Date of Graduation

5-2023

Document Type

Thesis

Degree Name

Bachelor of Science in International Business

Degree Level

Undergraduate

Department

Marketing

Advisor/Mentor

Worrell, Dan

Abstract

The first multi-level marketing (MLM) businesses were created in the early 20th century and have seen a substantial increase in popularity during the COVID-19 pandemic due to their work-from-anywhere nature. Multi-level marketing is “the practice of distributing, selling or supplying products or services through various levels of independent agents” (Koehn, 2001, p. 153). As working from home became the norm in the past few years, MLM businesses promised financial freedom, a steady income, and opportunities for growth, all by working on the Internet. What was often less transparent is the likelihood of these independent agents making a profit. Distributors have the possibility to earn money in two ways: one, selling the company’s products to consumers outside of the company, and two, recruiting and onboarding new distributors to work underneath them (Groß & Vriens, 2019). This structure is what characterizes MLM businesses as their own model, creating a ranked distributor network consisting of an “upline” and a “downline”. A distributor in the upline seeks to expand their downline as far as possible to earn commissions off their sales. Distributors expect to earn a comparable pay to their peers with corporate jobs yet end up required to purchase more product inventory than they can sell. “The ethical (and legal) problem is thus deception: distributors join a company to earn money, but overspend by buying company products they neither need nor are able to sell” (Groß & Vriens, 2019, p. 339).

Keywords

multilevel marketing; MLM; business ethics; direct sales

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