Difference between Direct Selling Companies and Pyramid Schemes
Pyramid schemes are frauds. And most of them are disguised as direct selling companies who pretend to have interest in the market of their products. But what do you do if you want to take a leap of faith and invest in a legit business opportunity?
All you have to do is to know the difference between direct selling companies and pyramid schemes. Although pyramid schemes and direct selling have almost the same marketing structure as any other industry in the world, the service is undeniably different especially when it comes to the operational area.
1. Direct selling lets you earn from direct sale of a product. This is a legitimate business opportunity. They usually discuss about customer satisfaction, customer cancellation rights and refunds. They tell you that a customer can ask for a replacement product or get a refund when they are dissatisfied. Pyramid schemes won’t offer you this at all.
2. Legitimate Direct Selling companies offer you a business career that lets you start with just a little capital. Some may request for low entry fees that are refundable if the dealer decides not to pursue with the plan. Direct selling companies may offer you a no inventory investment business opportunity which means you may start with just one product.
3. Direct selling companies DO NOT encourage overstocking. When you do overstock, they give you the chance to return the items. Unlike pyramid schemes, they strongly encourage wholesaling or buying their products in large quantities and it’s up to you to sell them. You cannot return these purchases and you are left with a lot of stock that you may or may not sell.
4. Your position in the company is based on your sales and customer satisfaction. The higher your sales and better customer satisfaction, the higher your rank is. Unlike pyramid schemes, you may purchase your position. They encourage you to pay higher for a better position.
5. Legitimate Direct Selling companies offer high quality products that you sell directly to the public and not to someone you will recruit. Most of their products go under a lot of research and development processes before being manufactured and sold to the public. Pyramid schemes will not invest in the development of their products. Most of them aren’t even interested in making a market out of them. Their only aim is to gain profit through high entry fees.
6. Most Direct selling companies offer 100% money back guarantee. If you suddenly feel dissatisfied with your product or you no longer wish to pursue your business opportunity, they will get you a refund. No questions asked. Pyramid Schemes will not offer you this. No refunds at all.
7. Before entering a direct selling company, you have to read and follow their strict rules of conduct. They don’t just hire anyone otherwise they won’t get any sale from that 96 year old man. You have to follow their rules. Unlike pyramid schemes, as long as you have the money, you’re free to enter.
8. Direct selling is a marketing method recognized and approved in many countries including the United States. Pyramid Scheme has been banned and outlawed all throughout many countries which also includes United States.