The Convenient and Lucrative Way to do MLM Business

* Timing of cashack credit: The usual practice is to calculate the amount of cashback you have earned on the anniversary date of your account; the method of paying it back to you is by crediting your account.

There are cashback credit cards however, that credit your account on a more frequent basis, even monthly.

* Annual fee: Expect to pay a higher annual fee for a cashback credit card than a card with no rewards scheme. In a way, this is how the credit card issuer will recover the cost of administering this credit card rewards scheme. Compare credit cards and see which one gives you the best advantage. Going by the above case study, if you are likely to earn $120 per annum in cashback rewards you will still come out on top if the annual fee was $69.

* Ceiling on cashback: There are cashback credit cards that limit how much you can earn to a certain amount, say, $10. This would be fine if your average spending rarely exceeds $1000 a month, but if it is significantly higher then you will prefer a card that does not put a ceiling or, at least sets a higher limit.

There are some credit card rewards programs that allow you to convert rewards points into cashback credits. In this case, they may set a minimum number of rewards points to be redeemed, for example, 4000 rewards points to be equivalent to $20.

* Flexibility: Certain cashback credit card have a limit to the refund for a particular purchase, e.g. food purchases or petrol. You don't want them; you want those cards that give credit on whatever you buy.

The first condition to really maximise the benefits of cashback credit cards is to pay your account in full every month. If you don't, the interest accrued on unpaid balances will quickly wipe out your cashback gains. In some cashback credit cards, the corresponding purchases will no longer be eligible to earn cashback. If you can't meet this requirement, then you may not be suited to a cashback credit card.

For some cashback credit cards, you may get extra cashback points if you use your credit card at certain stores and outlets which have made arrangements with the credit card company as participating sponsors. Look for these opportunities to earn extra cashback credits.

The best way to get the most cashback credits is to charge all spending on your credit card. This means charging all your regular bills, groceries, petrol, clothes, a holiday everything. By doing thisScience Articles, your cashback will build up very fast.

So, a long time friend that you lost touch with for the last 10 years gives you a call and asks to meet up at Starbucks. After some small talks and all that, he/she then introduces a new revolutionary product and sketches out the marketing plan using neat little circles on a piece of paper and explains how you stand to get rich by selling it. Throw in jargons like passive income and downlines, you suddenly realise you’re beginning to be sucked into the dream they are selling called Multi Level Marketing (MLM).

No judgment. We get it - living is getting expensive, so if you can get some extra income, why not, right?

And now, you’re curious. You probably have a few questions in mind like, “Is MLM bad?”, “Is this practice legit or is it a scam?” etc. Well, you’ve landed on the right page. Read on to know if you can be rich and if it’s the right opportunity for you to make extra moolah.

First, what is MLM? Is it a legit business model?

Also known as network or referral marketing, MLM is a distribution-based marketing strategy that contains two or more tiers of commission overriding (depending on the company). It offers the opportunity to become involved in a system for distributing products to consumers.

In other words, MLM companies build and manage their sales force by recruiting and motivating independent distributors to go out and sell products - REAL products from dietary supplements to kitchenware to beauty products. Some of the brands that you might be familiar with are Avon, Amway, Mary Kay, Herbalife, Cosway, Tupperware, etc.

It’s easy to see why people are tempted to join MLM businesses. Unlike a person starting a business from scratch, you don’t need a huge capital to join in. In a statement, Lawrence Cheah, Direct Selling Association of Malaysia (DSAM) Executive Director shared that the ‘starter kit’ for legit companies is usually below RM200 (sign up fee will be the price paid to purchase the product).

That said, there also some companies that only don’t require you to make a minimum purchase upon registration, like NuSkin, for example.

On top of that, the MLM participant has the support from the direct selling company that supplies the products and sometimes offers training as well. So nice, right?

Basically, the goal of MLM is to move products without extra costs like marketing collaterals, but using the network of distributors instead. The more product the business will be able to sell, the more money they’ll make.

In Malaysia, there are about 253 licensed MLM companies (as of 2015) - which means MLM is legal in Malaysia. The companies need to register with the Direct Selling Association of Malaysia (DSAM) and are regulated by the Ministry of Domestic Trade-endorsed Code of Conduct.

So, MLM is NOT a Pyramid Scheme?

NOPE. Many MLMs blur the lines between being borderline scammy versus being legit direct marketing companies. There are some telltale red flags to watch for. The more red flags that are checked, the more the MLM borders on being a scam.

Here are some differences between MLM and Pyramid schemes:

Also, take note that although MLM itself can be a legitimate distribution strategy, many MLM companies have shady/exploitative practices and schemes. It’s almost like they were set up to make money off its distributors than from customers outside the network.

Take LulaRoe (an American MLM clothing company), for an example. In October 2017, this company kena class-action lawsuit for being a pyramid scheme. Apparently, it required distributors to pay an onboarding fee and invest in stock to join (which could be up to US$9,000). Not only that, LulaRoe consultants were encouraged (read: pressured) to recruit new members so that they can receive bonuses that are based on how many new recruits (who also need to pay tak masuk akal fee) they brought to the company.

Malaysia also got a case - A local daily reported that the Penang Domestic Trade and Consumers Affairs Ministry raided an MLM company (they didn’t mention the name) and seized RM201,136.00 worth of health products. The company was charged under Section 4 of the Direct Sales and Anti-Pyramid Schemes Act 1993 for conducting direct sales without a valid license.

According to the State Director, it was likely that the company, which has a license for retail sales, had resorted to direct selling and pyramid scheme to rake in faster profit. On top of that, it also attracted members by offering lucrative bonuses with the sales of the health products, which are priced KAW KAW - from RM500 to RM3,000 per product.

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You must be thinking, “Aiseh, how to know if this MLM business in Malaysia is legit onot?”

Must have a Direct Selling Association Malaysia (DSAM) and Suruhanjaya Syarikat Malaysia (SSM) certificates.

Based on the business model, as an MLM distributor, you’ll make money from two revenue streams:

Money through sales of the products/services you sell - this part typically makes up the majority of your revenue when you first started.

Commission on sales made by team members/downlines. Over time, once you (distributor) have expanded your network through recruitment of downlines, this typically overtakes the revenue made from the individual distributor’s sales.

This means the more downlines a distributor has and the products are selling like hotcakes, the more money they will be making. Do this enough times and you’re a dancin’ millionaire, right?

Well, let’s take a look at the compensation plan from the largest MLM company in the world, Amway, for an example...

As an Amway distributor, your income is linked to overall sales and is calculated using a points system rather than per unit or purchasing cost.

NOTE: Here are some terms Amway use in their business:

Point Value (PV) – the numerical value is given to a product. Used to calculate the rebate percentage earned.

Business Value (BV) – equal to the Distributor Acquisition price (DAP) of Amway products minus taxes.

Distributor Price (DP) - purchase price as a distributor.

Customers Price (CP) – the selling price of the product to non-member customers.

Anyway, according to Amway Global, you can make money from:

Distributors are able to sell their products at a mark-up (the difference between cost and retail price) to earn a retail margin on the sale. They can set their own prices, but Amway does establish a suggested retail price for every product it sells.

For example, you bought a product at RM100 (DP) and sold it at RM113 (CP). You basically made RM13. So, if you can sell 3 of that in a day, you’ll get RM39, and if you can sustain that every day for the next 30 days, you can earn RM1,170 for that month!