Why price war can affect the right people working on MLM industry

In the context of the Multi-Level Marketing (MLM) industry, a price war—where companies aggressively lower their product prices to outcompete one another—can have significant consequences for the people working within the industry. These individuals typically include independent distributors, sellers, and recruiters who earn commissions based on product sales, team growth, and overall performance within the network. Here’s how a price war could affect them:

1. Reduced Profit Margins

• Distributors and Sellers: As prices drop, the profit margin for each product sold decreases. Independent distributors rely on these margins for their income. If prices are cut too much, they may find that even if they sell more products, their earnings do not keep pace with the effort and investment required.
• Incentive Structure: Many MLM companies structure compensation plans around achieving certain sales quotas or team-building milestones. A price war could lead to an increase in sales volume, but the reduced margins may not be enough to compensate for the increased effort, leaving distributors with lower earnings.

2. Increased Competition and Lower Demand

• A price war can create intense competition among distributors within the same MLM company. As distributors lower their prices to stay competitive, it may lead to a race to the bottom, where everyone is trying to outdo each other. This not only erodes profit margins but can also reduce demand as consumers may start to perceive the products as less valuable due to the constant price drops.
• When prices are slashed to unsustainable levels, the perception of product quality may diminish. Consumers may begin to question the value of the products, especially if they feel the company is constantly lowering prices just to keep up with competitors.

3. Pressure on Recruiting and Retention

• MLM businesses often depend on recruitment as a key strategy for growth. If a price war leads to reduced product margins, the financial incentive for potential recruits becomes less appealing. New distributors may be hesitant to join a business that doesn’t seem to offer solid earning potential due to thin profit margins.
• Additionally, if the price war causes dissatisfaction among existing distributors due to reduced earnings, there could be higher turnover rates as people leave the MLM network in search of more lucrative opportunities elsewhere.

4. Long-Term Sustainability

• Price wars are often short-term tactics that can hurt long-term business sustainability. If companies are constantly slashing prices to outcompete each other, they may eventually undermine the overall financial health of the MLM. This can lead to company-wide issues such as underfunded compensation plans, failure to maintain product quality, or even bankruptcy, which ultimately affects all the people working within the company.
• A company that cannot maintain a healthy balance between competitive pricing and profitability may struggle to provide adequate support, training, or incentives to its distributors, which can result in lower overall productivity and satisfaction.

5. Increased Pressure to Sell More

• With lower prices, distributors are often required to sell a higher volume of products to make the same income. This can increase the pressure on individuals to constantly recruit and sell. Distributors who are already struggling with the MLM business model may find it even harder to meet their sales goals, leading to frustration and burnout.
• For those who rely on personal sales and recruitment to earn their income, the added pressure to meet sales quotas can lead to financial stress and dissatisfaction with the business model.

6. Devaluation of the Product or Brand

• In an MLM, the perceived value of the product is a major selling point. A price war, especially one that continues for a long period, could devalue the product in the eyes of consumers. If people begin to perceive that the product is not worth the price, or that the MLM company is struggling financially, it can undermine the legitimacy and reputation of the business.
• This can affect the ability of distributors to sell products effectively, as they may struggle to convince consumers that the product is worth its price—even with significant discounts.

7. Negative Impact on Loyalty and Relationships

• Many people join MLMs because they believe in the product and the potential for earning income through personal connections and relationships. A price war can undermine these personal relationships, as distributors may have to offer steep discounts to compete with each other, potentially damaging trust with customers who may feel they are being sold to at a discounted or “inferior” price.
• Existing customers may also be less loyal if they see the price of the product constantly fluctuating, and may question the company’s stability or commitment to quality.

Conclusion:

In summary, while price wars can lead to short-term sales boosts, they can have long-term negative effects on individuals working in the MLM industry. Lower profit margins, increased competition, and greater pressure on recruitment and sales can ultimately harm the financial well-being of distributors. Additionally, the devaluation of products and damage to company reputation can lead to reduced earnings and dissatisfaction, making it harder for people to succeed in the MLM business. For these reasons, it’s often better for MLM companies to focus on adding value and maintaining stable pricing rather than engaging in a destructive price war.

Riway MLM Price Wars

Disclaimer! Neither Riway could have avoided this, however, Multi-Level Marketing (MLM) companies often struggle with price wars due to a combination of structural, economic, and competitive factors. Here’s why:

1. Overpriced Products

• Premium Pricing: Many MLM businesses tend to sell products at a premium price, relying on the structure of the business to create the perception of value. When a price war starts, these high prices become difficult to sustain. In such case, same for Riway’s Purtier deer placenta.
• Price Sensitivity: MLM products are often perceived as overpriced, especially when compared to similar products in regular retail stores. In a price war, the prices of competitors may be significantly lower, making MLM offerings seem less attractive.

2. Dependence on Recruitment, Not Retail Sales

• Emphasis on Recruitment Over Sales: MLM companies often incentivize distributors more for recruiting others than for selling products. As a result, the products themselves are sometimes priced higher because distributors are earning commissions based on recruitment and sales volume, not just the value of the product itself.
• Margin Squeeze: If competitors in a price war offer lower prices, MLM distributors can’t easily drop their prices without eroding their own profit margins, which are already stretched thin due to commission structures.

3. Lack of Economies of Scale

• Higher Operational Costs: Many MLMs are smaller compared to traditional businesses and might not have the economies of scale necessary to lower prices without cutting into their profit margins. Large-scale manufacturers or retailers can often afford to reduce prices due to their scale, whereas MLMs may not have the same leverage.
• Fixed Costs: With large upline/downline structures, MLMs have fixed costs tied to their compensation system that competitors don’t have. A price war forces them to maintain profitability while distributors and employees expect their commissions.

4. Complicated Pricing Structures

• Complicated Compensation Plans: Many MLMs use complex compensation structures (e.g., binary plans, unilevel systems) that require a certain pricing level to sustain the commissions. If the price drops too much, the MLM model itself can become unviable.
• Focus on Recruitment Bonuses: Lowering product prices would reduce the revenue generated per sale, which directly affects the bonuses and commissions paid to recruiters and downline members, creating internal resistance to price cuts.

5. Brand Perception Issues

• Value vs. Price Perception: If the company is already fighting a perception problem regarding the value of its product, entering a price war could further damage its image. Consumers may already view MLM products as overpriced, and lowering the price might reinforce that negative perception, making it harder to attract customers who want to feel they’re getting good value for their money.
• Inconsistent Pricing: Price wars can lead to inconsistent pricing strategies across different markets or distributors, creating confusion among consumers. This can damage brand trust and reduce overall sales.

6. Incentive to Undercut Prices

• Distributors Underpricing: In some MLMs, individual distributors may undercut the official pricing of the product in order to sell more quickly, especially if they are competing for recruitment. This can lead to price fragmentation, eroding the brand’s value.
• Conflict of Interests: Distributors might engage in their own “price wars” without regard for the company’s overall pricing strategy, which further destabilizes the business.

7. Saturated Markets

• Market Saturation: In a competitive price war, MLM businesses can quickly reach market saturation, where most potential customers have already been approached or recruited. This makes it harder for MLM distributors to rely on recruitment to maintain their sales, forcing them into a more price-sensitive environment where low-cost competitors dominate.
• Limited Customer Base: Since MLMs often rely on a small, niche customer base (often within the distributor’s network), they are more vulnerable to price wars, especially when the competition offers broader, more competitive reach.

8. Legal and Regulatory Scrutiny

• Regulatory Issues: Price wars in MLMs can attract the attention of regulators, especially when pricing practices become unsustainable or unfair to consumers and distributors. Some countries have strict laws governing MLMs, and a price war could lead to scrutiny on whether the pricing is misleading or manipulative.

9. Reliance on Direct Sales

• Dependence on Personal Selling: Many MLMs rely on personal sales efforts by distributors, which means they don’t benefit as much from traditional marketing or advertising channels. As such, when the competition enters a price war, it’s harder for MLMs to sustain the same level of visibility without dramatically increasing marketing costs.
• Limited Product Reach: Unlike traditional retail or e-commerce, MLMs usually have limited direct access to larger, more price-sensitive customer pools. Price wars often shift customer preferences toward businesses with broader distribution channels and more competitive pricing.

10. Focus on Long-Term Recruitment Over Immediate Sales

• Long Sales Cycles: Since MLM businesses are often more focused on long-term recruitment and the building of downlines rather than quick retail sales, they are not agile enough to quickly react to price wars. Competitors with lower overheads and faster, more efficient sales processes will often win in a price-sensitive market.

Conclusion

In essence, MLM companies are built on a unique business model that places greater importance on recruitment and distribution than on competitive pricing. This makes them vulnerable in price wars, where their reliance on premium pricing and commission-based structures prevents them from adapting quickly to market pressures. As competitors engage in aggressive price cutting, MLMs are forced to either maintain higher prices (which alienates consumers) or reduce their profit margins, ultimately undermining the business model.

I asked ChatGPT if joining Riway is a good way to get rich

Riway, a company that operates through a multi-level marketing (MLM) business model, offers a range of health and wellness products, including supplement like Purtier Placenta. MLMs work by encouraging participants to sell products while also recruiting others to join and build their own sales teams. Commissions are earned not only from direct sales but also from the sales generated by recruits (downlines).

While some individuals have found financial success with MLMs like Riway, it’s important to understand the dynamics and challenges involved:

1. Earning Potential: In MLMs, success typically depends on your ability to recruit others and build a large downline. The more recruits and sales you generate, the higher your earnings can be. However, the reality is that most MLM participants earn relatively little, and a small percentage of people make significant money. Studies show that many MLM participants make little to no profit, and a large number of people may even lose money after factoring in product costs, marketing expenses, transportation and training fees.
2. Recruitment vs. Product Sales: Many MLMs are criticized for focusing more on recruitment than actual product sales. This can create a business environment where the emphasis is on enrolling new distributors rather than selling the products, which can lead to sustainability issues.
3. Market Saturation: Because MLMs rely heavily on recruitment, the market can become saturated, particularly in smaller communities. If there are too many distributors in a given area, it becomes increasingly difficult to recruit new people or make sales such as in Singapore and Malaysia.
4. Costs: In order to stay active in most MLMs, you may be required to purchase a certain amount of product or pay membership fees. These ongoing costs can add up and reduce the profitability of your venture.
5. Risk and Legality: MLMs are legal, but some companies cross the line into illegal pyramid schemes, where the primary focus is on recruitment rather than product sales. While Riway has operated legally, it’s essential to research the company and ensure it operates within legal boundaries.

Conclusion:

While MLMs like Riway offer the potential for financial success, they are not a guaranteed path to wealth. The vast majority of participants earn very little, and success typically requires substantial time, effort, and skills in sales and recruitment.

For many, it is not a reliable or sustainable way to get rich. If you decide to pursue this type of opportunity, it’s crucial to carefully evaluate the risks, costs, and the likelihood of success.

Personal Review on Becoming Riway’s 10 Years Distributor

As the Chinese saying goes. 三年入行，五年懂行，十年称王! Meaning 3 years in a business or industry, with 5 years of knowledge and by 10 years you’d become the King.

I started out as a member of Riway International group when I was 24 years old in 2013 and yes, a free lifetime member… that meant to me I was just a small part of the company, organization and team, basically a customer who paid the full original price of SGD 3688 during that time and receiving 7 bottles of Purtier.

Officially, I evolved into a distributor in 2014, becoming a leader with partners and distributors from different parts of the world. Apologies for my incorrect English language use but I just wish to journal this down quickly.

Currently, most of the distributors who joined me have quit and joined other professions and industry. We all hate MLM, direct sales, networking marketing etc. whatever you’d call it from the beginning and it ended somewhat differently I would say.

Truth be told, we all grew much from the process and journey of being distributors of Riway with the sale of Purtier Placenta. In fact, every industry is very difficult.

Would you rather do one thing for 10 years or to do 10 things in a year? If you can stand out, you will stand out. If you can’t stand it, you will be out. Success isn’t dependable on what you say, but, your down-to-earth attitude and effort.

I do have a few loyal customers who are still with me ordering some Purtier Placenta from time to time but the income from the sales is insignificant.

Is 100% Duplication really possible?

Everybody is different. We all have different thoughts, feelings and way of doing things, but, in network marketing, you’re expected to follow what your successful leaders do in order to become like them. Successful leaders, yes.

I have come to realisation that it is almost impossible to become 100% the same as another leader or person. The reason is simple, most people do not practise what they preach, although we all shared the same dream.

However, don’t make up your mind just yet, come and try out our industry to experience it yourself. 3% of the people who joined made millions, come on, we are stronger together and there is no limit what we can achieve together.

Reality of Riway distributor

Honestly, this career has been full of ups and downs just like any other sales jobs. If you can hang around in this business for 2-3 years, you’ll probably make some money, but, most people don’t last more than a year. Why so?

Price wars, online sales, websites, tax and law enforcers, distributors snatching customers and many others.

You’ll need to have a big heart, a strong mentality and work hands-on seriously in order to succeed. Otherwise, especially if in Singapore, you’ll be better off in an ordinary job.

Review of PURTIER Placenta 7th Edition

It was announced on the last week of June 2023.

The prices of the PURTIER Placenta 6th Edition have been selling online around $125 on platforms such as Shopee, Lazada and Qoo10 etc.

Top leaders are also allowing pre-order bottles of Purtier 7th edition to be placed at $150 per bottle. We shall see what is the next update from Riway distributors soon when the products are readily available.

If you’re looking to embark onto this career and your network or circle of potential distributors are within Singapore, it’s a tough journey. Unless. Company does something about the top leaders and situation of price wars.

Purtier Placenta is still a wonderful health supplement product despite being in the market for almost 15 years.

But, can distributors still make any real money today?

Will talk about this soon.