Caution: Front Loading and their Dangers
I especially wish to highlight the dangers of front loading in a separate post in relation
to the 2 topics above because through proper understanding of these features in the
marketing plan will prevent people from losing money in the network marketing industry.
Front loading or inventory loading is more of a business maneuver where a distributor
decides to buy lots of products in an effort to meet his quota or target faster and even
buy his way up the ranking system (not usually at the entry level of the business).
Front loading can also occur when new distributors buy positions especially those at a medium to higher level. I have personally seen people invest more than $100,000 in buying products when joining a network marketing company.
More than they would like to admit, they are more interested in climbing the ranking and
not as interested in using or selling all those products. Their decision in purchasing those
products is purely to be in a more strategic business position (higher rank means better
income) and most of the time, those products sit in their store rooms or under their beds.
I would like to stress that there is no crime or unethical actions in doing this.
However, the danger is that many people fail to control their finances properly and that
leads to financial struggles and ill feelings towards their company and their upline.
Furthermore, many people new in this industry make the serious error after they buy up their position. They sit around thinking that their ‘investment’ will grow. This kind of
thinking is extremely wrong because after you have bought your position, you are not making any income (in fact people who build their network the ‘slower’ way has a more stable income than you) and you should work even harder to build your network since you have spent more money than before.
In the end of the day, network marketing requires a good business mindset in order to succeed. Being able to plan your finances is one thing.
Just like people in the real world, they work very hard to make a living promising to buy
gifts and vacations for their families but only winds up putting more hours into their work;
in network marketing many distributors tend to spend their hard earned money buying
up more positions, volume, or tracking centers so they can earn more in the future,
at the same time neglecting their families. Striking a balance is very important.
Lastly, front loading has the potential of DEVALUING a product if executed wrongly. Let
us say a new distributor joins a company and buys up $10,000 worth of products. If he decides to quit the business, what is the first thing he would do? Try to cut losses! He might even try to sell off his products way below his costs!
Now, if the company encourages front loading and there is attrition by the masses, imagine everyone doing the same thing to the product. In the end of the day, the overall value of the product will drop so much that the entire retail market will no longer be
viable (why should I get the product from the company? My friend sells them much
In the end of the day, remember:
• Only front load if you are financially able and have a large social network
• Have a fair assessment of your abilities and be prepared to go all the way
• Pace yourself in your business. Don’t overspend and hurt yourself financially
• Focus on high demand products with repeat sales
Next post: The Dreaded Demotion
Until then see ya later..