These have been favored by some 50’s companies that eventually became famous. Avon, Tupperware, Fuller Brush. All with real products, but the sales sides were in the shady business of making a lot of failed “independents” pay the rent for those higher on the pyramid. A lot of independents at the bottom stuck without even minimum wage for their efforts, and often with a garage full of stuff they have to pay for but can’t get rid of.
And the current batch are in the same vein, although more likely to sell things like timeshares and investment schemes.
It’s my understanding that a big difference between the older business that you named and some of the newer ones, like Amway (or whatever they’re called now) is the amount of money that members are expected to spend on the product versus what they’re expected to spend on other stuff. I believe Avon, etc., required some financial investment in the products, but not much beyond that. Amway and its ilk, on the other hand, expect members to purchase training materials, attend expensive seminars, and so forth. I get the impression that Fuller Brush, etc., made most of their money from selling their main products, while Amway, etc., generates substantial income from non-product offerings such as seminars and training events.
Someone with more experience with one of these businesses will probably be along soon.
I don’t think that Avon or Tupperware were or are pyramid (or multilevel marketing) organizations. They just used a direct sales model.
I was in Amway for two years, 1980-82. I’ve never been a salesman-type person so I have no idea why I thought this was a good idea. However, I don’t know how much product people in my circle actually sold because most the time was focusing on selling the idea of recruiting more people into Amway. After I left, no one in my circle actually tried to sell me any of the products- which I WOULD HAVE BOUGHT- they were good products! And in the years since, no one who has tried & failed to recruit me into Amway has actually asked if I wanted to buy anything.
My experience with Amway was that there were very small profits to be made from selling the product, and that profit was more than destroyed by the time it took to make the sale and deliver the product. I did see how the higher ups made a fortune on their $5 a week motivational tapes. The tapes all said the same sort of thing.
I was burned in college by encyclopedia sales operations. Just seem to rely on the fact that you will quit long before your orders get “confirmed” and thus they never pay out the commissions. One seedy guy was running the boiler room operation(and it actually was a vacant basement storeroom in a hotel, which he probably was getting access to by bribing a busboy). He was nominally getting 30% of all our sales, and we were to get 10% at first and 20% of sales of whoever we roped in below us on the pyramid. But when we quit because it paid so little for the work involved, he ended up with a lot of un-earned commissions.
Amway products can be used as a security system…