Suzhou Luye Company is a direct selling company with a direct selling license issued by the state. However, the direct selling process in some areas involves pyramid schemes and has been rectified. Many people do not understand what direct selling is and what pyramid schemes are. , in fact there are differences, as follows:

What is direct selling?

The World Direct Selling Association explains it this way: Direct selling refers to independent marketers using explanations and demonstrations in a face-to-face manner in places other than fixed retail stores (such as personal residences, workplaces, or other places). This method introduces products and services directly to consumers and conducts consumer product marketing. Legal direct selling is to deliver high-quality products directly to consumers. It also has a complete after-sales service guarantee and return mechanism to avoid economic losses for consumers and salespeople. True direct selling can be called a shining pearl in the field of marketing. It has not only successfully created large multinational companies such as Amway, Mary Kay, Avon, etc., but its excellent marketing concept and the rich management philosophy under this concept have been combined with The successful cases of these pioneer companies have been selected into the required textbooks for Harvard University's MBA (Master of Business Administration).

So what exactly is illegal pyramid schemes?

According to the "Opinions on Strictly Cracking Down on Illegal Business Activities such as Pyramid Selling and Disguised Pyramid Selling" issued by the State Administration for Industry and Commerce, the Ministry of Public Security and the People's Bank of China, the main characteristics of pyramid selling or disguised pyramid selling are: (1) Operators engage in non-store business activities by developing personnel and organizing networks, and participants draw rewards from the marketing performance of downlines; (2) Participants pay entry fees or subscribe for goods (including services, the same below) Obtain the qualifications to join, introduce or develop others to join, and obtain rewards by paying entry fees in equal amounts; (3) Early participants will obtain income from the fees paid by the downline members who have developed, and the amount of income will be determined by their joining Determined by the order of entry; (4) The organizer's income mainly comes from the entrance fee paid by the participants or the fees paid in disguised form by subscribing for goods; (5) The organizer uses part of the fees paid by the participants to pay for the first participation (6) Others engage in disguised pyramid selling activities by developing personnel, organizing networks, or recruiting personnel with high returns as bait.

The most fundamental difference between legal direct selling and illegal pyramid selling is:

Legitimate direct selling companies have their own factories and scientific research institutions, and the products they produce and sell are national Approved, the company and the direct sellers have a cooperative relationship, and the interests are based on the sale of goods; illegal MLM companies do not have their own factories, but sell inferior products from other manufacturers to downline members layer by layer, and each layer In addition to the intermediate profits, this kind of "indirect selling" that earns intermediate profits through the conversion of goods in the picture book of the difference between MLM and direct selling makes the price of the goods far different from the actual price. Moreover, the more levels of MLM, the higher the price of the goods. The higher the price, the lower-level people’s products will not be sold at all, and returns will not be allowed in pyramid schemes, resulting in huge economic losses.

Direct selling and MLM both mean "direct selling" in the original English meaning. This storeless marketing method was first introduced to the mainland from Hong Kong and Taiwan, and most of them translate it as "pyramid selling" in Hong Kong and Taiwan. ". Due to the existence of a regulatory vacuum, the "rat club"-style development model has brought out-of-control management to the direct selling industry, and it has become a street rat that everyone shouts about. To this day, many people still have a disdain for direct selling, while MLM It has also become a derogatory term. In fact, MLM is an evil variation of direct selling, a product that is exploited by others. On the surface, it is similar. There is only a "wall" between direct selling and illegal MLM. If it is managed well, it is legitimate, but if it is not managed well, it will turn into illegal MLM.