Wholesale Buying Organizations versus Retail Selling Organizations

There is a HUGE difference between these two organizations – don’t mix them up.

A Wholesale Buying Organization is an MLM business that recruits people to purchase products at wholesale prices from the MLM company. There is no emphasis on making a lot of money.

A Retail Selling Organization is an MLM business that recruits people to sell products to a consumer and also to recruit others to do the same. A lot of money can be made.

The main difference is the “sales pitch” and what the distributor’s activities are after the pitch.

If the sales pitch is about achieving wealth and time freedom, then that can only be achieved with a Retail Selling Organization.It has been achieved in a Wholesale Buying Organization, but requires approximately 5,000 customers purchasing the products to produce a $5,000/month bonus check.

If the MLM company is a Wholesale Buying Organization, the “sales pitch” should be about earning extra money. Notice that the pitch is NOT about wealth and time freedom. You can expect to purchase products at a discount and, after several others have joined, you may make enough extra money to pay for your products. After a few hundred people in your downline, you may be able to earn a car payment. After a few thousand people, a house payment. But a Wholesale Buying Organization is not the way to achieve wealth and time freedom.

Sometimes distributors in MLM companies mix these two organizations together. A distributor may be told to get customers to purchase products at wholesale prices by using a “sales pitch” about wealth and time freedom. This is the activity of a Wholesale Buying Club! Because there is no focus on getting and training new distributors, the “sales pitch” about wealth and time freedom is not accurate.

It may not be “illegal” to do this, but at a minimum it is misleading to suggest to someone that they can reach financial freedom doing wholesale consumption activities… unless you tell them it will require them to have thousands of customers.

The correct activities of a Retail Selling Organization are recommending that the new person purchase products (they should do this so they know they like the products), training them to get new customers, and finally teaching them to recruit and train others to do the same – these activities can and have produced “wealth and time freedom”.

If you see that your company is confusing these two organizations, you need to correct it with the people you recruit. Blaming your upline for not training you how to get customers does you no good. Just learn it on your own and then teach your downline. Soon you’ll be a top producer and everyone will want to know how you did it.

Summary:

If the “sales pitch” is earn wealth and time freedom = Retail Selling Organization. Activities are: Buy products for yourself and get trained on how to sell products and recruit others to do the same.

If the “sales pitch” is earn extra money and get products at wholesale prices =
Wholesale Buying Organization. Activities are: Buy products at wholesale and get others to do the same. Do not expect wealth and time freedom.

Do not confuse these two organizations.

Return to : Why Look at MLM?

Tim Sales

About the Author

Tim Sales

Tim’s experience in building his own downline of 56,000 network marketers helped him develop his signature training series. A public relations ambassador for the network marketing industry, Tim has also dedicated his time to debunking the false information spread about the network marketing industry.

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Andrea Goodsaid

Hi Tim –

YES! This is one of my biggest pet peeves about this industry — that people are never trained to treat retail customers like .. ummm … customers.

“Get ’em in my deal” thinking somehow tends to seep in and I think that this is perhaps the number one black mark against MLM as a whole.

If we all put serving our customer base and moving product to people who want it first, and then trained others who raised their hands in interest re. the biz to do the same, it seems to me that the stigma would melt away.

And the companies that are structured with ‘only distributors would buy products at that price’ pricing would also have to change their ways, eh?

It’s all in our intentions.

Appreciate this venue you’ve created!

Make it a great day,
Andrea

Darren Chaffee

This is exactly what this industry needed. We have a responsibility to educate people if we are to help them.
Thanks Tim for this great free resource!
Darren

Patti Roney

I have never seen an article on this subject and find it very educational! There IS a difference as you have pointed out and it is a critical difference in our thinking process, our business strategy and the eventual outcome. Thank you!

Roxanne Green

Tim,

You are absolutely right!! There must be a mix of selling and recruiting. If you can’t sell your products to the average consumer without getting them to sign up into your “deal” then you are in the wrong place. You should be able to sell your products and make money.

Awesome info here.

~Roxanne Green~

Tambria Alexander

I have never read any thing on this topic and found it enlightening. It makes sense; selling AND training are everything!

Becca Mutz

With my company, we purchase the products at wholesale cost and make a nice profit retailing them. That’s one way to make money immediately. I encourage new success partners who are looking for income quickly to sell the products. For long-term residual income, there is the team building option and generous compensation plan. Over a period of time, the retail sales and residual income will meet and eventually the residual income will surpass the income from retail sales…but it takes time, daily commitment and persistence. Thanks for your view on these aspects of our industry. Becca

Dean Rittenhouse

I agree with these assertions in a general sense… however, in the case of Melaleuca, which by your definition is a “Wholesale Buying Organization” how do you account for so many people consistently making full-time incomes, many making hundreds of thousands per year in net income and many making over a million (the top producer made $2 million+ last year)? I guess there are exceptions to every rule?

Joe Kresser

As usual you take something simple and keep it simple. Good job! Joe Kresser

Kelly S.

I am sure many people reading this are going, “Oohhhhhhh….”. Great article.

Valencia Burton

So clearly stated, thank you Tim!

Gavin Chapman

Didn’t know much about this. Thanks, Tim!

Shirley K., California

I feel I need to study this one to really be able to describe it like you do here. I’ve understood the overall concepts before;however, this is great material. Food for thought.

Patty Jones

“Wow”, my eyes are open to a completely new world. I came into my mlm thinking the way to wealth was to offer everyone wholesale and they naturally would purchase for life. I was wrong! The way to riches is to build a relationship with your “Clients”, then you may offer the wholesale account. If we are not relatioship building through sales, the wholesale buyer gets left to their own and pretty soon they are purchasing nothing.
Does this make sence?
Thanks Tim, I am eternally greatful for your articles and insight.

Efeosa Idemudia

WOW!!! Great article on the difference between retail and wholesale in MLM companies. I didn’t know there was a difference until I read this. Then the sales pitch made it all the more clearer.

Mark Bandy

Tim, your articles and research are second to none, and I am so glad that there is someone like yourself that takes the time to combat the nay sayers and proves that this is a viable industry and the most powerful buiness concept ever created. The only negative people, are the ones that do not have the work ethic to do what it takes to make it in this industry. They signed up, did nothing and wandered where their check was. So I thank you for providing web sites likes this one and your Brilliant Compensation site that allows us to have materials to succeed in this industry. Keep up the good work and the integrity that you add to it. God Bless you.

Kerry Erasmus

Tim, as usual you are perfectly correct, it’s simple maths when you consider how many people it will take to build a organisation on wholesale “distributors” only, as opposed to building an organisation based on “customers” and business associates . Were the line starts getting blurred though, is when you don’t have “retail” customers because the product just gets to expensive if you try to sell it at retail. What then happens is, you introduce what the industry calls “preferred customers” that only pay wholesale. Now obviously you don’t make profit on the latter (PC’s), thus forfeiting that income source, but they do count towards your accumulated points that eventually pay you a commission. Which in turn reduces the number of associates required to make a decent income. I am not sure if this is an issue in the USA, but I can tell you it is definite an issue in Australia and other markets that need to pay more for the USA products.

Teddy Letsou

Thanks for the terrific article. A lot of people, including some in the industry, don’t understand that the business model of MLM is a simple one. Hard work and commitment are still needed to be successful as nothing in life is free. Great to see that you also allow those who don’t understands) a forum to express their opinion as well. Great article.

Doug Pine

I hadn’t heard this differentiation before. It is most helpful.

Joseph Luckettt

So which one is better long term?

Jeffrey Lim

Hi Tim

I am new to the MLM industry. I have come across an MLM Company, who in addition to selling wholesale and training distributors to sell retail but also openly:-
1. sell products at retail prices over its sales counter to any walk-ins who are non distributors.
2. sign-up walk-ins who want to buy products at members/distributors price and then uses its internal created account as the sponsor.

May I know your take on this practice? Will it have an adverse effect on the distributors who are trained to sell retail?

Looking forward to your reply.

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