Traditional MLM companies often use a strategy of "setting people up in business" by having distributors purchase significant amounts of inventory with the hope of getting rich quickly, only to learn the difficulty of getting rid of the inventory. In many cases, that inventory ends up in their garage and becomes a drain on a family's finances. Distributors, consultants, or "independent business owners" purchase steeply priced products such as specially filtered water, skin creams, exotic berry juices, or body-enhancing magnets. They they attempt to sell those items to their friends and neighbors. If they are unable to move through that inventory, they are left "holding the bag."
Whereas MLMs often incentivize people to buy an inventory of products, CDM companies encourage customers to purchase only the products they need and intend to use on a monthly basis. There is no incentive to build a product inventory and, therefore, no financial risk. It is actually very hard to determine how much of an MLMs products are ultimately sold to end consumers.
On the other hand, Consumer Direct Marketing provides products that people use every day in their homes and continue to buy them because they like them. Not because they want to qualify for a bonus.
Another common feature of MLMs is that they charge several times what their product is worth in the marketplace (e.g. $40 bottle of juice that would sell for less than $5 at your favorite grocery store). CDM manufactures products that are competitively prices against retail, grocery, and drugstore brands. MLMs simply can't do this.
In MLMs, those who "get in on the ground floor" win, while those who get in last, as the company is collapsing, lose. On the other hand, because CDM can complete with the entire retail market, is can complete head to head with huge corporations such as Proctor & Gamble or Colgate Palmolive.
To make it a little easier to compare the two business formats, on the following pages, we have listed eleven major differences you should know about in evaluating these types of companies.