We've heard it so many times that we're compelled to repeat it. No, MLM or network marketing is not a pyramid scheme!
But since there are no mistakes, only lessons and learnings, here is our lesson of the day
Let's explain what MLM really is and how it works. So, ready for some good information?
What is MLM or network marketing?
MLM (Multi Level Marketing), or network marketing, is a business model based on selling products or services through a network of independent distributors.
It is a modern and innovative sales approach that has been around for many years. The principle is simple: market products or services directly to consumers, bypassing traditional distribution channels.
MLM is based on a legitimate and ethical system, offering a business opportunity to those who wish to become entrepreneurs while remaining independent.
In an MLM network, distributors sell the company's products or services and also recruit other distributors to join their team. Each distributor earns commissions on the sales made by themselves and their team. The core idea of MLM is to create synergy and collective growth by building a solid network.
Each distributor is independent but shares a strong brand and a common ambition.
Famous brands operating through network marketing include Herbalife, Tupperware, IAD or VorWerk, the brand behind the famous Bimby.
MLM VS Pyramid scheme
It is crucial to distinguish MLM from a pyramid scheme, which is illegal. While the two models may seem similar at first glance, they have fundamental differences.
In a pyramid scheme, the main objective is the mass recruitment of new recruits, without any actual offer of products or services. Participants are induced to pay a sum of money to join the system and are remunerated mainly based on the registration fees of new members. This model is not sustainable and can lead to financial losses for most participants.
Multi-level marketing, on the other hand, is based on the sale of real, quality products or services, a high level of ethics and compliance with current regulations. Distributors are paid according to their sales performance and the sales made by their team. MLM success is based on building a loyal customer base and developing sales and leadership skills.
This is all the more evident because as chartered accountants, a regulated and supervised profession, we cannot advocate just anything. MLM is a legal and innovative business strategy.
MLM legislation in Portugal
In Portugal, MLM is regulated by law. The legislation aims to protect consumers and ensure that business practices are ethical and fair.
As chartered accountants, we are bound by ethics and deontology. If it were not a secure system, we would not be here talking about it.
MLM companies have to comply with certain obligations, such as providing clear information about products or services, not being obliged to buy large stocks, being able to return unsold products and being transparent about potential revenues.
MLM (Multi-Level Marketing) is regulated by the legislation of the Code of Conduct for Multi-Level Marketing, established by Decree-Law No. 143/2009 of June 16.
The legislation sets out guidelines and rules for MLM activity, with the aim of protecting consumers and preventing misleading or fraudulent practices.
Viseeon, MLM in DNA
At Viseeon, network marketing is more than an organization or a business strategy, it is above all a state of mind.
MLM is a symbol of sharing, cohesion, skills development and a sense of service.
It's our way of putting people back at the heart of accounting!
So you see, MLM is a great tool for growth!
