The Difference Between Legitimate Direct Selling Companies and Pyramid Schemes

Brick stack representing pyramid scheme

We have all heard of pyramid schemes. Not only are such enterprises illegal, but they are buzzworthy when it comes to organized law breakers. Let’s be honest, people enjoy reading about corruption and businesses that do it the wrong way. They love to point fingers, and social media has made this easier than ever before. 

However, social media platforms don’t always apply context where context is due. And people tend to lump things together that have no business being lumped together. One such example is pyramid schemes vs direct selling.

These two have been conflated, and without good reason. Mostly, it’s because of a lack of understanding around precisely what direct selling is. Well, we’re here to set the record straight. Companies that use direct selling should not be labeled pyramid schemes.

And here are some of the reasons why.

Direct Selling vs Pyramid Schemes

First and foremost, direct selling is a business opportunity that relies on social networking. This is different from other sales companies that make use of a traditional retail establishment. This can either be a brick and mortar store or a website.

Through direct selling, a consumer purchases products or services through social networks. Some refer to this model as network marketing, since you are reaching through contacts or affiliates. In some instances, this might be friends. In other instances it might be through an organization.

But whenever a consumer purchases an item through direct selling, they are dealing with an individual. An entrepreneur works directly with these consumers to make sales. In this way, consumers have a relationship with the entrepreneur, as opposed to a larger company.

This personality is what many favor so much about direct selling. Consumers have a face affiliated with the products or services. And if everything goes well, this is a face they can trust. This might lead to additional relationships based on recommendations or referrals.

Buying products directly online.

And in addition to the face of the social networker, there is another important note to point out. The entrepreneur is selling products and services that are from legitimate companies. This is another way that direct selling is not a pyramid scheme. These are legal agreements based on personal relationships.

An entrepreneur believes that they can sell a particular product through their social network. The company backing the product agrees to this, and therein lies a legal agreement. Supply and demand and a sale of goods. It’s about as legitimate as it gets.

Get Rich Schemes

Direct selling has many advantages. For one thing, it’s a flexible industry, allowing people to largely establish their own working hours. Long before the work from home revolution took the world by storm, direct sellers lady had this freedom. But this freedom tends to cause some confusion on social media chatter.

Too many people associate flexibility with simple. This is not the case at all. Just because someone sets their own hours doesn’t mean they sleep in late every day. In fact, that is an accusation more than an assumption.

Pyramid schemes promise a cushy situation. Get in and get rich quick. They promote feet up and money raking in through the door. Direct selling cannot promise anything of the sort.

Direct sellers work very hard. And if some are seeing financial gain, it’s because they have tirelessly earned it. Like any industry, the harder you work, the more opportunities you create for yourself. And the more opportunities you create for yourself, the better your chances of financial gain.

A direct seller that has made a reputation for themself with a steady network of clients is a go-getter. No more, and no less. They work hard every day to be the best, to satisfy their clients, and keep companies happy.

This takes discipline and dedication. It means building a business model for yourself and sticking to it, perfecting it as you go. It doesn’t mean simply becoming a member and running the course.

Training is Key

Casual customer relationship meeting.

Legitimate direct selling companies have rigorous training programs in place. After all, this is a personal business, and there have to be behavioral and business standards in place. Additionally, these social marketers and sellers need to understand the products they are selling.

If you were to buy something from a direct seller, you’d want to know about it. How can it benefit you? How does it work? When will it run out?

Questions like this are important, and the answers even more so. If an entrepreneur is affiliated with a legitimate direct selling company, they’ll know these answers. Pyramid schemes do not have such training in place. There is no discipline in this way when it comes to being a member of a pyramid scheme.

And training comes in the form of ethics as well. Since you are dealing with people one on one, you are representing the voice of the company. Direct selling companies do not tolerate any falsities when it comes to sales tactics.

The sale of products should be done in a truthful and relationship based way. Training can be helpful to ensure these practices are maintained. After all, the company’s reputation is on the line. And what’s more, there are consequences for those who don’t abide.

Direct selling deals with high quality products and services. And therefore, they rely on high quality entrepreneurs to spread them into the world. In this way, direct selling is the farthest thing from a pyramid scheme.

Direct Selling is Not A Pyramid Scheme

Pyramid schemes want your money. Nothing more. Direct selling networks want your time and relationship. It’s true they want to sell you high quality products and services, but they want the relationship to continue.

These relationships can only flourish through honesty and integrity. The products will speak for themselves, but the relationship is what keeps the business moving forward.

Don’t be fooled into thinking any get-rich promise has your best intention at heart. Direct selling is not a pyramid scheme, as it is in an industry that cares for its professionals and its consumers. It is an industry that relies on relationships to keep driving it forward into the future.

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