How valid are Online Network Marketing Ventures?

By Eugene Wanekeya

Online Network Marketing has been touted as one of the best cash cows for idle unemployed youth in Kenya. Advocates of the concept sell the idea as the ultimate avenue for financial freedom, convincing so many youth in the country to buy into it. Another school of thought however, has branded the concept as a scam, the next pyramid scheme.

If it is indeed a scam, how did the Kenya Revenue Authority (KRA) and Safaricom – Kenya’s largest telecoms company, buy into the concept as well?

Screen-Shot-2013-06-13-at-9_52_51-AM-1728x800_cIn a nutshell, network marketing is a multi-level marketing strategy that remunerates a sales force not only for sales they personally generate, but also for the sales of the other sales people that they personally recruit into the company. When it comes to online network marketing, an individual doesn’t even have to make a single sale since they can earn a living from the income they receive for every new recruit they bring into the sales force.

The bone of contention regarding this concept is twofold. First, every new sales person recruited into the company has to pay a small fee in order to be trained and admitted, and a further monthly fee in order to get access to the company’s ‘money making’ online platform. What this means is that whether or not the sales person makes any actual sales, the owners of the company are generating revenue. KRA has legitimised this model by collecting tax on every payment whereas Safaricom has availed the MPESA platform for these financial transactions. This means that these two entities are also making money up front regardless of whether or not it is a legitimate business.

 “It may be argued that a good sales person is one who can sell you running water from your own tap.”

Second, the digital products that are up for sale are virtually impossible to sell in the Kenyan market at present because they are not business critical solutions. Most business entities are doing quite well without these products. However, it may be argued that a good sales person is one who can sell you running water from your own tap.

Talks of scam aside, it is noteworthy that the concept of online network marketing can actually be quite an invaluable legitimate marketing tool if used correctly. Any advertising or marketing professional will affirm that word of mouth is the most effective marketing tool. The only reason it is not popular is the cost implication. Network marketing is the solution to this. With a network of about a million individuals, word of mouth can be relayed within seconds with just a click of a button to each individual within that network. Advertisers would relish such a tool. As things stand however, this is not the key selling point for the concept of online network marketing. Whether it is a legitimate money making venture or a scam, is down to an individual’s interpretation.

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