Over the last month, I have noticed every time I hang out in Mohandeseein or, Zamalik a group of youth sitting in the next table that keep discussing and calculating numbers for so called potential business opportunity. If you have witnessed this you definitely know it’s Network Marketing, other terms would be used include pyramid selling,Multi-Level Marketing, and referral marketing. Also it recently summed in one word: QNET. Even some of my friends been involved and was trying to approach to hunt a new prey. Some was so straight when invited me and mentioned the famous term [Network Marketing] and others have used a sneaky way to get me into the so called meeting trying to convince me to join a party of quick money seekers promised big money with little work.
While some people try to convince themselves to act like entrepreneurs or see it as a part-time job, I don’t know how people could trust such an offer when you have to pay fist to the company to get hired. If their business model is really to hire you to start selling products, then paying up-front shouldn’t be unnecessary and inappropriate…
Financial Freedom //
A phone call from an old friend works as HR Manager, we really didn’t connect a while ago but this didn’t stop me to accept meeting her to explore cooperation in a new business venture she started recently with some partners [The same old trick to make it as mysterious as it could be]. It took 3 minutes before I stated my first question; the trigger was mentioning this word [Financial Freedom]. I asked her, how long have you been into Network Marketing? She replied for 4 years. And you now enjoy your financial freedom? I asked. She answered, not yet!
I replied with smile; so, this is the carrot?
This was enough for them to realize I am not involved in any Network Marketing business, nor do I have an interest in joining one.
What’s Wrong with Network Marketing?
I. Market Saturation
This is a major problem that face Network Marketing. At a certain point a question will pop up in your mind, what if I recruited the whole country? How many members you can hire in your team? You will come into a conclusion that this cycle will have to end sooner or later and common sense seems to get suspended when considering if Network Marketing products are viable and if people really make use of the offered product or, its just a cover to keep the business going. A new question will arise if this business will keep its profitability or some newly joined members will spend money with zero return? Even theoretically, Network Marketing can never equalize into profitability the way companies in the real world can ?
II. People = Machines
In a normal company a manager says, “We have enough, let’s stop hiring people at this point.” But in an Network Marketing, there is no way to do this. It is a human “churning” machine with no “off button.” Out of control by design, its gears will grind up the money, time, credibility, and entrepreneurial energy of people who joined seeking for a chance to increase their income.
There is simply no way to avoid the built-in failure mechanism of Network Marketing. If a company chooses to market this way, it will eventually hire far too many people.
III. Morality and Ethics
While I believe that Network Marketers don’t apply business fundamentals, sales and marketing techniques, strategies, etc., Here is 2 screen shoots from Fatwa from Azhar and another one from Fatwa Council in Oman That states Network marketing is harmful for country economy and its forbidden according to Islam regulations.
Network Marketing or, Organized Crime?
As I am involved in Digital Marketing aka, Online Marketing, I get uncomfortable hearing the news about Online Marketing companies owners being arrested for illegal activities and it sounds like the industry reputation is polluted in the media when The Public Funds Investigation (PFI) unit within the Egyptian Ministry of the Interior announced the arrest of the managers of eight online marketing companies’ works in Network Marketing.
The companies are 2 deal, Revolution, GlobalAdMart, Say Your Way, Alliance Continental, My Right Ad, OPES and TV Art Express. According to media reports, the total amount embezzled by these companies from customers in Egypt totaled 96.8M USD.
[blockquote style=”quote” align=”” author=”Nagah Fawzy, PFI Administrative Head.”]We have been monitoring and tracking these companies for ten months and accused for engaged in fraudulent activities.[/blockquote]
2 deal, whose managers were arrested in March, operate a website via a company in Domietta, with 2,500 partners and subscription fees which reach $630. While one of these companies called GlobalAdmart operates a website from India and includes a network of 127 countries including Egypt, Russia and Saudi Arabia.
These companies’ activities are based on the idea of a direct salesperson that attracts others to subscribe to a scheme for fake profits. Many of these companies’ websites use this idea and practice it through a system with virtually no products on offer. The network marketing system was hierarchical with a manager at the top, followed by the two oldest customers who received large sums of money. Those who follow them barely receive anything in terms of dues and those at the bottom receive nothing.
In Egypt internet networking is illegal since it violates a number of laws relating to monetary receipts, dealing in foreign credit and promoting imaginary products.