Stern decided to get out after she realized she had $20,000 in unsold wholesale inventory sitting in her living room. “It clicked for me that if you order 30 items, they send you 10 quick movers and the rest sit. It’s a false sense of actually being successful,” she says. “I noticed all these people started going out of business. I started getting scared that my inventory would be worth nothing, and I would be stuck with $8,000 on my credit card.”
A tipoff that should clue you into the wisdom of network marketing is that the companies themselves, who manufacture and sell the product, don't even eat their own dog food. They are making money the old fashioned way, by selling an expensive product. It's you whom they recruit to start a network marketing business. When an existing distributor pitches you and gets you to become a distributor yourself, you are required to make your initial purchase of "inventory" of whatever the product is. You either consume that product yourself or sell it to others. Your principal sales tool is the pitch that if your customers become distributors beneath you, they can buy the product at a discounted wholesale price. In most plans, in order to retain your distributor status and qualify for the wholesale discount, regular monthly purchases have to be made.
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