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  1. #1
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    MLM Market Saturation

    I'd like for us to discuss MLM market saturation, why it's a truth, or why it's only a myth.

    My opinion is that there is a relative saturation. When an MLM launches, the growth of the network expands rapidly. Over time, this momentum slows, relative to those closer to the entry level. What I mean, is that generally speaking, all things being otherwise equal, the upline that got in earlier will see a more rapid expansion below them than someone that joins much later. At some point, I feel that recruitment levels off, and while there may be some level of linear growth, it becomes more like churning at the bottom.

    We've all seen the plans, which is some variant of "hire three, they hire three, etc." There are several problems with this:

    Some or all of those three may either do little to nothing with the business, or leave entirely. That best case scenario of exponential growth becomes quite stunted. I believe that over 90% either leave MLM, or languish and do little to nothing.

    Theoretically, in a best case scenario, anyone on the planet could be a potential customer. In reality, most people you come across will not be interested in your "opportunity." If there were such a way to do it, I'd like to see the average conversion rate per MLM sales (opportunity) pitch. Is it 20%? 10%? 5%? 1%? That would certainly contribute to market saturation. Sure, there are billions of people on the planet, but if most (or virtually all) would not be interested in your buisiness, then all those individuals are irrelevant. What does that leave?

    How many people are willing to do two MLM's at once? Three? Four? If the conversion rate for MLM prospects is poor and there are many, many competing MLM's, then what does that leave?

    You can totally circumvent the distributors in Avon, Teambeachbdy, and Tupperware, to name a few, and buy the product yourself online. Other MLM distributors sell their mandatory autoship surplus on eBay and other online venues. What does that leave?

    Basically, if your MLM isn't strong, really strong on retail sales, you're going to see relative market saturation. By relative I mean that the company itself may see some growth, but it certainly won't be anywhere near the rate that it enjoyed in the past. Maybe the company did 70% the first year, and maybe 35% the year after. Now it's only 5%. This slowdown in growth negatively affects the distributors, especially the ones near entry level, since they will not likely enjoy the rate of growth of their network that those with better timing were in a better position to benefit from. Profit in MLM is all about expanding, and expanding quickly. If you're only growing your business 5% (what the company is doing) a year, your gross profits will only double every 14 years or so.

    If the company is growing, that doesn't necessarily mean that it's distributors are growing their businesses in kind.
    Last edited by BoxAlarm126; 09-27-2011 at 04:31 PM.

  2. #2
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    Re: MLM Market Saturation

    Quote Originally Posted by BoxAlarm126 View Post
    Basically, if your MLM isn't strong, really strong on retail sales, you're going to see relative market saturation. By relative I mean that the company itself may see some growth, but it certainly won't be anywhere near the rate that it enjoyed in the past. Maybe the company did 70% the first year, and maybe 35% the year after. Now it's only 5%. This slowdown in growth negatively affects the distributors, especially the ones near entry level, since they will not likely enjoy the rate of growth of their network that those with better timing were in a better position to benefit from. Profit in MLM is all about expanding, and expanding quickly. If you're only growing your business 5% (what the company is doing) a year, your gross profits will only double every 14 years or so.
    Good post.

    MLM's are never "strong"

    They are only as strong as their weakest link, the new recruit and what they are willing to commit financially in the short term.

    Once when that new recruit gets off autoship and the tools (DVDs, website access fees, convention tickets ect) ...it all ends.

    Of course our resident MLM experts will point to MLM companies that have been around for 50+ years.

    Amway isn't still around because somebody autoshipped boxes of soap to themselves for decades.

    Your typical veteran MLM'er has no concept of how this could happen.
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    Here's a good one....
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    Where else can you find this nonsense besides here?

  3. #3
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    Re: MLM Market Saturation

    Ok, regardless of what market saturation is, or whether it can occur, can we at least agree that there are some areas that would be more inclined for "saturateion" than others? For instance, I think everyone would agree that Orange County is a very saturated market for anything Amway, as compared to, say, South Korea.

    But why is that? There are millions of people who still brush their teeth in socal, right? Aren't they all having kids, and don't their kids need toothpaste? Yet clearly the market for crappy toothpaste is almost non-existant there, whereas it is exploding in Korea apparently.

    Based on that, how can you say that saturation doesn't exist?
    There is not one woman on this planet capable of finishing an entire can of soda.

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    Re: MLM Market Saturation

    Quote Originally Posted by iamwil View Post
    Isn't that the topic?I suppose if you have some validation like some little Amish community where everyone is a member... Should someone just accept that assumption carte blanche or do you have some back up....say number of people v. reps in LA vs SK?Shouldn't you first show that it is? And I assume you also have evidence of this? hint in 1997 the WSJ reported that Amway went from 140,000 SK reps to 70,000 and sales dropped 64%, (down to 36 billion won per month, what knowledge do you have of growth today?

    Based on what?
    You really should be a litigator. Your ability to dance around an issue and turn it back on itself is profound.
    There is not one woman on this planet capable of finishing an entire can of soda.

  5. #5
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    Re: MLM Market Saturation

    Quote Originally Posted by iamwil View Post
    When I represented myself in my divorce that is exactly what my ex's lawyer said....after she asked where I went to law school.

    But in reality....you provided stories with holes large enough for pterodactyls to fly through...
    MLM is sort of like a bad divorce where they get everything.

    I'm not sure what holes you were referring to. The primary thing I brought up was Amway burning out their market in socal and having an expanding one in Korea. Are you contesting that dinosaur boy?
    There is not one woman on this planet capable of finishing an entire can of soda.

  6. #6
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    Re: MLM Market Saturation

    Quote Originally Posted by iamwil View Post
    Our recomendation to our new affiliates is to set a goal to get 25 customers....once you have 25 regular customers, then you can teach others to do the same as you have done it.

    and in that search for 25 regular custoemrs, there will be more than one of them which will recommend products to others, and/or inquire about the business. This is what we speak of when being product oriented, having an interest and satisfaction first in the products and then decide to do the business.

    Now of course if everyone could get 25 customers, and then teach others to get 25 customers your typical OMG its a pyramid and lookee markets saturation will occur in 7 generations!

    But the fact of the matter is not everyone has an interest in or the werewithal to aquire 25 active customers. So it doesn't occur.

    How many McDonalds are there? How many active customers per McDonalds? Have they quit building fast food joints? Are they in danger of market saturation, just because if you commute near any big city you can see 10 of them a day? Is buying a McDonalds a scam?
    That 25 customer suggestion ought to be a rule. But other than that, it's refreshing to se an MLM focus on retail.

    Lets talk about McDonalds:

    There's a huge difference between an MLM distributor whose sales volume is virtually 100% in network, and a business that has numerous recurring retail customers.

    In the case of McDonalds, or any other chain, market share is the key, just like in any internet sales business. Up to a point, opening additional stores results in a growing percentage of the market share. At some point, though, opening any additional locations will lower the profit of existing restaurants in the area.

    Here's whare the MLM nearing saturation and the traditional business chain differ:

    The McDonalds business will still remain profitable. Just to make up a number, if the local franchises were pulling $1 million each, and the new one opens up, now they may each make only $850k or so, including the new owner. They can do this because there are so many retail customers. In MLM, the new distributor can't steer customers from existing distributors; they're doomed to languish, since those before them have already taken most of the customers and sold the opportunity to almost everyone who would be willing to do it.

    In MLM, in particular the vast majority of MLM's that don't need retail sales, the "greater fool" theory in investing holds true - there's always a greater fool willing to buy the investment, until the last person to buy in cannot find another to sell it to. In equities investing, your stock's value drops. In RE, your property value tanks, and no one will pay anywhere near what you're asking. In business, no one will buy your franchise (anyone want to buy a Border's Bookstore?) In MLM, there's no one left willing to buy the opportunity, at least not enough people under you to make you profitable. this brings me to my last point:

    In the Equities Market (company stocks), generally speaking, you can classify stocks as either growth or value. Growth stocks would be companies that are experiencing a meteoric rise, with their share value rising in kind. recall the various tech stocks in the late 90's. This can be analagous to a new MLM, literally exploding with downline growth. Value stocks are stable companies that don't see much growth, but are consistently profitable nonetheless. This would be your blue chip companies. This would be analagous to the Amways and Avon's. You can get in, but you're not going to see much growth with your business, since the company has already seen most of their growth.

    Really, just with inflation alone, companies that otherwise would have traded sideways can report sales growth. More money in circulation finds it's way into sales profits. This is part of the reason why the U.S. Stock Market has seen average double digit increases until a few years ago.

  7. #7
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    Re: MLM Market Saturation

    Another characeristic of saturation is exposure to MLM opportunities. If everyone in your area has been exposed to numerous MLMs already, then it doesn't matter if yours is new or not, to them it's still just another pyramid scheme. That market is then saturated. In that sense, it's not a cellphone market, or a juice market, but literally an "MLM market". Sort of like how the market for fast food may be saturated in a given area, regardless of whether you come in with a Taco stand or a burger joint or a sub shop. It's not specific to the type of food, but rather food in general.

    Remember, people don't look at MLMs as product-based companies. They just view them all as pyramid schemes.
    There is not one woman on this planet capable of finishing an entire can of soda.

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    Re: MLM Market Saturation

    Quote Originally Posted by needs2stop View Post
    Another characeristic of saturation is exposure to MLM opportunities. If everyone in your area has been exposed to numerous MLMs already, then it doesn't matter if yours is new or not, to them it's still just another pyramid scheme. That market is then saturated. In that sense, it's not a cellphone market, or a juice market, but literally an "MLM market". Sort of like how the market for fast food may be saturated in a given area, regardless of whether you come in with a Taco stand or a burger joint or a sub shop. It's not specific to the type of food, but rather food in general.

    Remember, people don't look at MLMs as product-based companies. They just view them all as pyramid schemes.
    Good point. If I had a dollar for every time I've heard someone say "Is that one of those pyramid schemes," I'd have enough money to recoup my losses from Quixtar. This is why they keep changing the name of their business type, and try to say that they're fundamentally different due to their complicated comp plan, even though they still pay out on multiple levels, and have uplines and downlines, you know, like an MLM does....

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    Re: MLM Market Saturation

    Quote Originally Posted by BoxAlarm126 View Post
    Good point. If I had a dollar for every time I've heard someone say "Is that one of those pyramid schemes," I'd have enough money to recoup my losses from Quixtar. This is why they keep changing the name of their business type, and try to say that they're fundamentally different due to their complicated comp plan, even though they still pay out on multiple levels, and have uplines and downlines, you know, like an MLM does....
    The association to pyramid schemes is the single most damning factor for MLMs, market saturation aside.
    There is not one woman on this planet capable of finishing an entire can of soda.

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    Re: MLM Market Saturation

    Quote Originally Posted by iamwil View Post
    ...so if the networker leaves to run off and jump ship to another company....they leave their customers behind.
    If I were a network marketer, I'd find a reason to obtain all of my downlines' e-mail addresses, so that I could solicit them if I were to start another business, MLM or otherwise.

    Matter of fact, perhaps it wouldn't be a bad idea to join a couple of joke MLM's, like Stiforp and 124online, the ones that purport to make recruiting effortless, do each one for a few months or so, and get all their e-mail addresses. Then, join the MLM you really want to join, and solicit all of your former downlines.

    I think this already happens in some way, shape, or form in MLM already.

    Just ask for e-mail addresses to receive your monthly or weekly newsletter, as the case may be.

    If someone feels that they need to do something like this in order to be successful, then the system they're in probably isn't structured to enable them to do well in the first place, otherwise.

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    Re: MLM Market Saturation

    Quote Originally Posted by iamwil View Post
    When I represented myself in my divorce that is exactly what my ex's lawyer said....after she asked where I went to law school.

    But in reality....you provided stories with holes large enough for pterodactyls to fly through...
    Remember the old saying, "A lawyer who represents himself has a fool for a client"
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  12. #12
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    Re: MLM Market Saturation

    Quote Originally Posted by iamwil View Post
    Now when I train someone to build a business, I get a small percentage, and they get the large percentage, it isn't much, but it all adds up. And since we are customer based, our customers are not networkers, they are not loyal to the networker but to the company, they like the products for the products, so if the networker leaves to run off and jump ship to another company....they leave their customers behind.
    Really? Then how come we keep hearing these stories of people with a sizable downline of customers jumping ship and going lock stock and barrel to a new MLM scam? Usually because the last one is about to burn out. Why do the "customer" go with them?

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    Re: MLM Market Saturation

    That's not what I meant. I'm not trying to say that because MLMs have levels, or are pyramid-like in design, that they are somehow bad. What I'm saying is that people automaticlaly associate anything MLM with the negative stereotype of "pyramid schemes" a.k.a. scams. And it's the association itself, not the actual structure of the MLM, which is what causes most people to be unwilling to participate in these types of organizations.
    There is not one woman on this planet capable of finishing an entire can of soda.

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    Re: MLM Market Saturation

    Quote Originally Posted by BoxAlarm126 View Post
    I'd like for us to discuss MLM market saturation, why it's a truth, or why it's only a myth.
    If market saturation isn't a myth, then it should be easy to answer this question.

    Name one MLM company that has reached market saturation, and state why you believe it was market saturation that prevented their further growth?

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    Re: MLM Market Saturation

    Quote Originally Posted by FST36 View Post
    If market saturation isn't a myth, then it should be easy to answer this question.

    Name one MLM company that has reached market saturation, and state why you believe it was market saturation that prevented their further growth?
    Perhaps not total saturation, as far as the company itself is concerned, but rather relative saturation, which means that the bottom level has no chance to grow their business like those before them have. That's where the churn comes from - those at the bottom got in too late, they quit, and one or two replace them. That's still growth, but it's at a much slower pace.

    Since most MLM's are recruitment focused, building the downline is the main focus. If it will take you much longer to build your downline than it did for those that got in much earlier than you. That's a relative saturation. It affects those at the top a little, and the effect becomes more and more pronounced as you progress down to the bottom.

    Saturation doesn't mean no sales whatsoever. Saturation means that most of the bottom line distributors will remain cash flow negative due to lack of opportunities to build their own network, like those at the top line.

    As for an example, how about Trek Alliance? As more and more people learned about their deceptive practices, they couldn't rope in enough fresh meat to keep the system going.

    Really, I could just post a list of MLM's that were shut down or otherwise defunct, and for many of those, the beginning of the end was when they failed to keep recruiting downlines.

    Edit: If one of the top lines got a few thousand downlines the first year, and the newest ones can't get more than a dozen or two in the same time frame, then I'd call that saturation.
    Last edited by BoxAlarm126; 09-29-2011 at 12:00 PM.

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    Re: MLM Market Saturation

    ACN. They started out in a newly deregulated market, but then competition sprang up out of the woodwork. They capitalized on the initial growth of that market until market saturation set in, among other factors, putting them where they are today. Needless to say, they are NOT a leader in that industry.

    Now, everyone has cellphones. When I tried to sell people cellphones through ACN they told me they already had one. Same with the videophone. They said they already used SKYPE. Not to mention they said they'd done pyramids before and don't want to do this one.
    There is not one woman on this planet capable of finishing an entire can of soda.

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