Multi-level Marketing (MLM) Statistics 2024 – Everything You Need to Know

• For some MLM companies, this failure rate can be dismissed, as only the top 2% successes of salespeople tend to be emphasized. ^[2]
• “MLM promoters often claim that the failure rate of small businesses is in the range of 90. ^[8]

Multi-level Marketing (MLM) Latest Statistics

• Yet only one quarter of participants make a profit and of those, 53% make less than $5,000. ^[9]
• Most MLM participants are women (60%). ^[9]
• More MLM participants attended or graduated from college (66%) compared to those who were never involved (60%). ^[9]
• While multiple reasons were given, 91% said at least one reason they joined was to make money, either from the sale of products and services or by recruiting others into the organization. ^[9]
• Though MLMs are a source for extra money, the majority (73%) who joined reported that they either lost money (47%) or broke even (27%). ^[9]
• Multilevel Marketing Explore MLM Aware Toolkit Click the image above to view the video Most (65%). ^[9]
• Participants found it awkward to pitch to family and friends (39%), were not making as much money as expected (36%). ^[9]
• (35%). Are you considering an MLM opportunity?. ^[9]
• As of 2009, 94.2% of Direct Sellers Association members use MLM. ^[0]
• 52% of MLM participants say the company’s representation of making a profit is “not too accurate” or “not at all accurate.”. ^[0]
• At least 50% of MLM participants drop out after one year. ^[0]
• It costs an estimated $25,000 to launch an MLM business. ^[0]
• 66% of MLM participants invest less than $1,000. ^[0]
• Only 25% of MLM participants turn a profit. ^[0]
• That said, according to the DSA, there are 6.2 million Americans currently participating in MLM. ^[0]
• That’s less than 2% of Americans, suggesting that participation rates are decreasing as younger generations come of age. ^[0]
• As of 2009, 94.2% of DSA members use MLM. ^[0]
• In 1990, only 25% of member companies used MLM, which demonstrates how firmly entrenched MLM has become in the direct selling business. ^[0]
• In 2019, wellness accounted for 33.2% of sales, while cosmetics/personal care accounted for 31.2% of sales. ^[0]
• Household goods and durables was a distant third with 12.8% of sales. ^[0]
• One AARP study found that 52% of MLM participants felt a company’s representation of achieving financial success through direct selling was “not too accurate” or “not at all accurate.”. ^[0]
• However, on the positive side, 43% of respondents said that it was “fairly accurate” or “very accurate.”. ^[0]
• The AARP found that more than 50% of participants drop out after one year, and more than 90% drop out before 10 years. ^[0]
• In contrast, about 20% of small businesses don’t make it past one year, while about a third survive more than 10 years. ^[0]
• MLMs can cost an estimated minimum of $25,000 for participants. ^[0]
• In an analysis of MLM for the Federal Trade Commission , Dr. Jon M. Taylor estimated that dedicated MLM participants who want to succeed with the larger company can accrue more than $25,000 in expenses in a year. ^[0]
• Another 24% of those surveyed by the AARP spent between $1,000 and $4,999; 11% paid more than $5,000; and 23% couldn’t remember how much they invested. ^[0]
• While the FTC reports that 99% of MLM participants lose money, the more recent AARP study finds that the numbers aren’t quite as stark. ^[0]
• The AARP found that 25% of those surveyed made a profit, while 27% broke even. ^[0]
• Of the quarter that made a profit, 14% made less than $5,000, 6% made between $5,000 and $9,999, 3% made between $10,000 and $24,999, 3% made $25,000 or more, while just .05% made $100,000 or more. ^[0]
• According to a report that studied the business models of 350 MLM companies in the United States, published on the Federal Trade Commission’s website, at least 99% of people who join MLM companies lose money. ^[10]
• (A study of 27 MLM schemes found that on average, 99.6% of participants lost money.). ^[10]
• The Direct Selling Association , a lobbying group for the MLM industry, reported that in 1990 only 25% of members used the MLM business model. ^[10]
• By 1999, this had grown to 77.3%. ^[10]
• By 2009, 94.2% of DSA members were using MLM, accounting for 99.6% of sellers, and 97.1% of sales. ^[10]
• Based on available data from the companies themselves, the loss rate for recruiting MLM companies is approximately 99.9%; i.e., 99.9% of participants lose money after subtracting all expenses, including purchases from the company. ^[10]
• “[64](By comparison, skeptic(By comparison, skeptic[64]Brian Dunningpoints out that “only 97.14% of Las Vegas gamblers lose money …. .”). ^[10]
• The Consumer Awareness Institute, whose research has been posted on the website of the Federal Trade Commission , found that 99% of people who participate in them lose money. ^[11]
• The Direct Selling Association , the trade group representing MLMs, says that 51% of the 51 companies that participated in a survey in early June said COVID 19 has had a “positive” impact on their 2020 revenue; 59% reported the same in a later survey. ^[11]
• During the 2007–09 Great Recession, the number of MLM sellers began rising and went from 15.1 million in 2008 to 18.2 million in 2014, according to a DSA report. ^[11]
• According to the agency, 72% of AdvoCare’s distributors made no money in 2016, and 18% made $250 or less that year. ^[11]
• In the past 41 years, the FTC has filed cases against 30 MLMs alleging they were pyramid schemes, according to Truth in Advertising, an independent watchdog group. ^[11]
• At Young Living, 89% of U.S.based distributors earned an average of $4 in 2018, according to an income. ^[11]
• At the skin care MLM Rodan + Fields, 67.1% of sellers had an annual median income of $227 in 2019. ^[11]
• According to the DSA, 74% of MLM sellers are women, and 20% of sellers are of Hispanic origin, a demographic that critics say highlights the industry’s systemic targeting of economically vulnerable communities. ^[11]
• Approximately 30% of Herbalife’s distributors are Latino, according to the company. ^[11]
• Beachbody CEO Carl Daikeler, who is 56 and estimated by Forbes to be worth hundreds of millions of dollars, says that achieving his level of success by selling Beachbody’s shakes and recruiting others to do so isn’t easy. ^[11]
• Except that wasn’t the reality for more than half of its coaches last year 57% of them earned $0 in commission and bonuses in 2019, according to the company’s income. ^[11]
• A 2018 survey found that 7.7% of the US adult population had participated in at least one MLM organization during their lifetime [2]. ^[1]
• They find that 90% of these distributors were women who worked part time in MLM activity. ^[1]
• They analyse the diffusion processes of the firm and suggest that the maximum penetration was 1% of the population, and that 94% of participants did not make profits. ^[1]
• [30] provide similar results, suggesting that only 6.5% of distributors earn commissions on recruitment. ^[1]
• [31] suggest that roughly 50% of distributors lose money, roughly a quarter break even, and another quarter make some profit. ^[1]
• Commission fees of 5% are the case in some MLM firms, e.g. Herbalife. ^[1]
• Tupperware offers commissions which range from 4% to 8% for the manager level. ^[1]
• Under a 5% fee the multi level firm has no more than six levels, and with a 3% fee the maximum number of levels is nine. ^[1]
• In the example given above , if fees are 10%, the number of levels is very small. ^[1]
• According to [43], having five levels of qualified distributors will allow the highest level distributor to receive $125,610 in recruitment bonuses alone. ^[1]
• According to Herbalife’s documents , a distributor can expect a $9 profit for each product sold. ^[1]
• According to the firm, distributors can expect a profit of 25%, or $8.75 in our case. ^[1]
• But MLM is different from pyramid schemes, as it does offer a genuine way to make money and is 100% legal. ^[2]
• 10% of people manage to make over $100 a week using MLM. ^[2]
• The wellness category is particularly promising with 24.1% of total sales by category. ^[2]
• Reputable MLM companies will buy back as much as 80% of unused stock. ^[2]
• Of this 25%, 14% make less than $5,000, 6% make between $5,000 and $9,999, 3% make between $10,000 and $24,000, 3% make $25,000 or above, and only 0.05% make $100,000 or above. ^[2]
• 52% of people said the company they worked for misrepresented their chance of financial success. ^[2]
• This means that only 1% of people make an actual profit, and these people tend to be those at the top of the pyramid. ^[2]
• This contrasts sharply with stats surrounding small businesses where 39% of owners can expect to generate a profit gradually in time. ^[2]
• To summarize The top 1% of Amway distributors in Wisconsin generated around $12,500 in gross profit per year. ^[2]
• According to Herbalife themselves, 10% of agents generate only $6,965 a year and only 1% earned over $108,802 a year. ^[2]
• This represents a loss rate to investors of 99.7%. ^[2]
• According to an income disclosure statement by Mona Vie back in 2007, less than 1% of people earned commission. ^[2]
• 50% of people drop out of MLM within their first year, MLM statistics reveal. ^[2]
• Although MLM can be addictive, people tend to latch on to the fact they’re paying out for not much gain, meaning that as many as 50% of people drop out before the end of their first year. ^[2]
• The best companies tend to buy back as much as 80% of unsold inventory from their agents. ^[2]
• To that effect, it requires agents to sell at least 75% of products before placing another order, at least one sign of a responsible MLM company. ^[2]
• Other promising categories include home and family care (22.6%) and personal care (18.2%). ^[2]
• And on that note Multilevel Marketing is a legitimate way to make money, and it’s 100% legal, unlike it’s darker brother – pyramid selling. ^[2]
• The AARP Foundation’s study found that 44% of participants dropped out after less than one year working with an MLM.2 Taylor’s research shows similar numbers and goes into a little more depth on dropout rates. ^[3]
• A minimum of 50% of MLM representatives drop out in the first year. ^[3]
• A minimum of 90% of representatives leave within five years. ^[3]
• By year 10, only those at or near the top have not dropped out—which means at least 95% of representatives have dropped out.3. ^[3]
• According to the U.S. Small Business Administration, about 20% of small businesses don’t make it past a year, about 50% of them last five years or longer, and about a third make it past 10 years.4. ^[3]
• The AARP Foundation found that only about 25% of those it surveyed made a profit with MLM, 27% broke even, and about half of them lost money. ^[3]
• Of the quarter that made a profit 14% made less than $5,000 6% made between $5,000 and $9,999 3% made between $10,000 and $24,999 3% made. ^[3]
• $25,000 or more .05% made $100,000 or more8. ^[3]
• The AARP Foundation found that only 40% of MLM participants received a copy of the company’s income disclosure statement. ^[3]
• Of the participants who received it, 16% felt that it was “very accurate”, 50% felt that it was “fairly accurate,” 24% felt it was “fairly inaccurate,” and 9% percent reported that it was “not at all accurate. ^[3]
• Taylor came up with a more bleak conclusion from his research “On average, one in 545 is likely to have profited after subtracting expenses, and 997 out of 1,000 individuals involved with an MLM lose money . ^[3]
• a 2017 report by the Consumer Awareness Institute found that 99 percent of MLM sellers actually lose money. ^[12]
• Nearly 20 percent of those polled never made a sale, and nearly 60 percent earned less than $500 in sales over the past five years. ^[12]
• [The woman who signed me up] makes 13 percent of Mary Kay’s portion of every consultant underneath her that places an order. ^[12]
• Today, the Direct Selling Association, the national trade association for MLMs has nearly 200 member firms, though it is estimated there are more than 1,000 firms selling via this model in the US alone. ^[13]
• In 2019, according to the Direct Selling Association, Direct Retail Sales totaled more than $35.2 billion, with the largest MLM companies selling all around the world. ^[13]
• According to the 2018 AARP Study of Multilevel Marketing, MLM participants are more likely to be female than nonparticipants (60% vs. 51%), married (72% vs. 65% of nonparticipants). ^[13]
• Approximately 75% of you reported earning less than $1,000 a year or losing money , which is roughly in line with the results of the larger 2018 AARP study. ^[13]
• However, nearly half lose money and a quarter make no money, according to a new study released by AARP Foundation. ^[4]
• One quarter made a profit. ^[4]
• Of those that made money, more than half made less than $5,000. ^[4]
• Two thirds of participants said knowing what they know now, they would not join the same MLM company again and 62 percent said they would not join another one. ^[4]
• Four out of 10 respondents reported that the company misled them in describing their chances of achieving financial success. ^[4]
• One third of MLM participants were recruited by a friend and 12 percent were recruited by a family member. ^[4]
• Also, 39 percent stopped participating because it felt awkward to pitch to friends and family. ^[4]
• According to research at the FTC, a whopping 99% of recruited sellers lose money in an MLM venture. ^[14]
• That means just 1% actually turn a profit. ^[14]
• But with 99% of people losing money, it’s hard to see why anyone would join this type of company. ^[14]
• It’s hard to succeed in any business, but the success rate is well over the 1% you see in MLMs. ^[14]
• The same FTC report explains that 39% of legitimate small businesses ultimately earn a profit over time. ^[14]
• The same FTC report from Jon Taylor explains that 95% of MLM participants quit within ten years. ^[14]
• Around 30% of all small businesses survive at least ten years, according to Bureau of Labor Statistics data. ^[14]
• While it makes sense that people would get want to move on from some businesses after a period of time, the rate at which people flee MLMs are a testament to the 1% profitability rate above. ^[14]
• In 1980, the top 1% of distributors in Amway in Wisconsin brought in a gross profit of $12,500. ^[14]
• In the United States, the top 1% earn $718,766 per year. ^[14]
• You’ll need to near $118,400 per year to reach the top 10%. ^[14]
• The top 1% in Wisconsin MLMs would be in poverty. ^[14]
• However, when you consider that 99% lose money, they are not actually making an investment in a business. ^[14]
• When 99% fail, there’s no reason to waste your time or money on MLMs. ^[14]
• To the tune of 99 percent. ^[8]
• That 99 percent number isn’t coming to you. ^[8]
• The Small Business Association found that 44 percent of small businesses survive at least four years, and 31 percent at least seven years. ^[8]
• The NFIB found in a recent survey of small businesses that over the lifetime of a business, 39 percent are profitable, 30 percent break even, and 30 percent lose money. ^[8]
• Cumulatively, that’s a 64 percent success rate. ^[8]
• “The loss rate for MLMs is at least 99%. ^[8]
• 50% of people who start participating in an MLM business abandon it within the first year. ^[6]
• Women make up 74% of the workforce engaged in direct selling in the US. ^[6]
• According to an FTC MLM report, the top 200 distributors in Wisconsin for Amway products lost $900 on average in 1980. ^[6]
• The Assistant Attorney General, Bruce Craig, looked at the top 1% of distributors in the state for that year. ^[6]
• Less than 1% of participants ultimately turn a profit. ^[6]
• Out of their 21,000 independent consultants in the UK, Arbonne only showed income for 12% of them, i.e., those who actually made some money during 2018. ^[6]
• Moreover, only 5% earned more than $60 over the entire year. ^[6]
• Finally, only 0.4% of the contractors made more than the minimum wage at the time. ^[6]
• In the same year, there were an estimated 116 million individual distributors worldwide. ^[6]
• However, the second place surprisingly belongs to Japan with 3.3 million sellers, according to MLM statistics for 2015. ^[6]
• Japanese MLM sales accounted for 8% of global turnover in 2015. ^[6]
• Additionally, 80% of Japanese direct sellers are women. ^[6]
• And of the 27.5% who earned anything, the average monthly payment was just $53, giving them an annual income of only $655 before deducting expenses. ^[6]
• Most fall into the 35–44 age bracket, and only 6% are under 25. ^[6]
• 47% of the respondents reported losing money as a consequence of their participation. ^[6]
• 27% reported breaking even, so neither losing or gaining money. ^[6]
• Of those who made a profit, 6% earned between $5000 and $9,999, while 14% earned less than $5000. ^[6]
• A 2018 survey found that 7.7% of the US adult population had participated in at least one MLM organization during their lifetime [2]. ^[7]
• They find that 90% of these distributors were women who worked part time in MLM activity. ^[7]
• They analyse the diffusion processes of the firm and suggest that the maximum penetration was 1% of the population, and that 94% of participants did not make profits. ^[7]
• [30] provide similar results, suggesting that only 6.5% of distributors earn commissions on recruitment. ^[7]
• [31] suggest that roughly 50% of distributors lose money, roughly a quarter break even, and another quarter make some profit. ^[7]
• Commission fees of 5% are the case in some MLM firms, e.g. Herbalife. ^[7]
• Tupperware offers commissions which range from 4% to 8% for the manager level. ^[7]
• Under a 5% fee the multi level firm has no more than six levels, and with a 3% fee the maximum number of levels is nine. ^[7]
• In the example given above , if fees are 10%, the number of levels is very small. ^[7]
• According to [43], having five levels of qualified distributors will allow the highest level distributor to receive $125,610 in recruitment bonuses alone. ^[7]
• According to Herbalife’s documents , a distributor can expect a $9 profit for each product sold. ^[7]
• According to the firm, distributors can expect a profit of 25%, or $8.75 in our case. ^[7]

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Reference

1. fundera – https://www.fundera.com/resources/mlm-statistics.
2. plos – https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0253700.
3. jobsinmarketing – https://jobsinmarketing.io/blog/mlm-statistics/.
4. thebalancesmb – https://www.thebalancesmb.com/the-likelihood-of-mlm-success-1794500.
5. prnewswire – https://www.prnewswire.com/news-releases/new-survey-reveals-73-percent-of-people-who-participate-in-network-marketing-opportunities-lose-money-or-make-no-money-300727716.html.
6. mlmstatistics – https://mlmstatistics.org/.
7. moderngentlemen – https://moderngentlemen.net/network-marketing-statistics/.
8. nih – https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8291665/.
9. scarymommy – https://www.scarymommy.com/mlm-failure-rate-99-percent-lularoe.
10. aarp – https://www.aarp.org/aarp-foundation/our-work/income/multilevel-marketing/.
11. wikipedia – https://en.wikipedia.org/wiki/Multi-level_marketing.
12. time – https://time.com/5864712/multilevel-marketing-schemes-coronavirus/.
13. vox – https://www.vox.com/the-goods/2018/10/15/17971410/lularoe-lipsense-amway-itworks-mary-kay-mlm-multilevel-marketing.
14. familyfinancemom – https://familyfinancemom.com/is-this-an-mlm/.
15. due – https://due.com/blog/3-mind-blowing-statistics-about-mlms/.

How Useful is Multi Level Marketing

One of the key arguments in favor of MLM is that it offers a low-cost way for people to start their own business. With little to no upfront investment required, MLM companies provide individuals with a platform to sell products and recruit others to do the same. This can be appealing for those who are looking to supplement their income or escape the constraints of a traditional 9-to-5 job.

Additionally, MLM has the potential to offer individuals a flexible working schedule. With the ability to work from home and set their own hours, MLM distributors have the freedom to work at their own pace and balance their work commitments with other responsibilities. This can be particularly beneficial for parents, students, or individuals with other part-time jobs.

Furthermore, MLM can provide individuals with the opportunity to develop valuable business and sales skills. From pitching products to managing a team, those involved in MLM have the chance to hone their communication, networking, and leadership abilities. These skills can be transferrable to other areas of life and may enhance an individual’s personal and professional development.

On the other hand, critics argue that the MLM business model is inherently flawed and unsustainable. The promise of high earnings and rapid success often leads people to overlook the reality of the situation. As MLM relies heavily on recruiting new distributors to generate income, saturation is a common problem that can lead to fierce competition and limited opportunities for success.

Moreover, the emphasis on recruitment and building a downline can create a culture of predatory practices and exploitation within MLM companies. Some individuals may feel pressured to sell products or recruit others, even if they are not interested or capable of doing so. This can strain relationships and lead to feelings of betrayal and mistrust among friends and family members.

In addition, the long-term success rate of MLM distributors is often called into question. While some individuals may achieve financial success in MLM, studies show that the majority of participants end up losing money or earning minimal profits. This can be disheartening for those who have invested their time, effort, and resources into pursuing their MLM endeavors.

In conclusion, the usefulness of multi-level marketing ultimately depends on the individual’s goals, motivations, and expectations. While MLM can offer a low-cost entry into entrepreneurship, flexible working arrangements, and opportunities for skill development, it also comes with inherent risks and challenges that may not be suitable for everyone. It is important for individuals to conduct thorough research, seek advice from trusted sources, and carefully consider the pros and cons before embarking on an MLM venture. By approaching MLM with a realistic mindset and a clear understanding of the potential pitfalls, individuals can make informed decisions and maximize their chances of success in this competitive industry.

In Conclusion

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