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Ecommerce Forum

Nobody is selling MLM sourced goods on the Internet
No competition, but maybe pesky Corporate Lawyers trying to shut you down

 1:51 am on Jan 28, 2013 (gmt 0)

I generally despise MLM (Multi-level marketing) source goods and the starting commission is so low, it leaves very little room for profit.

However we came across a MLM that pays a 50% commission on the second tier, so we were looking at getting our wives together, with the goal of creating our own internal sales network, which will provide us with the source of goods at the 50% commission level.

This network will feed our company with product so we can sell on the web. We can't do it directly, as it would be a violation of the MLM agreement.

We would them become an unauthorized seller of goods, but would be protected from Copyright and Trademark issues by the first sales doctrine.

Once we got above the radar, I am expecting the usual cease and desist orders, and other frivilous and vexatious litigation, as the Internet is evil for most MLM's. I would play the usual delay tactics, while protecting my ass(ets).

What bothers me, is why nobody has done this (other than a few ebay sellers that run at the first sign of trouble). I don't see any Adword competition or anything for the goods in question.

Are MLM goods, overpriced, due to the complexities of the dealer network, shoddy goods, or what?

What scares me, are not the lawyers, but the lack of competition.



 1:11 pm on Jan 28, 2013 (gmt 0)

You're going to sign an agreement with a company with the specific intention of lying, either explicitly or implicitly?

What do you think about people who do that to you?

Nevermind the fact that the agreement also certainly precludes you from doing what you plan to.


 3:49 pm on Jan 28, 2013 (gmt 0)

No, our wives will be selling the goods, and they will honor the MLM agreement to the letter.

However 99% of the sales will be to one customer, a corporation run by me and a few business partners (in which the wives are not part).

When the goods are sold to my corporation,the Trademark rights are extinguished, by the first sale doctrine. I am then free to sell these goods without interference from the MLM.


 3:55 pm on Jan 28, 2013 (gmt 0)

You don't need to reiterate what you're doing, it's entirely clear. I don't care what your sale of first doctrine is, what you're doing is dirty.


 4:45 pm on Jan 28, 2013 (gmt 0)

I don't consider it dirty, I will be opening new sales channels for a business that is using an outdated model, with the impact on any one MLM sales person being immaterial to non-existant.

However, I am not here to discuss ethics, but why internet sales of MLM goods is so rare. I can't be the first person to come up with this business model.


 5:04 pm on Jan 28, 2013 (gmt 0)

First sale doctrine applies to the first owner, and your wife's brokering doesn't constitute as "ownership" any more than Walmart "owning" the TV sets they sell.

The reason you aren't seeing the business model is because it's not a model. It's fraud.


 5:23 pm on Jan 28, 2013 (gmt 0)

No, our wives will be selling the goods, and they will honor the MLM agreement to the letter.

I don't think that will be possible. Usually the contract should have a clause that forbids the sale to wholesalers which are not part of the MLM network. Often fines are also part of the contract if one party should breach the contract.

Sometimes companies start to mark goods and make test buys to identify the leak in the sales network.


 5:30 pm on Jan 28, 2013 (gmt 0)

Well actually I found where all the action is. It's on Amazon.

Since 99%+ of MLM startups are failures, there is a variety of MLM goods on Amazon, advertised as new at deep discounts.

Adwords is probably to pricey to achieve a profitable margin for the impulse buyers I may pickup.

Still worth the look, but the shine has worn off.

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