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A New Page in The Book of Marketing

In a world that is fast paced and constantly evolving, change is bound to come in different shapes and forms, across a wide variety of different platforms. This is the case with Multi Level Marketing (MLM), which has now been called to face an increasingly more aware consumer base and pivot away from their ordinary form of recruitment, which has turned a blind eye to the MLM titans. The COVID-19 pandemic has undeniable effects across several groups and sectors, and perhaps this paved the way for a new future in the MLM world.

Multilevel-marketing firms are companies that compensate independent consultants according to their sales and recruitment of other consultants. Paralleled to the so-called pyramid schemes, these MLM firms are selling more than just products: they are selling a modernized version of the opportunistic American dream, which preys on the desire of participants to risk in order to gain. A rational actor, a homo economicus, would compare the costs relative to the benefits of entry when considering entering an MLM firm, and without necessarily having to plot down a whole utility function, would find the possibility of joining such a project enticing. That is why for decades, these multilevel-marketing companies had it easy, relying on small groups to embark on their journey to success, and then reaching out towards millions by mastering the available social media platforms. When presented with the necessary information about profits and losses and being given some preliminary background, individuals trust these MLM companies and by doing so fuel their growth.

This form of direct selling, which relies on the idea that a large portion of a person’s income originates not from the sales they make themselves but from the sales made by people they recruit into the company, was often termed exploitative by consumer advocates. Despite being viewed as a form of manipulation, it had rarely encountered any limitation to its growth. During the pandemic, distributors of many MLM companies made use of this freedom to their advantage. Offering economic collapse as a recruitment tool, MLMs have seized upon this crisis, trying to recruit new members and find ways to capitalize on job insecurity and economic inactivity. On Instagram and Facebook, sellers have been trying to persuade followers to use their stimulus checks to join a company that sells shampoo, essential oils or weight-loss products. These MLM firm initiatives are sprouting everywhere, and the dire world economic situation is preventing people from thinking rationally and evaluating the situation at hand.

The current state of precarity didn’t prevent Gen Z and consumer advocates from issuing a wake-up call and pointing out the flaws of this utopic system. When 20-year-old chemistry student Heather Rainbow made her first anti-MLM TikTok video, green screening herself in front of what she claims is the 2018 income-disclosure statement for a hair care company, little did she know that she would be initiating large-scale change in marketing. In the video she showed that the hair-care company Monat showcases that 94% of its distributors had an average income of $183 that year, highlighting the exploitative yet concealed aspect of MLMs worldwide.

Rainbow’s video turned the tables: it powerfully indicated that the same networks that multilevel-marketing distributors rely on and exploit are the same ones that stand firm behind a different message. Across social media, people have joined forces against the spread of more MLM schemes. On Reddit, Facebook, YouTube and TikTok a huge community has coalesced around the anti-MLM sentiment, bringing together former disenchanted salespeople, independent researchers and people who are simply tired of getting direct Instagram messages with offers to sell essential oils or protein shakes that boost the immune system.
These initiatives aren’t confined in the filed of wellness. The COVID-19 pandemic saw a skyrocketing in the number of distributors who claim that their products, like food supplements and special hand sanitizers can fortify the immune system against the Coronavirus, build up strength ‘to face the future challenges’ and nourish bodies with the vitamins necessary to fend off the flu. As the COVID-19 pandemic continues to throw everyday like off course, threatening the fragile economic security of many workers worldwide, MLMs may seem like a goof way to make money fast while being cooped up at home. This temptation unfortunately originates from a system that so far has been unable to support its most valuable workers properly during this period of instability.

The slow-to-spread hashtag #AntiMLM is still diffused and disorganized, but its rise serves as an existential threat to MLMs that rely on the constant and pervasive recruitment of new participants across different social media. The newfound popularity of this wake-up call is already presenting challenges. On the Reddit forum r/antiMLM members are mocking the industry, referring to distributors as ‘hunbots’ who lead off every conversation with a faux-warm ‘hey hun’. Anger and humor reflect the problematic logic behind the MLM titans: capitalizing off the possibility to conveniently increase economic opportunities in a very interactive world, which in reality does very little to sustain and properly support its workers in times of crisis.

From Reddit, the Internet took off, with many YouTubers in the blogging space pivoting to testimonials about their experiences with multilevel-marketing companies and uploading videos narrating the reasons why they quit the MLM industry. And when TikTok announced an updated version of its community guidelines, the small addition that prohibited types of ‘fraud and scams’ surprised users. The guidelines, that used to focus on the banning of Ponzi schemes, get-rich-quick hoaxes and phishing attempts, now turned into the first major media’s declaration that multilevel marketing is verboten as well. The notoriously opaque industry will now find it harder to penetrate the media market, aggressively recruit and form an entire community of sellers and creators.

Opportunism is the common pitfall for small and large social movements and is particularly intense for those that happen online and rely on social media platforms to recruit and reward. The era of multilevel-marketing schemes appears to have concluded its trip around the sun, given the largely more aware and informed customer base. The future of MLMs becomes more and more uncertain as information becomes more available and victims of these schemes are awoken from their slumber. It remains to be seen whether the #antiMLM sentiment will stay strong, or whether the economic hardships will tilt the balance in its favor.

Image Source: https://unsplash.com/photos/gcsNOsPEXfs

Originally published at Tra I Leoni: https://traileoni.it/2021/03/tra-i-leoni-n-94-march-2021/

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Tags: , Last modified: March 13, 2021