Entering text into the input field will update the search result below

The Decline Of Multi-Level Marketing In The United States By The Numbers

Dec. 13, 2020 9:44 PM ETHLF, NUS, PRI, USNA35 Comments
William Keep profile picture
William Keep


  • Relative to US Retail Sales, direct selling (i.e., multi-level marketing) in the United States is declining.
  • MLM companies and their selling agents tell a different story.
  • Recent DSA data makes the data more opaque.

No industry wants to recognize its own decline, particularly one that contains some public companies. When an industry goes south it typically triggers denial and public pronouncements to the contrary. The industry puffs itself up to look bigger. We see that happening now with the multi-level marketing (MLM) industry in the United States.

First, a caveat. The data below comes from the Direct Selling Association (DSA) and, as always, remains unverifiable. Assuming that whatever bias or inaccuracy may exist in the data is consistent over time, we can still get an idea and the trend is not pretty.

We begin with the issue of labeling industry participants, something of an art for the DSA when reporting annual industry “Facts and Data.” In 2004 participants were called “Direct Sellers,” though there was never any data on the percent of participant purchases retailed to non-participant consumers. Industry participants were buying products but that is where the data ends. In 2012 the label changed to “People Involved in Direct Selling,” still with no data on any actual retail sales (i.e., where the industry participants establish retail consumer demand with anyone other than another industry participant). In 2013 the labeled changed to “Direct Sales Representatives,” in 2014, 2015, and 2016 back to “People Involved in Direct Selling,” and in 2017 “direct selling representatives” (no caps), part of “The Direct Selling Population.”

The puffed-up part begins in 2018 and 2019. According to the DSA, the number of MLM industry participants went from 18.6M in 2017 to 36.6M in 2019. Wow! How did that happen? How did the industry go from 18.6M “representatives” to 26.2M “Preferred Customers” and 10.4M “Discount Buyers”? As all industry participants were in a single number prior to 2018, perhaps some portion of the 18.6M in 2017 was not actually sellers but only buyers. If so, then what are we to think about the 6.3M “Direct Sellers” in

This article was written by

William Keep profile picture
Former Dean, School of Business and former Interim Provost / VP for Academic Affairs, I am Professor of Marketing at The College of New Jersey. A 2002 academic article on MLM and pyramid schemes that I co-authored with Dr. Peter Vander Nat, then a senior economist at the FTC, has been frequently referenced. Our 2014 journal article provides an historical context on the same subject matter. I served as an expert witness in the prosecution of pyramid schemes in Gold Unlimited, brought by the US DOJ; International Heritage Inc, at the time the largest pyramid scheme prosecuted by the SEC; a private case between P&G and Amway, among others.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (35)

MLM (Network Marketing) is simply a convoluted obfuscated, opaque, pyramid scheme as I proved (with my grade 10 education) in the Superior Court of Ontario with more than 20 lawyers I consulted warning I would lose because this actual criminal had no criminal record (just a matter of time) and a legally registered business with actual recognized real products.

I posted on the internet and picketed his operation calling him a Crook, Liar, Gangster, Thief rounding it off with Scumbag... His 24 lawyer law firm reputed to be the best, or one of the best in MLM, sued me for $10 million for liable. With no lawyer, never having been to the Ontario Superior Court and then finding out Ontario Canada has the strictest liable laws in the free world....unlike the US and other countries it is unnecessary to prove malice or intent.


After the court decision I chased him across Canada at his "seminars." Arrested more than once, assaulted, later pushed onto a busy parkway- nearly killed... Stayed on him for 7 years. His father a cop.... For 15 years he ran this fraud (until he ran into me} with RCMP officers, Ontario Provincial Police on down, agents of the CRA (Custom Revenue Agency - US FTC equivalent) --- (supposed to prosecute these frauds) prison guards, lawyers, accountants, doctors, dentists, church ministers, politicians, etc, etc.

Read the 18 page precedent setting decision of the Ontario Superior Court which took the judge six months to render.....

Excerpt...[PAR 34] "....self-appointed Champions..."


The crook's inadvertent confession.... @ 250


Then in 2011 he was sent to prison.... No media (that I found) published the fact police, government agents etc, were his co-conspirators.... and MLM??? - kept "marching on."

We shut them down..... one degusting fraud at a time.


Great frauds in history: the Pigeon King’s Ponzi scheme - MONEY WEEK (UK)

EXPERT - "The scheme seemed to go well initially, but in 2007 a Mennonite farmer, worried about the impact on the wider farming community, tipped off an online vigilante, who started warning people about the scam." --- (Started a Cyber War)

The "Pigeon King" eventually sentenced to Seven Years.



dave thornton - aka Online Vigilante

@Online Vigilante 4 JusticeGreat job. When you say strictest liable laws, did you mean protecting against, or for SLAPP?
@Virtue1 The opposite. You are presumed guilty of libel in Canada. You must prove what you wrote or said is not libelous ---"Plaintiffs don’t have to prove falsity, malice or special damages to win a defamation suit."

Something that confuses many, including lawyers and judges is that defamation is not always actionable.... i.e. If you say the mayor is having an affair with his secretary..... definitely defamatory!!!

Sometimes the angry recipient of a defamatory remark will shout "I will sue you for defamatiion"

However, if it is a lie then it's defamatory LIBEL -- actionable..... If true, notwithstanding it is definitely defamatory it is not legally actionable.

The official definition above  is not quite accurate. It shou;d read.... ---"Plaintiffs don’t have to prove falsity, malice or special damages to win a defamatory LIBEL suit."T

It might be said that through his own actions the Mayor defamed himself.... You simply made his own defamation public ------ Simple and (just)
@Online Vigilante 4 JusticeMy understanding is that statements can not be lies, but can be an expressed opinion of how one interprets the facts, even if that interpretation was formed by an existing negative bias. As you said, you can call a CEO a crook or a##hole, but you can not say he's sleeping with his secretary......unless, of course, you witnessed it, either orally or visually. In essence, you can't make stuff up, but you can express an opinion, even if that opinion was based on an incorrect interpretation of fact.
Ron Henley profile picture
Network marketing is simply a product distribution channel. Instead of paying for advertising (radio, tv, magazines, etc) network marketing companies pay their distributors that money to get the word out and sell products/services.

Are there crooks in network marketing? Of course. However, in my 50+ years of experience in the profession, I have found that most are good people who genuinely want to help others. There are shady characters in any industry or profession, period. To single out network marketing is not only unfair, it's inaccurate.

Let me ask a question. If you join a company to distribute their products, then don't develop the skills and attitudes to do the job, is that the company's fault? Is it network marketing's fault? The answer, of course, is no. It's up to the individual to become the person they need to be in order to get the job done.

It's so easy to shift the blame and say network marketing is a scam or a pyramid scheme when the real reason for anyone's personal success or failure is looking them in the mirror. That's true in life, not just business.
@Ron Henley" Instead of paying for advertising (radio, tv, magazines, etc)"

No, instead they pay fees for publications to post articles, extolling their virtues, or for FOX news features, or Marathons, or to have their names on sports venues, in addition to the millions spent annually lobbying Washington. And don't forget the millions spent by their social media departments flooding the web with fake reviews or defending themselves on YouTube videos where they pose as "Joe the Plumber" or "Mary the bus driver".

"don't develop the skills and attitudes to do the job, is that the company's fault?"

When a football team has a losing record, when was the last time an entire team was fired, instead of the coach. MLMs are responsible for screening, recruiting, training and motivating their sales teams. Reps fail because MLM fails.
WrinklesWarrior profile picture
@Ron Henley, totally agree with you. What are your thoughts about promoting companies with expensive but high-quality products?
I grew up and lived in Utah which is home to most of these. I had a relative in the 1980's who went to work for Usana and worked himself up to manager and trainer. He did good for a few years and then they cut his earning power very ruthlessly and he left in disgust.

Nuskin was formed near where I lived in Utah in the 1970's (give or take). It was the hottest thing to invest in and everyone was talking about it. I remember this glamorous woman started it and she was quite the hit on the social scene, with a 'Movie Star' lifest yle. People couldn get enough of it. There cremes and products were crazy expensive but had the exotic story line and they sold some. The company survives but it has been reinvente numerous times and people lost money and interest.

When I was 12 my friends father took me to a recruting meeting for a cosmetic MMM. The company was named Coscot and their claim was 'mink oil' in their products.

The promoter was Glenn Turner and he flew into our town in a converted airliner. Wow! were we all impressed to see that (circa 1960) He delivered a fever pitch message, much like a traveling preacher, about getting rich. Many in the town shelled out several thousand for the priviledge. It never delivered all the product and never organized a local organization.

Eventually Turner did some time in prison but the money was gone...

I know plenty more fiascos related to MMM but I doubt many followed my journey down MMM "memory lane"...

As for me I have owned several business that were very profitable--the old fashioned Capitalist way of not 'screwing people"
@derek123Did you mean Koscot? en.wikipedia.org/...
The interesting question is what the heck was Ackman and Icahan thinking to fight so long and hard (and expensively) over a pile of crap like Herbalife?
@derek123Perhaps it was a game they both cooked up? Nothing like a battle of good vs evil to promote interest in a company.
Former FTC Chairwoman Maureen Ohlhausen has recently joined Neora's legal defense team. She is but one of a long list of FTC officials who have found feathered nests within the MLM industry. Now, ask me again why the MLM industry seem to have 9 lives?
William Keep profile picture
As voters and taxpayers we should be very concerned with the "revolving door" between government jobs and industry. The MLM industry and the former regulators they hire illustrate the essence of the game. But the MLM industry is just one of many who engage in this practice. The harm is both to those who think governments can protect consumers and families and those in government who work to do so. Even Investopedia sees potential harm: www.investopedia.com/...
Fascinating. I associate the term "multi level marketing" with people getting a group of their friends to come over so they can draw a bunch of circles on a large whiteboard while they try to make them eager to become amway distributors.

THAT'S multi level marketing. Yet many people commenting here seem to think Amazon is.

If you think Amazon is multi level marketing, then you are clueless as to what multi level marketing is/was.
I feel that will be more accurate talking about the amount of sales, not mentioned in this article, are up or down? Also, let's compare to other industries, is the retail (local) model down compared with the online model? What about franchise sales? What about insurance direct sales compare with the internet sales? If you go deep into the numbers, you will find that because the diversity of point of sales, the share decrease in many of them. Increase or decrease in sales would be a better indicator. Example, Walmart revenue for the twelve months ending October 31, 2020 was $548.743B, only a 5.31% increase year-over-year. while Amazon revenue for the twelve months ending September 30, 2020 was $347.946B, an incredible 31.07% increase year-over-year. At first glance seems that Amazon is doing better because its 31.07% increase, Bad news for Walmart? not at all!! it was an increase of over 9 Billion dollars over the year before!

Now, in order to thrive, the mlm or network marketing profession must move toward an affiliate model where sales become a very important part of the model adding better ecommerce tools. A small number of companies have already seen the writing on the wall moving to a more customer/sales friendly model. MLM is not dead, it will be evolving.
@procapital1 Based on your figures, it would appear then that Amazon gained by eliminating Mom and Pop store sales, the model which closely mimics the MLM model of buying from people you know locally. And of all marketing methods, MLM uses the highest "touch" factor of all, therefore Amazon is taking advantage of the fact that people prefer to shop passively rather than being approached by a friend or relative. Nobody needs a "pitch" anymore when the internet allows them to research directly. If anything, Amazon proves that MLM is in even less demand now than ever before.
WrinklesWarrior profile picture
@procapital1 you said MLM is not dead... but has declined due to the bad reputation? How will be evolving, into what?
Douglas Brooks profile picture
Kudos to Bill Keep for methodically taking apart the phony labels employed by the DSA which they use to create the impression that there are substantial actual profitable retail sales by participants in the MLM industry. Even more kudos for observing the declining share of retail sales claimed by the "industry." The MLM industry punches far above its weight in lobbying power.
@Douglas Brooks It's not so much that the MLM industry punches far above its weight in lobbying power, it's that its very survival depends on it. The whole industry is required to pay to play.
I would be very interested to have someone explain the reasons for this decline. This ‘streamlined business model’ not as efficient/effective as old-style retail? The lack of social support for the ‘direct sellers’ hurting the model? Or the ‘Amazon’s’ of the world eating into it’s profits?
@marlin3m A couple of decades ago, the only source of info was a recruiter spouting hype. Now the internet allows people to research any claims being made. This is why MLMs are aware not to mention the word MLM, or in many cases, even the company name, prior to any opportunity meeting.
WrinklesWarrior profile picture
S@Virtue16 instead MLM what word are they using to separate themselves from the well-damaged MLM concept?
@WrinklesWarriorNetwork marketing, direct sales, social sales, etc etc.
Nothing about those Amway people?
bluescorpion0 profile picture
Hey Genius, amazon is drop ship direct sales too. Is it declining?
What’s your thoughts on primerica specifically?
William Keep profile picture
Have you ever seen their earnings claims? Have you ever seen their earnings statement? Look at both.
What do you call an MLM distributor who, regardless of intent and efforts, fails to earn any commission in a year? ......A Preferred Client.

What do you call a preferred client who finally earns a $1 commission check at 11:59 pm on Dec 31??? ...... A distributor.

Both these labels are applied AFTER the year ends.
sad that the tc did not rule against herbalife. trump that! where is the sec?
@anonysubscribe If terms of the FTC settlement are enforced, they will likely lead to a quicker (and less costly) demise of HLF than a protracted (and costly) 5-7 year battle in the courts.
but then we are propping up other zombies as well. the rich and pwoerful pass laws which benefit them at the expense of the greater good.
@anonysubscribe Slavery comes in many forms. At least slaves knew they were slaves and not plantation entrepreneurs.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.