is US$312.427 billion.)

Funny, we have the whole of MLM industry competing against a single company yet Wal-Mart's astonishing results almost crush the whole MLM industry 3 times over.

Network marketing has been touted as the "future" of doing business since the days of Nutrilite. After half a century, Wal-Mart alone leapfrog the whole MLM industry 3 times over. MLM industry has a long way to go to even break the record of Wal-Mart today, even longer if Amway were to compete with Wal-Mart.

Don't get me wrong. I love the concept of network marketing more than discount retailing. If I buy a magic mattress from Wal-Mart at US$69.90, I get only that mattress even if I introduce my whole family to buy it. But if I buy that magic mattress in an MLM company and I introduce to my family, I can get recurrent income!

Hold on, wait a moment. The same magic mattress in an MLM company would have cost US$800 or more. So much hot air about MLM being a subset of direct selling!

Little wonder why the whole of MLM industry can't even beat a supermarket?

As of last year September 2005, the Walton family occupied the 6th to 10th position of the richest American with a total combined wealth of over US$75 billion surpassing even Bill Gates by a third. Sam Walton would be the world's richest man if he is still alive. Sam died in 1992.

Of the top 25 richest Americans, none of them come from the MLM industry. Most of them reached their positions by owning their companies (non-MLM), casinos, real estate etc.

Adding insult to injury to the MLM industry, Michael Dell occupy the 4th position after Bill Gates, Warren Buffet & Paul Allen. Michael Dell started his company using direct selling in 1984, much later than Amway in 1959. Today, Dell's turnover is about US$50 billion compared to Alticor (Amway's parent company) US$6.4 billion. Michael don't sell computers using direct selling approach at US$10k a unit.

What went wrong? Network marketing need a miracle.
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