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PR Newswire
12-06-2016, 11:19 AM
Although I have not looked into Best World much, I thought it will be good to think about some questions on the MLM model.
1) Who does the company sells the products to? Does it sells to the distributor agents or is it recognized only when the goods are sold to the customer? This is an important question since the agents could have bought up a lot of the products to sell, shifting the inventory from the company to the agents.
2) MLM can also drive quick sales growth by growing its distribution team rapidly, given the additional incentive for recruiting people. Each new recruit that you get will buy the product for himself as well as sell it to its family, friends and relatives. In Herbalife case, it was alleged to be a pyramid scheme since more money is made from recruiting people than selling the products.
3) How sustainable is the distribution team? What keeps them with Best World other than the commission that they get paid? If another company offers higher commission, what will happen to Best World?
4) Is the company's products superior in the market? Say vs Korean offerings which are highly popular in China.
It is easy to drive sales growth for MLM, but the key is whether the company is able to achieve sustainable sales growth. Amway Berhad has been able to do so although their profit has not grown.
1) Who does the company sells the products to? Does it sells to the distributor agents or is it recognized only when the goods are sold to the customer? This is an important question since the agents could have bought up a lot of the products to sell, shifting the inventory from the company to the agents.
2) MLM can also drive quick sales growth by growing its distribution team rapidly, given the additional incentive for recruiting people. Each new recruit that you get will buy the product for himself as well as sell it to its family, friends and relatives. In Herbalife case, it was alleged to be a pyramid scheme since more money is made from recruiting people than selling the products.
3) How sustainable is the distribution team? What keeps them with Best World other than the commission that they get paid? If another company offers higher commission, what will happen to Best World?
4) Is the company's products superior in the market? Say vs Korean offerings which are highly popular in China.
It is easy to drive sales growth for MLM, but the key is whether the company is able to achieve sustainable sales growth. Amway Berhad has been able to do so although their profit has not grown.