Independent Business Owner (IBO)

I was an Amway distributor 30 years ago. My upline DD (Direct Distributor - a rank in Amway marketing plan) always remind me not to display the products at any commercial outlet.

Many part-time Amway distributors were coffee shop operators, dhoby shop operators, tailors or sundry shop owners. They displayed Amway products in their shops. Amway warned those distributors and threatened to terminate their distributorship. The reason being the shop owners have a competitive advantage over other distributors without a retail outlet.

Some MLM companies still practise this policy

My brain was conditioned by my upline that the key feature of the Amway business is “doing your own business without any overhead cost”. That means a distributor does not incur any stock holding cost and no fixed cost to pay every month. Sound great isn’t this? But in reality is this practicable?

Is MLM direct selling still running on the same principles today?  I am afraid not.  Today’s distributors are not on level playing field.

They have deviated from the original MLM concept.

 

Most MLM companies have started having retail outlets. Some of these retail outlets belong to the MLM companies, while others are distributor-owned. Some distributors open their own retail outlet on their initiative.  Some are stockist outlets.  
There are also distributors whom are compelled by the MLM companies to open retail outlets. These MLM companies discriminate the distributors with commission structure.

Is MLM direct selling dead?  Looks like it is heading to that direction. In the early day of MLM business, AVON was the only direct selling company operating via the franchised boutique store. They are the single-level marketing (SLM) company.  More and more established MLM companies are following the AVON concept by opening retails outlet directly or through their distributors.

These outlets are called Independent Business Owner (IBO), Franchise Business Owner (FBO), Franchise Stores or Distribution centres. You can called them by whatsoever name you may so choose but in substance these are retail outlets. 

The home party system by Tupperware, has also joined the bandwagon.

The key difference between conventional proprietary retail outlet and the IBO or FBO is that you are subjected to control by the MLM companies. MLM companies controlled the products you can sell, the price you can sell and the profit you can make. And your profit is your commission and you are still at the mercy of the MLM companies to pay you. Why there are still so many suckers around?

The true Independent Business Owner is  your neighbourhood papa-mama store.

Some of these MLM IBO or FBO operates a “side business” to re-coup the fixed cost. You would not be surprise to find foot reflexioloy, massage, facial treatment, manicure and pedicure, café, hair dressing and food business being transacted side by side.

The saying that the MLM companies keep shifting the goal post while the game is in progress is very true. The IBO and FBO earn higher commission for the same product sold, as compared to those without a retail outlet. Who can say the business is on level playing field?

The Myths of MLM is being challenged further.

See the picture of the MLM retail outlets of  Zhulian, Cosway, Elken and  Sunrider.

Did you notice a small piece of flyer sticked on the glass door of the shop? Most of these shops offer services like facial treatment, manicure  pedicure, foot reflexiology etc to supplement their revenues.