Reality of Multi-level Marketing
Last year, 82 percent of pyramid sellers had not earned a single penny for a year. Also, 99 percent of sellers who made a profit in the name of “support payments” were paid only 490,000 won (US$431) a year.
The reality of pyramid sellers was appalling. According to a report titled “2017 multi-level marketing key information” released by the Fair Trade Commission (FTC) on July 19, there were 125 pyramid companies that were required to disclose information last year.
Companies which had sales figures and were in business as of May 31 this year had to open information. The sales of the multi-level marketing market came to 5.03 trillion won (US$4.42 billion), down 1.9 percent from a year earlier. The total figure has been gradually falling.
After peaking at 5.15 trillion won (US$4.53 billion) in 2015, it dropped to 5.13 trillion won (US$4.51 billion) in 2016, showing a downward trend. The combined sales of the top 10 companies stood at 3.55 trillion won (US$3.12 billion), down 2.07 percent from the previous year.
In particular, the number of sellers who earned more than a single penny in support allowance from companies fell 4.3 percent to 1.57 million, accounting for 18 percent of the total registered sellers. In other words, 82 percent of the registered sellers made no money at all last year.
In addition, the total amount of support allowances paid to sellers by companies was 1.68 trillion won (US$1.48 billion), down 1.3 percent from a year ago. According to an analysis of the 1.57 million sellers who were paid the allowance, top sellers took the lion’s share. In short, the average amount of support allowances paid to the top 1 percent of sellers, or 15,624, reached 58.61 million won (US$51,503). The figure went up 1.54 million won (US$1,353), or 2.7 percent, from the previous year. The remaining 99 percent, or 1.55 million, received 490,000 won (US$431) on average. The combined amount of support allowances paid to the top 1 percent stood at 915.7 billion won (US$804.66 million), taking up 54.5 percent of the total. Moreover, only 0.6 percent of the registered sellers, or 9,451, were paid over 30 million won (US$26,362) a year.
The top 10 companies were Amway Korea Ltd., Atomy Co., Nu Skin Korea Co., Unicity Korea Co., Herbalife Korea Co., Seacret Direct Korea Co., Bom Korea Co., Mannatech Korea Ltd., Karis Co. and ACN Korea Inc. The number of sellers came to 8.7 million, up 4.9 percent from a year earlier. However, the actual number of sellers would be much less because many sellers were registered with multiple companies but were not actually engaged in any sales activities, according to the FTC.