Criticisms/Limitations of Network Marketing

Though the network marketing is getting very popular around the world, yet it is criticized by many people. And it is not considered a good business at all.

From the point of view of a company
  • The company faces difficulty in sales forecasting leading to increased risk of under or over stocking of various items.
  • Establishing close relationship with the customers is difficult, though this is one of the strongly required strategies of successful network marketing.
  • Brand building is impossible without advertising.
  • Distributors often become largest customers and hence take over control of the company.
  • The company cannot keep control on its large sales team’s actions.
From the point of view of a distributor or a network marketer
  • The network marketing is not easy at all.
  • It causes concern and frustration because of flattened sales graph or low sales turnover in the absence of training and marketing skills.
  • It is based on contradictory belief, that earning money needs investment of money, time, and energy and on the other hand it is believed that network marketing needs very little investment.
  • The network marketing/MLM industry has a very shady reputation. Many people feel it is a scam or just a ponzi scheme. And most of the relatives or friends do neither want to get involved nor indulge in any such purchase or selling.

You can also check Benefits of Network Marketing and Selection criteria for Network Marketing.