Direct selling – the real deal

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Genuine direct selling schemes option for those seeking additional income

KUALA LUMPUR: The direct selling business if carried out earnestly promises lucrative returns.The Direct Sales Association of Malaysia (DSAM) reported that in 2008 the direct selling industry was worth RM5.6 billion with RM3.15 billion being contributed by 55 multinational and local companies who are members of DSAM.

Malaysian consumers may have come across direct selling schemes involving health supplements, cosmetics and body trimming pills and their success is often attributed to the direct promotion and satisfactory services.

Nonetheless, the irresponsible acts of some who want to make a quick profit have robbed the credibility of the direct selling industry to the extent many members of the public nowadays view direct selling with scepticism.

There are many instances where the direct selling strategy is used as a ploy to recruit or sponsor members, hence giving rise to Multi Level Marketing (MLM).

Proponents of MLM use ingenious ways in their membership drive and the allure is lucrative returns.

This has prompted many to invest their life savings and only to realise too late that they have invested in another typical ‘get rich quick’ scheme.

Some of the MLMs apply the ‘front loading’ concept that forces members to pay at a higher cost for the products or services that they are to distribute prompting many to borrow from the bank or use their savings.

The business proposition may seem too good but those who invest will only realise of the problem when they cannot sell the products or services.

As for Mohd Shah Lamat, 23, conscience forced him to withdraw from the scheme and he now has debts totalling RM23,000.

“It began to dawn on me whether what I was earning was halal because the profit that I was making was on the expense of others.

“To put it succinctly those in the so called ‘downline’ are the ones who will be financially burdened.

“So what I’m doing now is just selling the products that I have in hand earning profits from there and not through membership drive.

“I have given the same advice to those in my downline,” he said adding that proceeds from the sales are helping him to pay up the debts.

Mohd Shah, who previously has tried his luck with five direct selling companies, is confident of the benefits from direct selling as long as it is carried out properly without burdening others.

“It is acceptable to me if it really involves direct selling and not anything like the pyramid scheme,” he said.

Despite the risk of being cheated many consumers do not know the difference between direct sales and MLM with most believing that they are the same.

Direct Sales Act, 1993 defines direct sales as being selling from door to door or mail order sales.

The products for sale are not exhibited anywhere and instead trained agents go around explaining the product and selling them.

Therefore under the genuine direct sales scheme, the proceeds come from the sales of the products or services and not through membership.

On the other hand, the MLM’s marketing strategy depends on membership drive by its sponsors.

For example existing members (up line) would look for or sponsor new members who become their downline. This is where the existing members bring others to talk on the product and the returns offered to win them over.

The MLM is also dubbed as the pyramid scheme when one only needs to do a single payment and promised huge returns over a period of time.

The pyramid scheme is where the early investors profit from the investment made by those who come later.

Thus to earn more, the downline membership must be expanded and hence this is where the pyramid concept comes in.

Unfortunately, often individuals fail to differentiate the fine line between genuine business venture and deception in these schemes and end up losing millions.

The efforts by the Ministry of Domestic Trade, Cooperatives and Consumerism to come up with rules governing pyramid schemes is timely when looking at the scams happening under the guise of direct selling.

However, genuine direct selling schemes are still a worthwhile option for those seeking additional income.

Most importantly, if members of public are keen to participate in direct selling they have to find an appropriate product or service.

They have to make sure that they are confident of the chosen product’s potential so that they could easily sell them. Also, always make sure that the chosen business promises reliable rewards from the sales. Do not choose direct selling schemes that calls for membership drives as such business models will not last long.

For those who are interested to know more or need to lodge a complaint on Direct Selling, please call 1-300-888-255/1-300-888AJL or go to the ministry’s website at www.kpdnkk.gov.my <http://www.kpdnkk. gov.my>.  – Bernama