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With TikTok, we are all salesman. Scroll through the app for five minutes, and I guarantee you’ll come across a dozen videos promoting products. After swiping through two videos on my FYP, the third one featured a knockoff makeup set that looked identical to Hourglass Cosmetics’s brushes.
“Do you want to save yourself over $300 in beauty products,” user @sincerely.sarahandharry asked her followers. “I got these on TikTok Shop for $13. I’ve seen them as low as $12. These are incredible…they blend just as well as those other ones.”
But she didn’t stop there, pulling in viewers with a call to action before signing off. “If you want to check these out, this has been one of my best buys on TikTok Shop,” she added. “Click the orange cart and check them out there.” Below the shopping cart icon, a disclaimer read, “Creator earns commision.”
This has become the new normal, with creators profiting off their “holy grail” hauls, earning revenue by partnering with brands to sell products and then influencing others to start shelling out items. And viewers eat it up because it feels like a friend sharing a great find and not some scummy salesman.
How is this different from an MLM model?
After all, an MLM company encourages members to promote and sell its offerings and are paid a percentage of their sales. Plus, they earn more if they can recruit new members to the business, creating a wide net of sales representatives. The pyramid scheme is no different than what we’re seeing from TikTok Shop creators. Yet, the hate for MLMs hasn’t translated quite the same, as consumers have turned a blind eye and set aside their moral compass to ravenously raid the app’s commerce section.
While TikTok has turned into a pyramid scheme dream, did you know MLM brands were actually banned by the platform in December 2020? Of course, TikTok hasn’t exactly enforced the policy. In fact, popular multilevel marketing brands like Herbalife and Avon have active accounts. With TikTok Shop booming, it’s unlikely the app will take action against brands making them richer. Money talks, as they say. And the consumer pays the ultimate price, as some of these brands, like Herbalife, promise miracle weight loss results and other health-related claims that can potentially put consumers at risk—both financially and physically. And as you may have guessed, influencers don’t usually issue a disclaimer.
At the same time, while pyramid scheme-type strategies are thriving on TikTok, most of these MLM brands are transitioning away from the business model that made them millions. Rodan + Fields, Seint Makeup, and Beautycounter (among others) have recently rehauled its blueprint or have fallen apart completely. Beautycounter, for example, which successfully solidified itself as a clean makeup mainstay and was sold at Ulta Beauty, is temporarily closed. It’s unclear if the brand is rebooting or will remain canned forever. Either way, the end of Beautycounter’s era highlights the new marketplace, which is really a regurgitation of old-school businesses.
Everything old is new again.
There are times when TikTok Shop even feels like QVC or HSN. “I have this amazing new product launch…I’m gonna reveal it on my live shopping show,” OG beauty guru Michelle Phan teased last month. “There’s a saying, ‘Early bird gets the worm.’ So, those who come to the show early will have access to a flash sale.”
The move towards peer-to-peer sales is hard to beat, especially when there’s little legwork involved for the influencer and the brand. Plus, anyone can do it! That’s the seduction of MLMs, you don’t need a degree or experience in business to successfully sell products.
While it was much easier to tell your cousin’s wife that you didn’t want to buy her Lipsense, TikTok Shop makes it’s harder to turn down. Between the low price points, allure of influencer persuation, and a product’s virality, it’s sometimes easier to click “add to cart” than swipe away.
But we must ask ourselves, are we being served or sold?