Late last week, analyst Douglas Lane at Jeffries & Co. told investors that "direct selling companies" were going to be a good investment in the coming year. His rationale? The industry's ability to penetrate new consumer markets with disposable income, particularly in countries like China, Russia and India.The news report explained that the "direct selling" industry distributes products by demonstrating them in homes and with product parties.
What the news story left out is the fact that "direct selling" is really a misleading term for what is now more commonly known as multi-level marketing (MLM), or network marketing.
Here's the problem with MLM from a consumer standpoint: The MLM industry has been around for decades, and still fails to be a real player in the retail marketplace. The economy functions by real retail sales from real retailers online and in brick-and-mortar stores. MLM could completely go away and almost no retail consumers would even notice.
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