Sunday, June 14, 2009

Do you think Direct Selling is SCAM?

It has been quite some time I’ve never had a chance talk to a direct selling person. Until recently, someone just started to approach me about direct selling. It is actually my neighbour insisted want to talk to me. I rejected at the first place but she told me that it isn’t anything about directly selling. Huh?

Me: What is it?
X: It is about a system.
Me: What system? Direct selling system?
X: No, it has nothing to do with direct selling. I’m going to introduce you a system. That’s why we need to talk. Can we meet tomorrow night to discuss in more detail?
Me: Some kind of the business? You want me to invest?
X: No, it is a system that I want to introduce you. So tomorrow night, okay?
Me: Okay, sure. (Just to give face since she is my neighbour. Don’t want to spoil our relationship)

What is My First Impression?

As what usually direct selling people do, they just want to talk to you no matter what. That is their first ultimate goal to approach their potential customers by not telling you first what they plan to sell you.
What the heck? You're selling stuff but you don't want to tell me what you're selling? Some more you lie... I dislike the ways they do things that doesn’t have the integrity at all. In the conservation as you can see, she kept avoiding my questions.

Conversation at that Night
Me: So, let’s start. I’m very curious about the system that you mentioned yesterday that has nothing to do with direct selling.
X: Yes, have you heard of a system?
Me: Huh? What kind of a system?
X: Before we start, you seem like you don’t like direct selling. Would you tell me why? (not answering my question again...)
Me: Yes, I can’t sell. That’s why I don’t like to sell stuff because this is simply not my strength. Unless the product is very good, then I probably can sell.
X: I see. If you don’t like to sell, you can just refer the product to someone else. For example, when you use a very good product and you definitely will share it with others, right? You don’t need to sell at all.... (Blah blah blah…. for few minutes)
Me: Yupe, you’re right. So, what is the “System” about? (not yet answering my question again about the system)

  • We talked about all these non-sense for about 30 minutes back and forth and she had not yet explained to me what the system is about.
  • She asked a lot of questions like where I buy my toothpaste, my grocery and etc. Then later she started talking about product that directly from the producer to consumers without those advertisement and etc.
  • Hey, isn't that all about direct selling right that they usually claim that their products without the charges of marketing, stocking, profit and etc?
Me: So, what is the system? I know about all these, what you have been saying so far it seems like a direct selling to me. What do you mean by system at the first place?
  • She started to explain the benefits of joining the direct sell company and how to enjoy the benefits from collecting a point.
  • This takes another 15 minutes and I stopped her half way immediately.
Me: So, this is a direct-selling "SYSTEM" in your company? So is this what you meant by the "SYSTEM" where you can also collect points and use that points for certain benefits?
X: “Hmm… kind of yes, As you see the "SYSTEM" is very powerful”. (she continued to talk about the "SYSTEM’s crap….)
Me (In My Thought Only): Why you don't want to tell at the first place? Why don't you just say the following:
  • Our company has a new system which his a totally different concept than the conventional direct-selling company. Do you want to hear about it in detail, maybe you're interested?

Is direct-selling scam?
As you probably know, direct selling is not a scam legally. It is a multi-level marketing (i.e. MLM) business with real products. Those pyramid scheme companies (e.g. swisscash) without the real products are only considered illegal. Although they’re not SCAM legally, the way the agent approaching me at least does look like a SCAM to me due to the fact that they have low integrity and unprofessional. What do you think?


I really don’t like most of the direct selling people (of course not all of them). They do not “STRAIGHT to the POINT” and talk a lot (really a lot) before go directly to the point. Their real intention deeply in their heart is want you to become their down line member rather than helping you to buy the right products that you really need.

At the end of our meeting, she did mention that buying direct sell products is actually cheaper and in fact we can save a lot and we can enjoy high quality of the product at the same time. It is cheap with good quality. I told her, if this is really true, I will 100% support your product! I really do…

What do think about direct selling or multi-level marketing? Do you think they’re SCAM?


Mt. said...

it depends, statistical historical records show that those who are direct did not earn as much as those who do silly tricks like above. The fact is that most ppl are not educated enough and most ppl will be attracted, joined and spent a lot of money on it.

MLM is like communism, the system itself is perfect. But a perfect system used by imperfect human being is prone to have imperfect outcomes.

lastly, those who think MLM is scam will not get benefit from it, those who blindly believe in it like a religion, 'may' find it a great way to grow rich

Kris said...

Yeah.. For me, i will avoid it like a plague.

It only enriches a few select top guys namely the originator of the MLM.

They are so creative at marketing this so called get rich quick scheme that they have now move on to taking money MLM way to open food franchises. They package the deal looking that you can easily double back your investment within a few years time and looked like sure win situation.

Google and look around local finance blogs and you will know what i am talking about :P

Horlic said...

MLM is a great plan. But, sad thing is there are lots of agents who use wrong approach.

imDavidLee said...

when people heard about direct selling, all runaway...this is malaysia style..but in western country, wont happen in that way

ChampDog said...

Good point! Being direct, mostly you will get rejected therefore they’re this silly tricks. The system is probably perfect but what about the product? As a consumer shall we buy stuff from direct-selling company?

Yes, because you do not know when the market is saturated. So I guess people still want to join just to hope that they’re the top 20%? What I explained sounds like “Island Red Café”? I wonder do people really invest in it?

If majority people reject them at the first place, what is the right approach then? Hmm…

We not only run away from direct selling, we run away from insurance too. I think mutual funds and unit trust now started to get accepted. Maybe insurance too? Maybe one day MLM too?

Johnny Ong said...

not a scam at all. some products being retailed by them are actually good.

Andy D. said...

Nice post!

What I don't like of MLM, is when they use abusive practices, which happens with many of these companies.

For example, the one advertised by this person was making use of your wanting to be a nice neighbour, when they expected you to hear the speech without knowing what it was about.

I don't consider that to be endorsing nor enticing, it's just a steal of some goodwill and time. I experienced other similar cases.

ChampDog said...

Yes but some agents make it looks like a scam. Don’t you think so?

@Andy D.
Very true and I absolutely agree with that. Perhaps as being discussed before, the system is fine but is a matter of people who implement it.

Anonymous said...

why did u spend so much time with this woman??
is she pretty? :p
yeah if the products are very good, i would like to start my own business.
but unfortunately, they are not really attractive.

ChampDog said...

If she is pretty, then it is worth the time. :) hahaha...

Start your own business become a direct-selling agent? or start a direct-selling business? :)

Anonymous said...

ewwww direct-selling agent. and become independent later.
possibility is 0.1% though :D

ChampDog said...

:) Could be one of the good side income but got to work every hard.

Wealth Journey said...

It's not a scam, it's just that they are more interested in selling the system than the products.

It's coz the SYSTEM is what makes them money, not the product.

So, MLM relies on the greater fool theory until they cannot find any more fools, the system will collapse and a new MLM company will be borned.

Higher probability that the highest upline benefit more than the downline. So, if you want to get rich, it's better to start a MLM company than join a MLM company :p

ChampDog said...

I agree with that they're actually selling the system rather than their prodcuts. No wonder they keep talking about the system to me. :D

Greater fool theory? It seems like some of the big players have been survived for many years. It seems like the fool will never be saturated? hahaha...

It is better to be founder of the MLM company rather than just MLM's member but how many people can do that? It is easier for everyone just join and earn money. At least, I don't have a skill to start up one. :D

Kam Shing, Choi said...

Hi ChampDog,

Interesting article, and thanks for the experience shared although it was dated back 3 years ago... And it will make no difference 3 years from now.

I have been in the industry for more than 10 years, and it is definately not a scam (if you choose a reputable company). Because of the MLM business model is proven successful, that's why it lure many so-call-similar companies to copycat it but too bad most didn't last long and leave a bad image to the industry.

The market will not be saturated as 14/14 comments here still don't understand the true values of this business but the trend is set and MLM will definately fluorish in the coming decade as the more you seek the answer from the right source, the more you will find that it is another great investment tools which can bring many benefits into your life apart from the monetary (which is good as well).


ChampDog said...

Thanks KS. Yes, this kind of thing will never be outdated. :) Thanks for sharing your experiences too. We're talking about 2 things here. Scam company is another thing and usually they don't last long as you mentioned.

However the discussion is for those legal and non-scam MLM companies, when the implementation is fall in the wrong hands, it becomes a scam and I have seen these in majority of the MLM agents. Exactly what mentioned by "Michael Tsen" in the previous comment where a right business model implemented by a wrong poeple, the outcome is prone to be wrong.

MLM is a good business model and not for everyone. For instant, I'm just not the person for that. However, I do agree with you that there is great opportunity there. Whether it will be saturated or not, depends on the company. The longer the company can sustain, chances for the business to get saturated is low as they always come out new ideas or new products. However, if a company ONLY focus on products and do not expand their products base, I do think that it will be saturated. When this happens, they will have to force themselves to close down.

Anonymous said...

MLM is not a bad idea, except because of commissions, it is a lot more expensive than a hypermarket.

Why would anyone pay Rm20 for a tube of toothpaste when they can get it for Rm10 at a hypermarket? same quality, after all toothpaste is toohtpaste right.

ChampDog said...

Yes, it supposes to be cheaper because no third party or advertisement but in most of the cases somehow, because of the commissions, it turns out to be way higher prices than those broad base consumer products.

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