Network Marketing Is NOT The Business For The 21st Century
Robert Kiyosaki has made the claim that network marketing is the business of the 21st Century. In my opinion, Robert Kiyosaki is confused and living in the past century. Let’s take a look at the statistics and see if he knows what he is talking about.
Network marketing is also known as Multi-Level Marketing (MLM). – Source Businessdictionary.com
Robert Kiyosak says the following, Corporate America is a 20th-century dinosaur, trembling on the edge of extinction. – Page 4 of The Business of The 21st Century
Today, network marketing is recognized by many experts and accomplished business people as one of the fastest-growing business models in the world. – Page 37 of The Business of The 21st Century
In realty, the MLM-dominated direct selling industry in the U.S. has not proven to be an increasingly important alternative to traditional store retailing in the 21st century. Corporate America has outperformed MLM. MLM companies haven’t seen significant growth in the U.S. market in decades.
From 1974 to 2012, the U.S. direct selling industry grew at an annual rate of 1.45% while US GDP grew twice as fast, at an annual rate of 2.84%. The GDP grew approximately three-fold while the direct selling industry increased by approximately 1.7 times. As the number of people engaged in direct selling tripled from 1991 to 2011, direct sales as a percent of total retail sales at first increased and then declined. – Source Multilevel Marketing and Pyramid Schemes in the United States: An Historical Analysis
Nearly 30% of Nu Skin’s total revenue over the last year came from China, up from 10% a year earlier. Without Mainland China growth, Nu Skin’s revenue growth would have been negative on a year-over-year basis. – Source Forbes
The average distributor earnings for some of the largest network marketing companies are stagnant.
A comparison over time of average annual distributor earnings showed that the average Amway distributors in Wisconsin in 1980 earned $744 in 2012 dollars ($267 in 1980), while the average annual earning for all Herbalife and Nu Skin distributors in 2012 were $749 and $641, respectively (State of Wisconsin v. Amway 1982; Herbalife, 2013a; Nu Skin, 2013); thus little or no change. – Source Multilevel Marketing and Pyramid Schemes in the United States: An Historical Analysis
Network marketing businesses are genuine Information-Age businesses, because they deal not with land and materials, factories and employees, but with pure information. As a network marketer, you might think your job is to demonstrate and sell a product. It’s not. Your job is to communicate information, to tell a great story and build a network. – Page 63 of The Business of The 21st Century
Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. It’s a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money. – Source FTC Bottom Line About Multi-level Marketing Plans
Remember, this is not principally a sales business, but a teaching, team building, and leadership business. Your job is not to sell a lot of product, and it isn’t even to teach a lot of people to sell a lot of product. It’s to lead, train, and build people. It is first and foremost to build a network. – Page 103 of The Business of The 21st Century
Robert Kiyosaki is wrong. In my opinion, his view of network marketing is that of running an illegal pyramid scheme. Network marketing is a business of a previous century in the U.S. with a declining percentage of total retail sales in the 21st century.