Company payout (in commissions & bonuses) per sale for the total of all upline participants equals or exceeds that for the person selling the product – resulting in inadequate incentive to retail and excessive incentive to recruit. Jim can make more money getting commissions off the product that distributors beneath him are required to buy from the company than he could from selling the shakes at retail to customers outside of the business.
But even this discounted wholesale price is usually far higher than the market value of comparable products available from the supermarket. Participants nearly always find themselves in the unenviable position of having invested a lot of money in their own required inventory purchases, and desperately trying to recruit new distributors in an effort to earn commissions on their inventory purchases, and hopefully recover their own investment. So this raises the question: How often does it work out that way? How many MLM participants ever recover their own investments?
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