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Why most MLM companies do nothing with price slashing and war despite distributors complaints

riway price war purtier

Why most MLM companies do nothing with price slashing and war despite distributors complaints

riway price war purtier

In many MLM (multi-level marketing) companies, the compliance department often ignores or takes minimal action on price slashing and price dumping issues due to several reasons:

1. Conflicted Interests

  • The company benefits from overall sales volume, regardless of whether distributors are undercutting each other.
  • If top distributors or large-volume sellers are engaging in price slashing, the company may hesitate to take action because these individuals generate significant revenue.

2. Lack of Enforcement Mechanisms

  • Many MLM companies lack the resources or a structured system to effectively track and penalize price dumping.
  • Compliance departments often issue warnings but may not follow through with actual penalties.

3. Legal Grey Areas

  • Depending on the country’s laws, enforcing a strict price policy might be considered price-fixing, which can be illegal in some jurisdictions.
  • To avoid legal scrutiny, the company may take a hands-off approach.

4. Focus on Recruitment Over Sales Integrity

  • MLMs typically prioritize recruitment over retail sales, so they may tolerate price dumping if it helps attract new members.
  • Many MLMs do not have a strong retail customer base and rely on distributors purchasing products themselves, reducing the urgency to control pricing.

5. Distributors’ Business Autonomy

  • Some MLMs argue that distributors are independent business owners and can set their own prices, limiting the company’s ability to intervene.

6. Fear of Distributor Backlash

  • Strict enforcement could drive away distributors who feel controlled or restricted, leading to mass exits and declining revenue.
  • Rather than risk upsetting high-volume sellers, the company may choose to ignore complaints from smaller distributors.

7. Lack of Transparency

  • Some compliance departments exist more for show than for actual regulation.
  • The company might want to appear compliant without actually taking meaningful action.

If you or other distributors are facing price dumping issues, it might be worth escalating complaints collectively, documenting violations, or even reconsidering involvement with the MLM if the business environment is unfair.