Modere Shutting Down – Is MLM Worth it Anymore?

Modere Shutting Down: What Does It Mean for Network Marketing?

The recent and abrupt shutdown of Modere, a well-known network marketing company, has sent shockwaves through the industry, prompting many to question the stability and future of the MLM business model. In this episode of the Digital Trailblazer Podcast, we delve into the details of Modere shutting down and explore the broader implications for individuals considering or currently involved in network marketing. Having themselves ventured into the MLM space years ago, Todd and Leah offer valuable insights based on their experiences and observations of the industry.

The Sudden News of Modere Shutting Down

The closure of Modere, a company that sold nutrition and beauty products and had been in operation for 23 years, came as a complete surprise to most involved. The shutdown occurred suddenly on payday, with distributors' payments failing to process. Adding insult to injury, the company's online systems, including customer, downline, and order information, were terminated by the end of the same day. This left distributors scrambling to retrieve any crucial data within a very limited timeframe.

Many distributors have described this event as a significant "rug pull" due to its suddenness and the lack of any prior warnings. Typically, when an MLM faces financial difficulties, it might restructure its compensation plan, alter product lines, reduce corporate staff, or issue reassuring statements to its distributors. However, in the case of Modere shutting down, there were no such indicators, leaving even top leaders with substantial downlines completely blindsided. While there had been some distributor departures and lawsuits, the hosts note that these are not uncommon occurrences in the network marketing world.

What Led to Modere Shutting Down?

While the specific reasons for Modere shutting down aren't specifically know, there are several potential contributing factors...

• Opportunity-Focused vs. Product-Focused: A core issue highlighted is that many network marketing companies are primarily focused on the business opportunity rather than the quality or uniqueness of their products. If customers were genuinely drawn to the products themselves, the departure of a top distributor would likely have a minimal impact on sales. However, in many MLMs, distributors often buy products mainly to qualify for commissions, creating a system heavily reliant on recruitment.
• Lack of Unique Products and Competitive Pricing: The products sold by many network marketing companies, including Modere, are often not unique and can be found elsewhere, such as on Amazon, at significantly lower prices. This makes it challenging for MLM distributors to compete in the broader marketplace.
• The Illusion of Residual Income: The promise of building a team and earning long-term residual income is a significant draw for people entering network marketing. However, the reality often involves constant recruitment to replace departing distributors, making true residual income elusive, even for those at the top.
• Regulatory Scrutiny: The hosts mention a past wave of scrutiny from the Federal Trade Commission (FTC) towards companies that were overly focused on recruitment rather than genuine product sales. While not directly linked to Modere Sshutting down in this excerpt, it underscores the potential risks associated with certain MLM structures.

The Impact of Social Media on Network Marketing

The transformative impact of social media on the network marketing landscape has been significant. Years ago, MLM success was often built on personal relationships within one's immediate circle. The advent of social media and influencer marketing has shifted the focus towards online connections, where individuals might align themselves with online personalities only to jump to another opportunity when a newer, "shinier object" appears. This constant churn contrasts with the more relationship-driven approach of the past, potentially contributing to the instability seen in companies like Modere. Mike Dillard's "Coffee House Letter," mentioned in the podcast, provides a deeper analysis of this shift.

The Changing Dynamics Since the Coffee House Letter

When we first got involved in network marketing, social media wasn't our primary point of engagement. Opportunities were typically introduced through personal acquaintances. Today, however, people readily search online and find a plethora of MLM companies and promoters, leading to a more transactional and less loyalty-driven environment. The concept of "planting your flag" in a single company for the long term has become less prevalent in this landscape of constant opportunity-hopping.

Should You Still Consider Network Marketing?

The sudden demise of a seemingly stable company like Modere naturally raises questions about whether network marketing remains a viable option for individuals seeking to build an online business. While we're skeptical of the industry as a whole and no longer participate in MLM, there are many potential benefits.

• Gateway to Entrepreneurship: Network marketing can serve as an accessible entry point into the world of business, often requiring a low initial investment and minimal commitment. It introduces people to the possibility of building their own business who might not have considered it otherwise.
• Skill Development: Involvement in MLM can help individuals develop valuable skills in sales, networking, prospecting, lead generation, and marketing. We credit our early MLM experience with providing a foundation for our current success in online business.

However, we also have significant reservations:

• High Failure Rate: Despite the low barrier to entry, the failure rate in network marketing is generally high, potentially linked to the low level of commitment from many participants.
• Lack of Control and Stability: The Modere shutting down situation vividly illustrates the lack of control distributors have over the company's decisions and their potential impact on income and business continuity. Distributors are reliant on the integrity and stability of the parent company.
• Ethical Concerns: Our personal experience of feeling uncomfortable promoting an opportunity where many hardworking individuals were not achieving financial success. There's also an awkwardness of constantly being in "pitch mode" and the potential strain on personal relationships.

Exploring Alternatives: Affiliate Marketing and Building Your Own Brand

Because of these factors, we strongly suggest that people looking to build a sustainable online income should consider alternatives to network marketing, such as affiliate marketing.

This model involves referring people to specific products or services and earning a commission on sales. Unlike MLM, it doesn't involve building a downline or the pressure of recruitment. In our personal experience, we've found affiliate marketing to be significantly more profitable than MLM.

Furthermore, no matter what type of business you're building, it's critically important that you build your own independent brand - especially if you're building a network marketing business. Attaching your brand solely to a specific MLM company can be detrimental if that company ceases operations, as seen with Modere shutting down. Building your own audience, email list, and marketing skills provides long-term security and control over your business.

Building a Sustainable Business Beyond MLM

In addition to affiliate marketing, there are several other business models that you can pursue, even without prior experience or skills. These include creating Facebook advertising agencies for local businesses, starting cleaning businesses with outsourced labor, freelance graphic design, and online education. It's important that you explore other options and consider their long-term goals and skill sets to find a better fit.

Learning from Modere Shutting Down

Modere shutting down serves as a stark reminder of the potential instability within the network marketing industry. While MLM can offer an initial foray into entrepreneurship and the development of valuable skills, it also carries significant risks and challenges.

The emphasis on recruitment over product, the lack of control for distributors, and the impact of external factors can all contribute to the sudden collapse of even seemingly successful companies. For those seeking to build a lasting and controllable online business, exploring alternative models like affiliate marketing and, most importantly, focusing on building your own independent brand are likely to be more secure and fulfilling paths.

The lessons from Modere shutting down underscore the importance of critical evaluation, long-term vision, and building a business on a solid foundation of genuine value and control.