Is Plexus An MLM?

If you have a friend who is constantly posting about their improved "gut health" and how products from a company called Plexus have not only changed their health, but also allowed them to "start their own business" and become "financially independent," it's a fair bet that your friend is selling for Plexus. The brand's most popular products are ones geared toward weight loss and gut health (via ScamRisk), so you may have seen even more of a social media presence by their sellers during the start of the year, as many people make health and wellness resolutions at this time.  

Your friends might be selling this company's products because they feel they have found a great opportunity to make some extra money. The Plexus website promises prospective "brand ambassadors" a "fulfilling future, designed by you" (via Plexus). But how does the company's business model actually work?

While Plexus offers compensation perks like profit-sharing to all of their ambassadors, which not all multilevel marketing businesses do, the company still operates as a multilevel marketing company with a compensation plan that fits that controversial business model (via ScamRisk). 

What MLM actually means

According to Investopedia, the signature practice of a multilevel marketing company (MLM) is one that "encourages existing members to promote and sell their offerings to other individuals and bring on new recruits into the business. Distributors are paid a percentage of their recruits' sales. New recruits become the distributor's network or downline and are, in turn, encouraged to make sales to earn money." 

In other words, the more people a seller can recruit to sell underneath them, the more money they can make. This is where the model starts to look an awful lot like a pyramid, but the reason most MLMs, including Plexus, are considered legitimate businesses rather than illegal pyramid schemes is that they actually do sell a product. The issue is that just selling the product doesn't usually make much (if any) money for the seller; they usually have to keep recruiting other people if they want to make significant income.   

In fact, only about 25% of people who sell for an MLM ever make a profit (via Fundera). That means that the vast majority (about 75%) of MLM sellers never make a dime, and many of them lose money because of the upfront costs associated with stocking the products they are trying to sell. So even though Plexus has earned some praise for offering things like profit-sharing, the main business structure is an MLM.