Some would frown upon hearing about multi-level marketing, which is usually confused with scams or fraudulent schemes. However, these kinds of businesses — along with network marketing and direct selling — are accepted as a legitimate sales and marketing method, which have financially empowered many individuals regardless of economic stature throughout time.
Multi-level marketing is usually defined as a mode of business wherein products are directly marketed or sold to consumers instead of the traditional way of selling products from a fixed retail location.
Reports indicate that in recent years, direct selling has gained a strong foothold in the country as a retail option. In fact, citing a 2016 report from Euromonitor International, the Direct Selling Association of the Philippines (DSAP) noted that direct selling in the Philippines continues to grow as more Filipinos from the lower-income segment — which holds a large share of the population — choose to purchase products from this channel due to the availability of installment payment schemes and familiarity of consumers towards sellers, which are usually relatives or close friends.
DSAP further cited the report and said that there is also a notable percentage of the population who were encouraged to enter direct selling and become sales agents because of the minimal start-up requirements and the limitless profits and opportunities that they can gain from it.
Separate media reports noted that direct selling is one of the major alternative sources of income or as a means of augmenting finances for some, especially among women. It is also said that one of the advantages in direct selling is its flexibility — allowing individuals who are either employed or unemployed to earn extra income at their own pace and time.
Moreover, it is said that Filipinos opt to be involved in this industry because it doesn’t require business experience or high educational background.
Apart from the income-generating opportunities and financial success multi-level marketing and direct selling presents, individuals who engage in the business also have the opportunity to be mentored and trained by companies involved in the industry.
According to some companies, they invest in harnessing the potential of its members by developing their personality, entrepreneurial skills, and leadership skills among others.
DSAP, for example, made initiatives in educating the public about direct selling through various programs as indicated in the association’s Web site. DSAP said that as service to its members, they invite speakers from related fields to help them benchmark against other industries.
In a larger perspective, DSAP reportedly said that as membership in direct selling grows, these sellers generate income for themselves, pay taxes, and generate employment — thus contributing to the development of the country.
Meanwhile, the future of direct selling in the country seems to have a healthy outlook. According to a 2018 report by Euromonitor, direct selling continues to allure Filipinos who aim to better themselves.
“Direct selling seeks to exploit the market potential through a network-centric business model, often with an emphasis on health and beauty products. The prevalence of underdeveloped retail markets and the growing obsession with health amongst women make direct selling alluring to Filipinos who are looking for economic power, and those looking to better themselves via self-improvement.”
Avon Cosmetics, for example, as cited by Euromonitor, can reach far-flung provinces, beating even the expanding reach of shopping centers and online retailing in the Philippines.
On the other hand, the report continued to note that companies selling products related to wellness is seen to benefit from the rise in concern for healthy living. Euromonitor noted that a recent Asia Pacific Sports Nutrition Survey reported that seven out of 10 Filipinos consumed some form of supplement in the last six months.
Meanwhile, separate reports indicate that direct selling is thriving despite the rise of e-commerce and convenient online shopping as Filipino consumers continue to trust products that are recommended by families and friends.
While network marketing or direct selling creates boundless opportunities, companies warn of fraudulent schemes like pyramiding that disguises as legitimate direct selling enterprises.
DSAP defines pyramiding as an illegal money scam often confused with legitimate network marketing plans, where people are convinced to pay money for a chance to profit from the payments of others who might join later.
But, how to differentiate legitimate ones from the frauds? Experts say that pyramiding usually involves entities primarily earning by recruiting other people with the latter paying registration fees to join the pyramid scheme.
DSAP, on the other hand, suggested to consider some factors first before joining a multi-level marketing or direct selling company. The association advised to consider if companies have a product and that these products have fair market value, or if there is a reasonable product return policy among other factors to make sure that the enterprise you are joining is legitimate. — Romsanne R. Ortiguero