(NaturalNews) The world of network marketing is undergoing a radical, positive transformation. I've been investigating half a dozen network marketing companies over the last twelve months, and while I haven't been surprised by the usual disappointing suspects (Zrii, Monavie, etc.), I've also found something rather startling: A new wave of emerging network marketing companies that bring a new level of integrity, vision and product quality to the network marketing industry.
As you'll see here, this new wave of
network marketing companies shatters the
myths commonly associated with old-school
direct sales. Even more interestingly, the
social implications of these new
companies are nothing less than groundbreaking. I'll explain why as we explore their influence on issues like
corporations vs. the People, the decentralization of
power, the "anti-Wal-Mart effect," the future of
money and even the mainstream acceptance of natural
health products.
I'll discuss each of these topics in this
review, and I'll offer short reviews on several emerging direct sales companies I'm looking at right now.
A healthy dose of skepticism is in order
But first, let me start where you might be starting right now: Network
marketing companies? Are you kidding me? My first thought was the same skepticism you might be feeling right now.
I've seen Herbalife, the Amways and the Monavies. I've been hit up by dozens of companies over the years, each hoping for me to publicize their
products. But time and time again, I was disappointed by their formulations (too much filler), their integrity (too much "get rich quick" hype) or their product claims (this cures everything!).
This went on for a number of years until I met John Easterling of the
Amazon Herb Company, who challenged my outmoded views of direct sales companies. As I quickly came to learn (see my full review below), the
Amazon Herb Company shattered the myths I once held about direct sales companies being populated by self-centered, ill-informed pushers of overpriced products. In fact, I was delighted to find Amazon Herb Company distributors to be remarkably well-informed, generous, compassionate and committed to the healing arts.
To this day, in fact, some of the most impressive people I've ever met are those I met in the Amazon Herb Company (and I'm not even a distributor, but I did give a lot of volunteer speeches for the organization).
This experience broke me free from the outdated, limiting beliefs I had once held about direct sales companies. The Amazon Herb Company demonstrated to me that with proper leadership, integrity and a genuine commitment to product quality, a direct sales company can be
far more effective at putting lifesaving products into the hands of people than any other distribution model.
In fact, I came to quickly realize that the
structure of such companies is irrelevant to their
nature. Direct sales can be outstanding or disappointing, just like any other company, regardless of its sales model. For example, I'll bet you can think of lousy retailers (K-Mart comes to mind) as well as impressive retailers (VitaCost, for example). The
character of the company counts more than its distribution model.
In addition to that important realization, I also came to understand that the direct sales distribution model is, in many ways, far superior to traditional retail
store distribution models (I'll explain why in a bit).
Monavie, Xango and Zrii
Most of the attention in the direct sales space over the last few years has been garnered by Monavie, Xango and Zrii. I've already written about Zrii, which I personally consider to be a deceptively-marketed, "junk
juice" product associated with a false guru. Any time a network marketing company goes to great lengths to actually
hide their list of ingredients, that's a sign of deception, if you ask me.
At the same time,
these three companies are commercially VERY successful!How can that be? If their products are made largely with non-impressive filler juices, how can these companies be so commercially successful? What do they have that makes people want to keep buying (and drinking) their products?
The answer, of course, is found in their
compensation plans.
Lousy products, brilliant compensation plans
Despite offering unimpressive products, these three companies have become very commercially successful. Monavie is perhaps the best example of this, so I'll focus on its compensation plan here. The brilliance of the Monavie plan is that
it's a binary compensation plan that leverages teamwork and self-interest to create a cascading, viral marketing wave of interest from
consumers.
Let me describe it this way: Almost everyone wants to get something for nothing. Most people who join network marketing companies want to earn a fortune without having to expend any real effort in the process (or at least the minimum effort required).
In a binary tree compensation plan (like the one offered by Monavie), people who join the company hoping to get rich without any effort may begin to see new distributors appearing underneath them, in their binary tree "downline." Over time, this binary tree of distributors can become quite large, and the larger it gets, the more money the "self-centered" distributor
could earn. But here's the catch:
They won't earn a dime unless they personally enroll two people themselves.In time, the self-centered distributor begins to see their binary tree growing, and they realize they are now missing out on money they could be collecting! All they have to do to start collecting that money is personally enroll two (or more) people, and then they qualify to start receiving commissions on their binary tree downline...
even on some of the people they didn't enroll themselves!Naturally, when this person enrolls two new distributors, those distributors get placed somewhere beneath them in the binary tree, potentially underneath
other distributors who are now suddenly seeing people appear underneath them, too. And they, of course, start
thinking the same thing: Gee, if I just enroll a couple of people, I could be getting PAID on all this!
In this clever way, a binary tree compensation plan motivates a typical "self-centered" distributor to act in their own self interest by enrolling two (or more) people. This action, of course, simultaneously serves the interest of the entire organization, including others in the binary tree, due to its spillover effect.
Because of this binary tree structure,
enrollment goes viral, and success becomes infectious. Rather than each person being on their own, fighting over enrollment candidates, the binary tree structure encourages people to
work together as a team. One person's success spills over to the success of the next person. The whole thing goes viral quite rapidly, resulting in not just explosive commercial growth, but also a more friendly teamwork attitude among distributors. (It's not without some level of bickering, of course, but that happens in any organization...)
The real root of Monavie's commercial success
This is, above all else, what has made Monavie a commercial success (in my opinion).
The product is practically irrelevant. What made Monavie is the compensation plan, and how it leverages basic human psychology to amplify its viral success.
In a sense, Monavie is a commercial success because it's aligned with human nature: It leverages each individual's self-interest and fear of "missing out" on money they could be getting right now. Monavie works because it's in each distributor's interest to enroll a couple of people,
even when they are only thinking of themselves!This is what has allowed Monavie to become a $1 billion company, in my opinion.
You might wonder (as I did), what would happen if someone combined the brilliance of the Monavie compensation plan with an honest, high-potency, no-compromises product. Precisely such a company has just been recently launched, by the way. I'll review them later in this story.
The Wal-Mart model vs. the network marketing model
Even though I don't endorse the Monavie product line, what the company has unquestionably demonstrated is the power of person-to-person distribution of
health products. This topic, it turns out, has ming-boggling social and commercial implications.
To get to these, let's first examine the Wal-Mart model of product distribution. The "Wal-Mart Model" represents every brick-and-mortar retail establishment that distributes products.
In the Wal-Mart Model, there are six key players, each of which has a financial stake in the sale of products:
1) Product manufacturers
2) Advertisers and marketers
3) Product distributors / wholesalers
4) Product transportation & shipping companies
5) Retail stores
6) Customers
Let's look at how this product distribution model works:
First, the
product manufacturer makes a product (a bottle of juice, a bottle of
supplements, etc.) This product might cost 10% of the actual retail price it will eventually be sold for.
Next, the
advertisers and marketers spend millions of dollars
running ads in the popular media in order to
create consumer demand for the product. This often adds 20% (or so) to the product price.
Once this consumer demand is in place, the manufacturers sell it to
product distributors at about 40% of retail price (a 60% discount from the retail price).
From there, the
product transportation companies get paid to deliver the product, in bulk, to retail
stores. This typically adds about 5% - 10% to the product price.
The
retail stores then buy the product at about 50% - 60% of retail price and put it on their shelves to be sold at full retail price.
Finally, a consumer enters the store, buys the product and pays retail price.
In this model, if the product costs $100, here's how this money is actually distributed:
• The manufacturer got $20
• The advertisers got $20
• The distributor got $10
• The transportation company got $10
• The retailer got $40
As you can see, your $100 in cash spent at the
health food store effectively pays out commissions to all the various players in this distribution chain.
You may also recognize the interesting fact that, since there are thousands of health retailers serving millions of customers around the world,
this distribution model is a network marketing model, too!Every time a consumer buys the $100 product, for example, the distributor earns a 10% commission, the retailer earns a 40% commission, the manufacturer earns 10% as profit, etc.
How the direct sales model compares
In a direct sales model,
the advertisers, distributors, transportation companies and retailers are all eliminated!They are replaced with a human network of individuals who serve those same functions: Advertising, distributing, retailing, enrolling, etc. Just like in the above example, retail sales that occur in this network generate commissions for the people who brought you the product. Except that in the case of network marketing, it's really the People -- a network of individuals -- rather than a handful of corporations who earn the commissions.
In essence, then:
The direct sales model is a more Democratic, decentralized model of product distribution that distributes economic benefits to the People rather than concentrating them in the hands of a few corporations.
Where the retail distribution model creates
profits for the few, direct sales distributes those same profits (markups) to the many (distributors).
Key differences between direct sales vs. conventional retail
Here are other key differences between the two models:
• The Wal-Mart model economically benefits a few rich corporations.
• The Direct Sales model economically benefits a large network of People.
• The Wal-Mart model traps wage-slave
employees in a system of low wages.
• The Direct Sales model shatters the glass ceiling and creates the potential for unlimited earnings, regardless of education, race, or work experience.
• The Wal-Mart model wastes resources on needless inventory sitting on shelves in a massive network of local warehouses.
• The Direct Sales model delivers products to people as needed, bypassing local warehouses and avoiding the cost and waste of needless
real estate.
• The Wal-Mart model enriches
advertising executives, television networks and mainstream advertising outlets (think:
soda ads).
• The Direct Sales model enriches the people doing the work, spreading the word about intriguing, life-enhancing products.
• The Wal-Mart model encourages the formulation of cheap, low-cost products with high markup.
• The Direct Sales model makes possible the direct sales of high-quality products with only a 50% profit margin (although some direct sales products are also cheap, low-cost filler products, so be sure to discern the difference).
• The Wal-Mart model disempowers the People, giving them no voice in the product or the company (unless you are a wealthy shareholder)
• The Direct Sales model empowers the People, giving them a powerful voice in the future of the company: Its products, formulations, policies, etc.
• The Wal-Mart model focuses on the lowest price, regardless of
environmental concerns, sweatshop labor or other ethical considerations.
• The Direct Sales model demands accountability due to the combined voice of the large number of individual distributors whom the company must keep happy.
• The Wal-Mart model is considered successful when the people SPEND more money (weakens
household finances).
• The Direct Sales model is considered successful when the People EARN more money (strengthens household finances).
• The Wal-Mart model treats customers like cattle: Nameless, faceless Joe Public consumers who shuffle through security detectors, monitored by video cameras and secret anti-shoplifting agents.
• The Direct Sales model treats people like real people. It's a face-to-face business built on strong relationships and genuine trust (if you choose the right organization, of course).
• The goal of the Wal-Mart model is to take your money and get you out of the store as quickly as possible.
• The goal of the Direct Sales model is to show you how to MAKE money as quickly as possible.
The Wal-Mart model is, metaphorically speaking,
Communism.The Direct Sales model is, metaphorically speaking,
Democracy.In essence, the Wal-Mart model is about
centralized control.
The Direct Sales model, in contrast, is about
individual freedom.
Network Marketing distributes power among the People
When I first got all this, it was a stunning realization. The
Direct Sales model of product distribution and compensation represents a mass Democratization of power and profits. When done with integrity (with real products that offer real value at reasonable
prices), it is nothing short of revolutionary.
We are talking about a system here that completely bypasses the centralized, power-hungry, mega-wealthy corporations that traditionally funnel all the profits into their own profits, often while selling harmful (even deadly) products to consumers.
That model, I believe, is in many ways hopelessly outdated and socially lopsided.
Network Marketing is more efficient and uses fewer resources
The Direct Sales approach to product distribution uses far fewer resources to get the same job done (the job of distributing products into the hands of those who value them and benefit from them).
In the Wal-Mart model, hundreds of millions of dollars must be spent to buy land, build retail buildings, hire employees, stock inventory, advertise in local
newspapers, and so on. These are real resources being wasted: Land, commercial real estate, concrete,
paper, etc. And they're entirely unnecessary, because in the Direct Sales model, all this
waste is cleverly avoided.
This has serious implications for sustainable living and environmental stewardship. The Wal-Mart model, most people have come to recognize, is environmentally non-sustainable. But the Direct Sales model is not merely sustainable; it is
efficient! By relying on the People to do the job of a typical retail store, enormous real-world resources are conserved. The eco-footprint of the Direct Sales model, in other words, is vastly superior to the Wal-Mart model.
It doesn't mean Wal-Mart has no useful role in society, of course. People will always need cheap plastic spatulas, AA batteries and contact lens solution. They're not likely to buy these through a Direct Sales organization, and they need the convenience of having such products stocked locally on physical shelves. Convenience stores will always have a place, but for many products, they are remarkably wasteful and disadvantageous to the people.
Product acceptance and market penetration
In marketing schools, the term "market penetration" describes the percentage of the target market that has embraced your product. If you sell disposable razors for men, for example, and 4% of the men in the country buy your razors, you have achieved a market penetration of 4%.
Perhaps the greatest challenge for any product manufacturer is to achieve some degree of market penetration. For the big consumer product corporations in the world, that means running endless
television ads that try to convince people their virtually-useless products need to be purchased again and again, at ridiculously-high markups (like Swiffer cleaning products, or most pharmaceuticals).
The conventional retail model of product penetration
relies on advertising to imprint logos, packaging designs and product names into the heads of consumers. This is accomplished through various
propaganda techniques, including song jingles, implied sex appeal (beer ads), a hidden promise of social acceptance (soda ads, sports shoes, etc.) or even empty promises of health (drug ads). All these promises of course,
are really just clever lies disguised as entertaining ads.
The cost of such propaganda campaigns is so high that the amount of money left to put into the product itself is often shockingly low. A $1.00 can of soda, for example, contains about three cents worth of actual ingredients. Some prescription drugs, as another example, are literally marked up 565,000% over the cost of their ingredients. The conventional retail / advertising approach to product penetration is a tremendous waste of resources, and it results in extremely low-cost products being sold to consumers at ridiculously high prices.
The Direct Sales model is vastly superior to this because, by avoiding all the overhead of advertising, public relations and costly propaganda campaigns, Direct Sales companies are capable of bringing high-value products directly to consumers at reasonable markups (if they so choose). The money traditionally spent on advertising gets redistributed to People.
Even more importantly, the Direct Sales model is capable of achieving
impressive market penetration without the need for organized advertising campaigns. Why is this? Because the viral nature of face-to-face product demonstrations and distributor enrollment has the potential to reach every single person in society... even without a single dollar being spent on national advertising.
This is socially important because it allows people to learn about important health products they might otherwise never discover. The
FDA, you see, is engaged in a campaign of routine health product censorship. It has outlawed true, scientifically-supported health claims on all health products, and it has gone to great lengths to disrupt, oppress or otherwise destroy the natural products
industry. (If you're skeptical of this statement, see my articles on the FDA here:
www.NaturalNews.com/the_FDA.html )
Thus, if left to traditional product advertising, marketing and fulfillment channels, many genuinely miraculous health products would never see the light of day. The Direct Sales industry enables many critically-important health products to actually get into the hands of the people who need them most -- such as
cancer patients who can use South American
rainforest herbs to eliminate cancer tumors and regain their health (various
rainforest herbs deliver potent anti-cancer phytochemicals, including Una de Gato, Sangre de Drago and many others).
Through Direct Sales organizations, people have real access to lifesaving
herbs, supplements and health products that the pro-Pharma establishment would prefer to see outlawed entirely. This is one reason, by the way, why the FTC and FDA have both attacked Direct Sales companies so aggressively over the years: It's a product distribution channel they cannot control, and they absolutely hate the fact that two people can sit in a room and privately discuss the truth about anti-cancer herbs in a way that cannot be censored or regulated by the
government.
This is why Direct Sales organizations are, in one sense, a kind of
underground railroad of information: They allow people to pass along lifesaving information about
natural remedies that they would never learn through traditional, tightly-controlled information sources (network news, newspapers, magazines, etc.).
The social implications for this are nothing short of huge: People who are involved in health-related Direct Sales organizations
are more knowledgeable about natural remedies than those who are not. That's because they're plugged in to a channel of word-of-mouth information that is currently censored in traditional information sources.
The upshot of all this is that Direct Sales organizations provide not only an alternative channel for physical product distribution, but also
an alternative channel for knowledge distribution. In a very real sense, network marketing distributors are passing along the truth about health products like ancient storytellers would hand down important cultural knowledge from one generation to the next. The active people in Direct Sales today are the ones keeping alive the
endangered knowledge that
the FDA would just as soon wipe clean from our minds.
Personal freedom vs. the wage slave workers
Another important social implication of the new wave of Direct Sales companies is that
they are showing people how to successfully quit their jobs and build their own income streams.
The is especially important in these times of global financial crisis: Peoples'
paychecks are in danger. The vast majority of U.S. cities and states, for example, are now virtually bankrupt. Paychecks, pensions and health benefits are all endangered, and that means the livelihoods of those who depends on such paychecks are also potentially in
danger.
Thanks to the global financial wipeout of 2008, and the realization that
banks, governments and even well-known corporations are often skating on thin ice, there's a resurgence of interest in how to
create your own income, independent of any fixed paycheck.
For many people, the presumed reliability of a steady paycheck from a "solid" institution is suddenly being revealed as illusion. Reliable income, more people are realizing, does not come from a paycheck that can be taken away from you at any time; it comes from owning and controlling your own income, using independent sources. In this way, Direct Sales organizations are vastly superior to almost any job, unless you happen to hold a key position (board member, for example) of the
corporation providing your paycheck.
Even then, your paycheck in traditional jobs is almost always limited by unfair considerations: Your race,
skin color, speaking style, sexual orientation, marriage status, parental status, education, background, religion, etc. While job discrimination based on these criteria are illegal, anyone reading this who identifies with one of these probably has dozens of stories about how they were discriminated against in a job interview or job termination.
In Direct Sales,
nobody can keep you chained to poverty, and nobody can fire you (for any reason!). Your income is entirely up to you, and once you build it, it's yours to keep, month after month, year after year. You OWN the income stream, and it cannot be suddenly taken away from you.
That's real financial security. It's also one of the reasons many people are now joining more than one network marketing company at the same time: They are achieving income diversity by representing TWO companies offering products or services they feel aligned with. By doing so, they are creating double income streams that they own and control.
Furthermore, these income streams will survive any potential future currency switchover. If the U.S. dollar inflates to the point that it is someday abandoned by world banks, commercial transactions will simply continue in whatever new currency is introduced. Consumers still need health products, of course, and a network marketing distribution system will survive a currency collapse that might bring down a bank or even a government.
In essence, building a successful Direct Sales distributorship sets you free! It frees you from the cage of depending on a steady paycheck from an organization you can neither trust, nor rely on to provide for your financial future. In a Direct Sales organization,
you are building a pathway to your own personal freedom.
Of course, choosing the right Direct Sales organization is crucial to achieving your own, personal financial success. I review several companies later in this
article.
Success or failure at network marketing
I've heard people say that "most people don't succeed at network marketing." That's a funny frame of reference, because if you're talking about making money, then
nobody succeeds at the traditional retail distribution model.
I've never met anyone who got paid to shop at Wal-Mart. I've never seen someone go to a health
food store, buy a bag full of products, and have the cashier hand THEM a few hundred dollars on the way out!
Thus, by the definition of "success," the traditional retail distribution model has a zero percent success rate.
In contrast to that, millions of people are earning real money in Direct Sales organizations. Most earn only a little. Some earn a few thousand dollars a month, and a few of the hardest-working folks earn as much as six figures a month. (I've actually met someone earning over a million dollars a month, but that's extremely rare...)
Even those who aren't earning big profits are still winning by having access to life-enhancing health products. Granted, not all the health products offered by network marketing companies are impressive, but many of them truly are. The skin-care like from Nu Skin is quite impressive, by the way, and the Lluvia skin care line from the Amazon Herb Company absolutely blows away anything you've ever seen in retail (there's just no comparison whatsoever). If these Direct Sales companies didn't exist, consumers would have no access to these vastly superior products... at any price!
Compared to traditional retail distribution, the Direct Sales model makes everybody a winner: The consumer benefits from access to the unique product line, the distributor earns an income by introducing people to the product, and society benefits as a whole by eliminating the waste overhead of competing retail operations (inventory, advertising, etc.). There are no losers in this equation.
Unless, of course, the product is garbage. That's why choosing a Direct Sales company that operates with integrity is so important. Below, I'm reviewing FOUR companies I see as representing the future of Direct Sales. For each one, I discuss its strengths and weaknesses.
NaturalNews holds a distributorship position in two of the four companies, and I disclose those below. For each company, I'll also reveal what kind of person it is best suited for.
This article continues with a review of the top four network marketing companies operating today. Three of them are less than a year old. One of them is barely a few weeks old, making them truly ground-floor opportunities.
Click here to continue to part two of this article where you'll find out who they are...
About the author: Mike Adams is a natural health researcher, author and award-winning journalist with a strong interest in personal health, the environment and the power of nature to help us all heal He has authored more than 1,800 articles and dozens of reports, guides and interviews on natural health topics, reaching millions of readers with information that is saving lives and improving personal health around the world. Adams is an independent journalist with strong ethics who does not get paid to write articles about any product or company. In 2010, Adams created NaturalNews.TV, a natural living video sharing site featuring thousands of user videos on foods, fitness, green living and more. He also launched an online retailer of environmentally-friendly products (BetterLifeGoods.com) and uses a portion of its profits to help fund non-profit endeavors. He's also the founder and CEO of a well known email mail merge software developer whose software, 'Email Marketing Director,' currently runs the NaturalNews email subscriptions. Adams also serves as the executive director of the Consumer Wellness Center, a non-profit consumer protection group, and practices nature photography, Capoeira, martial arts and organic gardening. Known by his callsign, the 'Health Ranger,' Adams posts his missions statements, health statistics and health photos at www.HealthRanger.org
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