Direct Selling is NOT a pyramid scheme. It is a common misconception that can easily be debunked. In this article, we discuss what direct selling and network marketing really is vs pyramid schemes. We also delve into how you can distinguish between a legitimate direct selling company and a pyramid scheme. Read on to learn more about direct selling vs pyramid schemes.
What Is Direct Selling?
Direct Selling is a business opportunity that relies on social networking rather than storefronts for sales. You can expect to find great products and services but sold through your personal social networks, giving everyone in the circle a chance to be an entrepreneur. Direct Selling is a 160-year-old industry that is responsible for global direct sales numbers of USD 180 billion. The global sales force is 200 million strong and it is present in over 100 countries.
Network marketing, on the other hand, is one of the components of direct selling. It is a way through which independent distributors expand their business and build a network of direct sellers. Simply put, it is marketing or selling goods and services to your networks and building your network that way.
According to the World Federation of Direct Selling Associations (WFDSA),“it isn’t only about getting great products and services into consumers’ hands. It’s also an avenue where entrepreneurial-minded people can work independently to build a business with low start-up and overhead costs.” What’s more, the industry has proven itself to be recession-proof, making it a great additional source of income during economic uncertainties.
The Difference Between Direct Selling And A Pyramid Scheme
1. Legitimate Direct Selling Companies deliver quality products or services.
Genuine companies invest significantly on research and development to provide exclusive, innovative and high-quality products to meet the lifestyle needs of people across the globe. Pyramid schemes either have no real products or offer low quality or worthless products.
2. Distributors for direct selling companies earn commissions based on sales of products and services that they or their sales teams have made.
In a pyramid scheme, financial returns are based only on the number of persons that have been successfully recruited into the company.
3. Direct selling is not a ‘get-rich-quick’ scheme
Any company that promises you an easy way to get rich quickly (especially through membership building only) is probably a pyramid scheme. Legitimate companies make it clear that extra income in this business is only possible through consistent hard work.
4. Direct selling companies provide a comprehensive training system
Genuine companies care about helping people build a long-term business. They support distributors with not just knowledge about the products and business but also leadership training, personal development and mentoring programmes. Pyramid schemes have a short shelf life before they go bust. Their focus is on making money for themselves.
5. Direct selling companies provide business tools to support their distributors
A genuine direct selling company will equip you with all the marketing and sales tools you need to promote your business. They also offer robust customer support to help their distributors. In direct selling, you work for yourself, but not by yourself. Pyramid schemes do not offer any kind of support and rarely if ever interact with distributors.
6. Legit Direct selling companies have proper policies and procedures and a code of conduct for their distributors.
Genuine companies believe in achieving strong long-term growth and stability by creating a culture of professionalism and ethics. Any breach of their policies is dealt with strictly.
7. In a direct selling company, everyone has an equal opportunity to make money.
Pyramid schemes don’t work unless somebody loses. Only the people at the top, or those who came in early can make money. In a genuine direct selling company, it doesn’t matter when you join. You could even earn more than your sponsor if you put in more efforts into the work.
What do prominent public figures have to say about this business?
“I’m a tremendous believer in network marketing. I’m a great believer in entrepreneurs. I think all the future jobs in the next 20-30 years will be created by network marketing entrepreneurs.” – Richard Branson, Founder, Virgin Group
“What’s beautiful about network marketing is you get all the benefits of being a business owner, but you don’t have to worry about supply chain or accounting.” – Tony Robbins, Best Selling Author, Speaker, Philanthropist
“Your industry gives people a chance to make the most of their own lives. And to me, that’s the heart of the American dream.” – Bill Clinton, Former American President
“Direct Selling is the most efficient method for the distribution of intellectual information that will improve your life. It is the ideal model that allows anyone to reach out.” – Paul Zane Pilzer, American Economist, Former White House Economic Advisor
