Compare and Contrast: Multi-Level Marketing and Pyramid Schemes

Ok, a little context real quick. I am planning on becoming an independent consultant for Jamberry, and in my research about network marketing/multi-level marketing, I came across something interesting that I thought I would focus a blog post on: the carefully drawn line between pyramid schemes and multi-level marketing schemes (MLM). Now, how does this affect e-marketing? With the growth of online marketing, many MLM-based companies are now becoming "Facebook companies," where a lot of the marketing is based on Facebook and other social media sites. Pyramid schemes are also becoming more of a problem, with people being able create legitimate-looking schemes to draw people in. 

Back up a bit. What are pyramid schemes and MLMs? Well, "a pyramid scheme is a non-sustainable business that involves the exchange of money, usually in the form of a sign-up fee, and usually has no product or service." (wikihow.com) These businesses are illegal! Go figure. Money is charged for enrolling other people into the scheme. Only a few people actually make money, and those few are the ones that started the scheme in the first place. So, basically, you pay money to join the scheme, and only make money if enough other people are willing to pay to join the scheme. It's just an exchange of money for no real reason.

MLMs, such as Jamberry, Avon, MaryKay, and Pampered Chef, are built bringing in "independent consultants" to market products. As a consultant, you are encouraged to recruit other consultants to join, at which time you may receive a commission from everything your recruit sells. For example, in Jamberry's compensation plan, as a first level consultant, you can make between 30%-40% commissions on what you sell, and 3% on what your recruits sell. As a team manager (7th level), you make 12% on your recruits' sales, 7% on their recruits, and 5% on on their recruits. You don't get any money just for recruiting, your recruits have to sell, and you have to sell as well to get money. 

So, the main differences are:

• MLMs are based on selling products, you get commissions on sales and your recruits' sales; pyramid schemes are based on recruiting, and that's all you get money from.
• Pyramid schemes are illegal, MLMs are legitimate (and kind of brilliant)
• MLMs are based on selling products, pyramid schemes usually don't have products to sell.

Compare and Contrast E-Marketing Strategies: ModCloth and White House Black Market

White House | Black Market is a women's clothing retailer founded in 1985. It specializes in upscale clothing for women 35 and older, but several of the designs appeal to a younger audience, as well (in my opinion at least). What makes WHBM unique is that they focus on clothes that are white or black, and they have one pop color each season. The styles are inspired by runway designs, and it follows the current trends to some extent. However, the company is well known for professional-looking, fashionable clothes that have a timeless feel.

On their website, they list Facebook, Twitter, Youtube, Pinterest, Instagram, and Google+ as ways of connecting. They use Facebook and Google+ to showcase their new styles and lines. Twitter is used more for showing where they were mentioned, such as blogs and magazines, as well as showing new styles. Youtube shows some "behind the scenes" documentary-type videos about the company, as well as showing the charities they support. Pinterest is used to showcase new styles, as well as inspirational fashion, recipies, and dream vacation destinations. Instagram seems to be the most customer-focused social media campaign, since they specifically ask for customers to post pictures with the tag of the season.

ModCloth is an online retailer founded in 2002 specializing in vintage, vintage-inspired, and indie clothing, accessories, and decor. They offer a wide range of items, with no specific age-range in mind, although most people I've found who are huge fans are between 18 and 35. Most people would agree their style, in a word, is "cute."

ModCloth uses social media in a pretty similar way to WHBM. They also list Facebook, Twitter, Youtube, Pinterest, Instagram, and Google+, as well as Tumblr. Facebook, Twitter, Tumblr, and Instagram all are used primarially for showcasing new items avaliable. Pinterest (and Instagram, to a small degree) are used to showcase inspirational fashion and items, as well as new items avaliable on the website. Youtube shows interviews with celebrities, and a few documentaries about the company. Google+ is somewhat surprising, though. They have 11,053 followers, but only ONE POST! (weird)


Personally, I think WHBM's  social media campaign is better, since they do specifically ask customers to share their styles on Instagram. However, ModCloth does invite customers to share pictures as part of their reviews on the main website. Despite ModCloth being an pure play e-business model, there is a surprising lack of community on the social media sites. It's all about ModCloth sharing their own inspirations, not as much sharing their customer's own style. It is interesting that they are following 613 boards on Pinterest, while WHBM follows 160.

Compare and Contrast E-Marketing Strategies: Julep and Jamberry

    Julep is a cosmetics company that opened in 2007. They specialize in 5-free nail polish, but they also sell lipstick, eye-shadow, and several other beauty products, including the tools. The founder started by opening 4 nail salons, but in 2008 Julep started selling online. They now offer over 300 products on their website, which they get most of their business from.
    Jamberry is a strictly online company. They sell nail wraps, nail polish, and manicure tools. Jambery was started in 2010 by three sisters who wanted to create a cheap alternative to expensive salon manicures.
    Julep uses Facebook, Twitter, Instagram, Pinterest, and Youtube to create content to reach new customers, while Jamberry primarily uses Facebook, Twitter, and Pinterest. Jamberry is rather unique, however. It uses customer's pictures on Instagram to showcase the different nail wraps and polish.  Also, Jamberry is built somewhat like MaryKay. You have to be in contact with a consultant to order items. Consultants are paid by commision, and anyone can become a one. A consultant can hold Facebook parties, offer deals, and present a friendly face to potential customer.
    Technically, Julep's marketing campaign seems to be more effective in that they are more widely known and have a larger company. Jamberry is relatively small (it doesn't even have a Wikipedia page!). However, Julep has had some difficulties adjusting to the fast growth. The Better Business Bureau gave Julep an "F" rating due to an influx of unanswered complaints.
    Both Julep and Jamberry have monthly subscription boxes, although Julep's is more customizable. However, Julep's "fun stuff" and customer engagement kind of ends there. Jamberry is all about the customers. As I said before, on each nail wraps individual page are several customers' Instagram photos showcasing different ways you can use them and combine them. Hosting Facebook parties allows the customers (even the brand new ones) to gain rewards points and free stuff, and anyone passionate enough can become a consultant and receive even more rewards (and commissions!)