Why I avoid Network Marketing

Having a background in business and marketing, I’m occasionally approached by friends and colleagues looking to get my input on new ventures they’re thinking of pursuing. Sometimes, these ventures are well-thought out, original and are simply in need of a sounding board and someone willing to spend the time to make them work. Sadly, others approach me with pitches to join Network Marketing schemes (which are sometimes called Multi-Level Marketing). I once came close to signing up with one of these companies, but a closer look convinced me to walk away – a position I’ve continued to hold over the years with similar ventures.

What is Network Marketing?

Network Marketing is a business model in which a distributor network is assembled to sell a product or service. A common example in England is the Avon Group, which was an enormously successful business based around stay-at-home women who might want part-time work but who couldn’t commit to full-time employment.

Most Network Marketing companies feature a low investment upfront – maybe as little as £100 – which gets you a basic sample kit of the product you’ll be selling. The idea is that you’ll sell this product line to friends, family and other personal contacts, impress them with the quality of the product they’ve bought, then convince them to start selling it too. If you manage to convince someone else to start selling the product, you’ll receive a portion of their sales in addition to your own.

As an example, let’s say that your Network Marketing Opportunity sold Gold Bullion. For every bar you sold, you receive a 1% commission – so on a bar worth £1000, you receive £10 back. If you recruit a friend into selling these gold bars as well, you might earn 1.5% on anything they sell, giving you £15 on every bar they sell, encouraging you to spend more time recruiting than selling (as you’ll make more money). If that person goes on to recruit someone, you might get a small cut of their sales too, recognising your initial efforts in training the second person.

Network Marketing sounds great – what’s the problem?

  1. Effort does not equally correlate to reward in Network Marketing. Every Network Marketing effort I’ve been pitched tells me that I’ll get out what I put in. This sounds obvious – after all, there’s no such thing as a free lunch, but in all honesty, most people don’t realise how much effort is required. In my current company, there are more than 3000 employees working across the country, supporting me in a whole host of areas I know nothing about – HR, Accounting, Sales, Commercial Awareness, Operations. In a Network Marketing business, it’s just me (at least at first). I need to promote these products, sell them, do my accounts, manage growth opportunities, and ultimately, that’s a lot of work for one person.
  2. Lack of control. With Network Marketing, you ultimately have no control over the quality of the product you’re selling or the overall reputation of the business. If it turns out your gold bars are actually copper sprayed with gold paint, you can’t do anything about it. You don’t run the operations of the business – someone else does.
  3. High potential for scams. The world of Network Marketing is a hotbed for scams and dodgy dealers. Many have had run-ins with the authorities for being ponzi schemes or similar and to the unwary, the lure of ‘running your own business’ could overpower warning signs around the legitimacy of the opportunity you’re reviewing. Take for example, the idea that it’s more profitable to recruit and get other people to sell for you than it is to make sales yourself. If you pursue this strategy, you’ll be selling people on the idea of being able to sell a product you haven’t event sold yourself – you’ve only been able to sell the idea of selling it.
  4. The ‘need’ to acquire customers. A big part of the sales pitch for most Network Marketing opportunities is the idea that you should leverage your existing relationships with friends and family to recruit the first few members of your team. The foundation of this approach is based around the loyalty, trust and unwavering support that many of these individuals will place in you, but this comes with an enormous downside. In most of these businesses, you’ll be selling products which are overpriced and/or poor quality. Once your friends and family realise what you’ve been selling them, they’ll quickly turn sour, especially if you’ve talking them into placing a big order.


Ultimately, I believe Network Marketing seems like an awful lot of effort for very little reward. One opportunity I was pitched was brought to my desk by three different people in the space of six months. I turned all of them down based on the mediocre quality of the product and the seeming saturation of the market. Sure enough, within two years, all three of them had given up the game and taken up regular employment again.

If you’re serious about running your own business, I’d take a pass on anything that looks like a Network Marketing opportunity. If you really, truly think you’ve found one that’s the gold standard in the industry, take some time to evaluate it independent of what the company wants to show you. Look at reviews online, ask around in your local community, get a rounded picture of what it is you’re signing up for.

If, after all of that, you still want to move forward with it, you can always write to me for an unbiased opinion on the quality of the business and my thoughts on how it could work for you.