Let me be honest here. I was attracted to multilevel marketing because my recruiter showed me the proofs of income by him and other members. All I had to do was purchase their product (which was useless to me) and make two more members join the program. Sounds simple right? I did join and tried pulling two members. I could manage that too but they didn’t put the efforts and my dream of becoming a millionaire was shattered.
This was back in the year 2000. That time online MLM schemes were not many. I had just started my job back then. I quit my job in 2014. All this while I was searching for ways to make money online. Unlike the year 2000, I was doing thorough research on the pros and cons of every opportunity. After rejecting many opportunities, two opportunities appeared in front of me. MLM and affiliate marketing.
I decided to give MLM one more try as frankly, I didn’t work properly on it back in 2000. I am also doing affiliate marketing for the last 2 years. Let’s see what are my findings for MLM and affiliate marketing
What is MLM?
MLM is purchasing a product and recruiting people to purchase the products. Then encouraging those people to recruit more people. You keep on doing that. Depending on the program, you get a certain percentage of commission from each member who joins under you. They (and you too) need to keep purchasing those products at set intervals (usually monthly) to stay in the program. The person recruited you too get a commission from you and people whom you have recruited.
There are many types of MLM programs. Unilevel plan, binary plan, hybrid plan, gift plan and so on. The rules about making money differ a bit in each plan but the basic principle remains the same.
There are plans where you don’t need to purchase any product but pay to join the program. BEWARE, all such plans are illegal.
In short, MLM is a pyramid scheme. Most pyramid schemes are illegal as more than 90% of MLM programs violate the conditions set by FTC and state attorney general. Trust me, most MLM recruiters will tell you that their plan is not illegal but many MLM companies are still operating because they are yet to be prosecuted for the policy violations.
Having said that, there are some legal MLMs too 🙂
What Is Affiliate Marketing?
‘Affiliate Marketing’ can be defined as earning a commission by selling products or services that you don’t own. You don’t have to worry about inventory, shipping, refunds, exchanges, etc. Just sell the product and bag the commission.
It is pretty straight forward. If you manage to sell, you earn a commission. If you don’t sell, you don’t earn. Depending on the products and network, the commissions can range from 1% to 75% of the product cost. You need to sign up at affiliate networks like ClickBank, jvzoo where sellers list their products to sell or you can join the independent affiliate programs and sell the products.
You can use your website to list the products and run paid promotions to sell them. You may also sell the products to your mailing list if you have one.
There is no monthly commitment to sell the products. You get commission even if you manage to sell just one product.
Disadvantages of MLM
I am not going to discuss the advantages of MLM and Affiliate marketing. Both of them can be done by sitting at home and both are capable of making money that you are aiming for. Let’s only discuss the disadvantages of MLM and Affiliate marketing.
Here are a few disadvantages of MLM programs
- Most of the MLM companies required monthly commitment of product purchase to stay in the program. If you don’t pay you don’t get the commission. Rejoining will put you at the bottom of the pyramid.
- You don’t earn a commission if the people you recruited quit in between.
- You don’t earn enough commission if the people you recruited don’t recruit more people.
- The compensation structure can be difficult to understand initially. By the time you understand it completely, you have either earned a lot of money or you have wasted your time and effort.
- If one MLM program doesn’t work for you then you can quit and join other MLM program but you again start at the bottom of the pyramid.
- Most of the MLM companies are borderline illegal (sorry but that’s a harsh truth). One fine day they just disappear (mostly with your pending commission if any).
Disadvantages of Affiliate Marketing
Affiliate marketing too has its dark side. Here are a few drawbacks of affiliate marketing
- The commission of easily sellable products is usually less. Sometimes less than 5%.
- Marketing a product can be challenging unless you are good with paid and free promotion methods.
- Not all products that you sell are great. If the product has got a high refund rate, your commission gets impacted too.
- You will not earn thousands of dollars from day one. It takes time to get established.
- Not all affiliate programs are trustworthy, especially the independent ones. They not only have low commissions, but there may also be delays and errors in the payment.
- Like MLM companies, independent affiliate programs may shut down suddenly (mostly with your pending commissions).
Which Is Better?
I know that I have confused you here 🙂 Let’s try to analyze this rationally here. You may get the impression that all MLMs are fraud but that is not the case. People are earning well from MLMs.
The initial costs are high for MLM in most cases. Also, your success depends on the networking skills of people you recruit (and people they recruit further). You have no control over that. Also, you lose a lot of time, efforts and money if you join a fraud or wrong MLM company. Of course, you can join multiple MLM companies but that will mean even higher startup cost.
On the other hand, the success and failure of affiliate marketing depend on your efforts in the right direction. Only you are responsible for it. The startup costs are low. You can change the affiliate programs easily if your current program doesn’t work out. Due to the very low startup cost, you can become part of multiple affiliate programs easily and increase your chances of success.
For me, the clear winner is affiliate marketing. If you are patient, persistent and give it a time to establish, you are more likely to succeed with affiliate marketing
And did you know that wealthy affiliate teaches you how to do affiliate marketing step by step? Starting from how to select an affiliate marketing niche to developing websites to marketing your website, they teach you everything in detail. That increases your chances of success as you are the one who will be taking all the actions for its success.
Not only that, but you can also try this platform for free for 7 days and no credit card details are required to sign up. You can develop one free website and complete one certification course of 10 sessions during your free trial. They have been doing it for the last 10 years. Do read my detailed review of the wealthy affiliate here.
If it works, you get a head start with your affiliate marketing journey. If it does not meet your expectations (which is unlikely), you at max lose 7 days of effort but still gain some great insights about affiliate marketing. No harm in giving it a try right? Just click on the button below to join wealthy affiliates and get a head start.