Second, specifically, how to judge whether he is a pyramid scheme company:
1. First of all, there is no company name in the directory of direct selling enterprises of the Ministry of Commerce, so it is definitely illegal to do direct selling.
Secondly, it depends on his behavior to identify pyramid schemes. Did you hold a group meeting to tell you about the head-pulling, pyramid model, five-order three-tier system and so on? Yes, it is pyramid selling.
Third, pyramid selling and direct selling:
(A) the concept of pyramid selling:
MLM refers to the behavior that organizers and developers illegally acquire wealth through developers or require the developed personnel to obtain the qualification to join on the condition of paying a certain fee. The essence of pyramid selling is Ponzi scheme, which is to distribute the money of latecomers to the income of pioneers. New pyramid scheme: no restrictions on personal freedom, no ID cards and mobile phones, no group classes. But under the banner of capital operation, attracting people to cheat money, using luxury cars, wearing gold and silver, etc. Use money to attract your relatives and friends, and finally make you lose everything.
(2) How to distinguish between pyramid selling and direct selling:
1. Difference 1: Is there an admission fee?
MLM usually has several obvious characteristics. The first is whether there is a relatively high entry fee. Some MLM companies will charge a hard entry fee ranging from 3500 to 1000 yuan. Of course, there are also some "smart" MLM companies, and they will have other flexible forms, such as charging hundreds to thousands of dollars for the first subscription. It is understood that these MLM participants get the qualification to join, introduce or develop others by paying the membership fee or paying the membership fee in disguised form by subscribing for goods, and get a return. In a regular direct selling company, there is no such fee.
2. Difference 2: Do you rely on high-quality products?
This is also the fundamental difference between MLM company and direct selling company. MLM companies often rely on products that are worthless but expensive. A set of cosmetics worth only tens of dollars can sell for hundreds or even thousands of dollars. It is worthwhile to standardize the product pricing of direct selling enterprises.
3. Difference 3: Is the product in circulation?
MLM enterprise is just a "crowdfunding" game, and the high admission fee and the low-quality and high-priced products that cannot be circulated in the market will not last long. Their sales method is to let all the entry-level sales representatives subscribe for products, but these products are not in circulation in the market, but only as samples or promotional materials for the next salesperson. In the end, all the salespeople have one hand, and the products are not circulated or sold in the market at all. Moreover, the income of the organizers of these MLM companies mainly comes from the admission fees paid by participants or the fees paid in disguised form by subscribing for goods. Because the products are not in circulation, most of the organizers use part of the fees paid by the late participants to pay the remuneration of the first batch of participants in order to maintain their operations. However, direct selling companies are completely opposite. On the one hand, the products of enterprises require good quality; On the other hand, products sell well in the market. For direct selling enterprises, the quality of products is the fundamental reason to determine the sales volume of products, because the distribution channel of products is from manufacturers to customers through marketing representatives, with no other links in between and few advertisements.
4. Difference 4: Is there a return guarantee system?
Once the products of MLM company are sold, they can't be exchanged, or try to set obstacles for customers. This is completely different in direct selling enterprises. All regular direct selling enterprises will provide customers with perfect purchase protection. For example, general customers can get 100% cash payment if they promise to get back the products that still have sales value within 7 days after purchase. For high-quality customers, some direct selling companies also promise to get back the products that have been used or have no sales value within 10 days (at least half of the remaining amount), and get 50% cash or 50% equivalent purchase amount.
5. Difference 5: Has the sales staff structure surpassed?
MLM companies that earn income by attracting talents usually present a pyramid-like sales staff structure. This sales structure leads to whoever comes first will be superior. At the same time, the first batch of participants get benefits from the membership fees paid by the members who develop offline, and the amount of benefits is determined by the order in which they join. As a result, the first participants are always ahead of the latecomers. This kind of unsurpassability does not exist in direct selling companies. In direct selling companies, no matter whether the participants join or not, the income is "more work, more gain".
6. Difference 6: Is there a store operation?
After the comprehensive rectification of MLM in China by 1998, many foreign direct selling enterprises have been transformed. Since then, the mode of "store hiring salesman" has become the main sales mode to standardize direct selling enterprises. This special way of direct selling makes salesmen subordinate to stores, which is not only directly related to the company, but also convenient for management.