They were always close. Some friends, neighbors or family members who were dedicated to selling beauty and cosmetic products. His work was not widely known nor was it hardly talked about, but they used to be accompanied by his batch of products and they would display the merchandise wherever it was needed. They belonged to one of the so-called multi-level companies, a business system based on direct sales where its members are consumer-distributors and the business moves through recommendations or the well-known word of mouth. Mary Kay, Herbalife, Avon, Rhingana and Young Living are some of the companies that thrive on this model. The Association of Direct Selling Companies (AEVD) defines it as “the sale of goods or services through a network of independent sellers, although coordinated in the same commercial network.” In the Spanish State, this type of business would be carried out by around 250,000 people – officially -, 83 percent women, with an average age of between 40 and 45 years. The income would come from the sale of a “quality” product that the distributors buy at a discounted price and then sell at the market price.
There is another sales scheme that is often confused with multi-level sales, although they are different practices. They are pyramid companies, prohibited throughout the world, in which the products are an “excuse” to attract participants in a commercial network of opaque companies where a very high entry fee is paid, which is the main source of income. “In recent years, the multilevel system has created some confusion and controversies among people, due to its approach to pyramid selling, as both systems are based on networks of sellers,” he indicates. Beatriz Abella del Valle in academic research. A key difference between both structures is that multi-level selling is legal and regulated in the Spanish State by Law 29/2009 of December 30. Furthermore, the company does not require an excessive outlay to become part of the business, something that does occur with pyramid sales. In the latter, furthermore, the economic compensation is derived fundamentally from the entry of new users or distributors, not from the sale of products.
The multi-level model arrived in the Spanish State, as Abella explains, in June 1986 with the help of the American beauty and personal care company, Amway, which also had a representative sales volume. And its trail seems to have widened and perpetuated itself over time. Currently, many of the companies that develop in this area are integrated into the so-called beauty, nutrition or weight control sector.
“You have to change the way you dress, the way you do your hair and the way you put on makeup, because you have to give an image. You get a little obsessed with it.”
It is an always rising market. In 2023, the cosmetics industry will generate $800 billion worldwide, 50 percent more than in 2017, when turnover reached $530 billion, as reported by the company CB Insights. “The beauty-related market is very broad and generates many business benefits. “There are countries like Brazil that in times of economic crisis and recession have multiplied by three the consumption of these products related to aesthetics,” he says. Alicia Rius, president of the Feminist Economy Network. This would be one of the reasons that would explain the expansion of these companies and their success in multi-level dynamics. It is also no coincidence that it is mostly women who are involved in this type of work. “It is only explained if we take into account that the mandates that women receive from childhood to meet social demands for beauty are broad and unattainable. Added to this, the lack of recognition of their work and contributions usually generates low self-esteem, which can generate great social desirability that leads to being accepted according to the imposed canons.“, contextualizes Rius. And precisely in this search for the ‘ideal’ image, companies such as Avon or Mary Kay also collaborate.
Ana (not her real name) worked for the latter for two years: “In order to achieve certain goals you have to dedicate many hours and it ends up being a bit sectarian, because you have to change the way you dress, the way you do your hair and the way you put on makeup, because you have to than to give an image. You get a little obsessed with it. It depends on the group you are in, they tell you that you have to comb your hair better, I am not one for putting on makeup, and they said that I had to take better care of myself, that I was my own showcase. And if you wore heels even better. The message was a bit ‘accept yourself as you are, but what you don’t like, change it’. And there are many products to achieve it.”
He came into contact with the company at a wedding event in Bilbao. She began working to earn extra income, which was around 300 euros per month, but then it became his main job for several months, with a remuneration of about 1,200 euros. “The way it works is to buy batches of products that you purchase at a consulting price, with a discount, and then sell them at a public price; that margin is your profit. If you decide to invest 800 euros, you can sell it for 1,600, but for making that purchase at the beginning they give you merchandise worth 500 euros, so that’s more than you earn,” he says. Ana Lauser. What happened when he had been working for two years and had managed to form his own team of distributors was the same thing that can happen in any company. She became pregnant and left the activity temporarily, when she wanted to return she had lost the title as ‘team leader’. “I didn’t feel like continuing at all, because you have to dedicate time to it, especially at the beginning and you have to be aware of many things and many people. It was not my time to continue, she had a small baby, she had lost everything she had achieved and she was not motivated,” she remembers.
“The problem is that they present work as an illusion, not as a business where you have to make an investment of money and time to achieve results”
“In general, these structures are related to organizational levels that pursue an accumulation of capital dependent on a large base that works and that is slowly and limitedly promoted to higher positions. They are also undemocratic structures both in decision-making and economically, with a very unequal distribution of benefits,” explains Alicia Rius. However, when self-organization of time is necessary, these multilevel companies become a way out. “The more social flexibility in hours a job offers, the more you will be helping people, particularly those in care work, to enter the labor market. Home sales and on-line Sometimes they meet these conditions, but many others do not, because those who work in them are subject to impossible sales demands,” adds Rius. These caregivers are, for the most part, women who do not have the role of main breadwinner of the family or lack a stable job, but for whom an occupation like this allows them to earn their own income.
For Social Security, you would have to register in the Self-Employed Regime when carrying out any activity that is carried out on a regular, personal and direct basis for profit and without being subject to an employment contract. However, in 2007 the Supreme Court issued a ruling establishing that it was not necessary to register, unless the Minimum Interprofessional Salary was reached, now at 1,134 euros in 14 payments. But since it is such a profitable economic sector, the Treasury has it in its sights. In fact, five years ago this organization requested information from Mary Kay Spain to understand its sales system and the contractual relationship with its network of distributors, which numbered around 45,000. In the United States, her country of origin, she had already been accused of pyramid scheme. Although it had no further consequences, it did reveal the legal limbo in which these companies operate.
“They feed on the capitalist American dream that everyone can get rich”
In her study of social representations of multi-level companies, the independent researcher Monica Maisterrena González points out that these organizations offer different benefits that are not obtained in traditional companies. On the one hand, it states that invitations come through friends or family; Those who access are classified as members and partners of the company, which transmits a sense of belonging and exclusivity; They offer them a large amount of money with supposedly little effort; each person manages their time, that is, flexibility is offered; They teach them to be leaders to create their distribution network, and provide them with strategies to fulfill their “dream.” The latter, as Maisterrena points out, is a key concept in this type of companies, something that Alicia Rius corroborates: “They feed on the capitalist American dream that everyone can get rich.” Along these lines, Ana Lauser also remembers certain values that predominated: “The problem is that they present work as an illusion, not as a business where you have to make an investment of money and time to achieve results. And they don’t tell you like that, because it wouldn’t be so nice.”
Mónica Maisterrena explains in her work that the multi-level business model emerged in Europe through people who, for different reasons, lived outside the prevailing economic system.
In 1886 David H. McConnell creates one of the most important direct selling companies to date: Avon. The model, which is still in force today, was based on a network of distributors, who sold their products to friends and family, which facilitated sales and increased profits. Years later Carl Rehnborg He founded the multi-level marketing company Amway, after separating from the founding company of this business system: California Vitamins. According to Rehnborg, “it is easier to get many people to sell a small amount of products than a few to sell large quantities.” Reason (or business mentality) is not lacking.
And this is precisely the formula of these companies: numerous profits for the founder or the management, generally male, and very little investment. With no salary to pay or premises to maintain, the advantages are unquestionable. They focus on reaping the fruits of this extensive network of saleswomen who, although they receive a monthly contribution for their hours of work, will always be far from that “dream” of eternal beauty, money and social status distilled in these structures.
This report was published in number 9 of #PikaraEnPapel, which you can get in our store on-line.
