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Following the legalization of network marketing, also known as multi-level marketing in Singapore, it has become a force to be reckoned with. This article may seem to be a bit of a bitching session about this phenomenon, but more often than not, the facts are pointed out from an insider's point of view.

For the uninitiated, network marketing is a system that sells products by direct selling through distributors who more frequently than not tap into their own social network to sell the company's products. The company's structure is normally made up of many tiers of distributors who can advance to the next level once a certain quota has been fulfilled. Each distributor is attached to another distributor (often the distributor who recruited him). This recruiter shows him the ropes and is also entitled to a certain percentage of the profit of each product that the distributor of the lower level sells. I will now tell you some of the faults that I discovered by myself while being a distributor.

The oft-said refrain of distributors is that the products of these companies are cheaper. If you go for any of the companies' seminars, they will tell you that most products of the traditional business system need to go through many channels. Having taken some business modules myself, I know this to be true. Ordinarily, a product will need to go through multiple channels which include the wholesaler, the agent and the retailer before finally reaching the consumer. Following this rationale of the profit maximization of a business, each channel the product goes through will add on to the cost of the product, making it extremely expensive by the time it reaches the consumer.

Many distributors have argued that in network marketing, this is avoided as the product goes directly from distributor to consumer, making the product less expensive and relatively cheaper. The argument that it is cheaper is the point that I seek to discount.

Although the products in network marketing do not need to go through the multiple channels of distribution, the incentives offered to distributors far exceed those of the salaries of the typical retail assistant in traditional business models. In the company that I was working for, for instance, top distributors are given a car and a fund for car maintenance. In addition, normal profit margins of the typical distributor are higher, high enough to add on to the cost of the product. In addition, in some network marketing companies, top distributors also get to have a cut of their companies' profits.

Thus, it is not true that the products of network marketing companies are cheaper. If one really breaks down the budget, the prices as compared to traditional business companies are comparable.

Following this train of thought, perhaps you are thinking that you should go into the business now, since it is so lucrative. Since the company treats you well, why not? Well, think again. Have you ever wondered why these network marketing companies carry out recruitment exercises all the time? This is because they have nothing to lose and everything to gain. Let me explain why.

When you enter a normal company as an employee, you are given some benefits. For instance, health benefits, discounted gym membership and payment of your mobile phone bills. At the very least, you have a pantry where there is at least water, coffee and tea given to you free-of-charge.

Well, in network marketing companies, you are not given any of these benefits. In fact, you are typically given nothing unless you make it to the very top. In fact, in place of a pantry, what greets you is a vending machine. At the company that I used to work for, I even had to purchase some of the publicity pamphlets to show my clients!