Rodan & Fields Shifts from MLM to Affiliate Marketing: Impact on Sellers and Industry Trends
On September 1, 2024, Rodan & Fields made a groundbreaking shift by moving away from its traditional multi-level marketing (MLM) model to adopt an affiliate marketing approach. This change represents a significant pivot in the direct selling industry and has left many current MLM sellers grappling with the new reality. Here’s a closer look at what this shift means and how it impacts both sellers and the broader MLM landscape.
The Shift from MLM to Affiliate Marketing
Rodan & Fields, a prominent skincare company known for its MLM structure, is now embracing affiliate marketing. This transition means that, starting from September 1, Rodan & Fields sellers will earn commissions solely based on the products they sell directly. This is a dramatic departure from the MLM model, where income was heavily reliant on recruiting new sellers and earning from their sales.
Understanding the MLM Model
To grasp the impact of this change, let’s break down how the MLM model works:
- Recruitment-Based Earnings: Sellers earn commissions not just from their direct sales but also from the sales made by their recruits (downline).
- Pyramid Structure: Sellers at the top benefit from multiple levels of recruits below them, creating a structure that resembles a pyramid.
- Product Sales: While MLMs do involve selling products, the primary revenue often comes from recruitment and ongoing sales by recruits.
Emily Lynn Paulson, author of Hey, Hun: Sales, Sisterhood, Supremacy, and the Other Lies Behind Multilevel Marketing, explains that MLMs lure people by promising financial independence and community, but the reality is often a struggle for most sellers, who lose money rather than gain it.
The Impact of the Shift
Rodan & Fields’ pivot to an affiliate marketing model has been met with mixed reactions:
- Top Sellers’ Dilemma: Established MLM sellers, who have built their businesses around the recruitment model, are now facing uncertainty. Many have invested significant time and effort into building their networks, only to see their income potential dramatically reduced.
- Industry-wide Implications: This shift reflects a broader trend where MLMs are abandoning their controversial models in favour of affiliate marketing, a strategy more aligned with contemporary online business practices.
What Is Affiliate Marketing?
Affiliate marketing is a model where individuals earn commissions by promoting products and driving sales through unique referral links. Here’s how it works:
- Commission-Based: Affiliates earn a commission when someone makes a purchase through their referral link.
- No Inventory: Unlike traditional MLMs, affiliates don’t need to hold inventory or manage a network of recruits.
- Widely Used: This model is prevalent among influencers and content creators on platforms like TikTok and Instagram.
In contrast to MLM, affiliate marketing offers a more straightforward and less risky way to earn commissions. Sellers or influencers don’t have to build and manage a large downline but can still make money by promoting products to their audience.
Why the Shift Matters
- Reduced Risk for Sellers: Affiliate marketing reduces the financial risk associated with MLMs, where many sellers end up investing more than they earn.
- Broader Appeal: The affiliate model aligns better with modern online marketing practices, making it more accessible to a wider audience.
- Ethical Considerations: The transition may be seen as an attempt to address criticisms of the MLM model, which has often been criticised for its exploitative nature and high failure rates among sellers.
Responses from the MLM Community
The reaction within the MLM community has been significant:
- Amber Olson Rourke, president of Neora, expressed frustration about the abrupt change, highlighting how it impacts those who have invested heavily in building their MLM businesses.
- @bethtag76 on Instagram and other sellers have voiced sadness over the disruption to their multimillion-dollar businesses, showing the deep impact of this transition.
The Future of MLM and Affiliate Marketing
This shift by Rodan & Fields signals a broader change in the direct selling industry. MLMs are increasingly adopting affiliate marketing strategies to align with the modern digital economy. While this transition offers a more sustainable and less risky income model, it also highlights the ongoing evolution of how products are marketed and sold online.
Conclusion
Rodan & Fields’ move from MLM to affiliate marketing represents a significant shift in the direct selling industry. For many sellers, this change is a challenging adjustment, as it alters their business model and income potential. However, for the industry at large, it signals a shift towards more contemporary and less controversial marketing practices.
Additional Resources
For more information on affiliate marketing and its benefits, check out the following links:
