Differences Between Direct Selling and Pyramid Schemes

Direct Selling Vs Pyramid Schemes

Compare Each point from 14ponts with Direct Selling and Pyramid Schemes respectively.

Direct Selling:

1. Direct Selling means the marketing of the products/services to the consumers generally from home or workplace i.e. locations away from permanent retail locations. It is done through explanation and demonstration of the products by a direct seller.
2. They offer genuine business opportunities. It involves quality sales plan of goods and services.
3. The cost of entry is reasonable.
4. Plans are entirely performance based.
5. Returns are dependent on the time invested and motivation of the direct seller and come slowly.
6. Sales incentive is based on sale of goods/services.
7. Enrollment is not compulsory of doing business.
8. Business is by sale of products. Enrollment is optional.
9. Sales incentive to all distributors is through Direct Selling Companies only.
10. Direct seller joining the business can exit the business within reasonable time. Investment is refunded as per the company provisions in the Initial Contract. Exit policy in place for termination of contract.
11. Products have 100% buy-back guarantees to ensure protection of end-consumer as per company policy.
12. Products are supplied to meet genuine demand and direct sellers are encouraged to hold minimal inventory and replenish as and when need arises.
13. Rigorous product and product Sales training is done. Incentives based on sales or products and Sales performance are offered.
14. Every sales person had to abide by the Industry Model Code of Ethics.

FRAUDULENT FINANCIAL PYRAMID SCHEMES:

1. "Pyramid" means a multi layered network of subscribers to a Money Circulation Scheme formed by subscribers enrolling one or more subscribers in order to receive any quick or easy money benefit, directly or indirectly, as a result of enrolment.
2. Pyramid schemes involve products which are cheap to produce and have no established market value. New miracle products, exotic cures, mattresses, online surveys are some of these.
3. Cost of entry is extremely high.
4. No Plan or Pyramid Plan.
5. Returns are easy and quick.
6. Incentives are based on recruitment rather than on sales.
7. Enrollment is mandatory for doing business.
8. Commission based on recruitments.
9. Payment through members and negligible pay outs by promoters.
10. No refund or exist policy exists.
11. Products usually do not have a buy back policy.
12. "Front Loading" is encouraged. Therefore, products are thrust upon the direct sellers, irrespective of their ability to sell the product and the product and the actual market demand.
13. There is no emphasis on product or product sales training. Emphasis merely lies on collection of money from new enrollment.
14. There exists no code of Ethics.