In recent years, network marketing has become a popular profession among Iranian youth.
After these network marketing firms have successfully distanced themselves from controversy over pyramid schemes, they are working with licenses and permits, according to an article published by Al-Monitor. Below is the full text.
Network Marketing has gained in importance as a business model in Iran since 2009. In order to generate substantial income, every marketer must attract salespeople to their network. In theory, if each marketer recruits two people as sub-marketers, and each of those people in turn recruits two additional marketers, the original marketer will receive commissions from four people on the second level.
The arithmetic is simple: eight earners on the third level, 16 earners on the fourth level, and so on. In other words, there is room for exponential growth as the number of earners continues to grow at various levels.
In the United States, companies that fall under the umbrella of network marketing include brands like Avon and Tupperware.
Given some similarities with the sales models of pyramid schemes, network marketing has been the subject of much discussion in Iran. The debate is about whether the method of making profit is legal and religiously sanctioned.
Ayatollah Ali al-Sistani, the Shiite supreme religious authority in the holy Iraqi city of Najaf, has publicly stated that the business model is an unacceptable way of making money. In Iran, Qom-based prominent clergyman Ayatollah Nasser Makarem Shirazi wrote on his website that network marketing is only legitimate if all profits are awarded to the marketer in question, adding that “any other way of distributing profits is illegitimate” .
After much deliberation, the Ministry of Industry, Mining and Trade put a question to the leader Ayatollah Seyyed Ali Khamenei on the matter. In response, the leader stated on May 20, 2015 that network marketing is essentially a legitimate activity. Since then, the uncertainty about the legality of the business model has decreased.
At the same time, new mechanisms for recognizing irregularities in network marketing were established. Among these, the Ministry of Industry has created a website dedicated to the business model, which not only provides information, but also facilitates and tracks the process of registering network marketing companies.
According to the website, 23 such companies have been licensed to operate in Iran in areas such as food, chemicals, healthcare and cosmetics.
A committee made up of officials from the Department of Industry, Mining and Trade, the Secret Service, the Department of Justice and the police closely monitors the activities of these companies and the licensing process.
Although network marketing is still overshadowed by pyramid deals, this method of making money is becoming increasingly popular with young Iranians.
Tahoura Shahbazi, who joined a network marketing company in November, told Al-Monitor, “The whole process of joining and making money using these networks takes two years. In these two years you have to increase your tiers and branches and sell more products. “
When asked how these networks work, she said, “A key difference between these companies and pyramid-style companies is that you buy products from network marketing companies. These are not unusual products, but everyday goods, such as groceries that every family needs, or laundry and hygiene items or products such as watches, sunglasses, etc. These are things that can be easily sold to Friends or family members. “
In response to criticism of the similarity to pyramid schemes, which is still hesitant among ordinary Iranians, proponents of network marketing argue that it opened new avenues for the sale of products and, in particular, has spurred the trade in domestically manufactured goods.
Alireza, who has a bachelor’s degree in electrical engineering but was previously unemployed, told Al-Monitor, “I’ve been in this field for about a year and I really enjoy it. Besides making good money, we’re helping the country’s economy. Traditional marketing and sales methods no longer work. This method allows us to introduce and sell products faster and better. That way everyone wins because the buyer gets a discount and the seller can sell more products. “
In this sense, Shahbazi also explained the popularity of these companies among young Iranians.
“Our company is one of the largest of its kind in Iran. We have around 2,000 employees in our headquarters and many people also work for us in our provincial offices. Based on the standard plan put in place by the company’s board of directors, the income of each employee from the time they join the company to the time they leave the company, commonly known as “retirement,” will reach $ 54,000 per month, “he said.
“This exponential generation of income continues after an employee’s ‘retirement’ through the activities of subordinate recruits who continue to support the income.”
Al-Monitor was unable to verify that these numbers are correct. However, such revenues are all but out of the reach of network marketers in the United States. But in a society where a common man earns $ 230 a month according to the Department of Cooperatives guidelines, the thought of making sums of money like the above is more than tempting.
But despite the Iranian public’s apparent increased interest in network marketing, bitter memories of pyramid schemes remain in people’s minds. Therefore, despite the overwhelming money at stake, most Iranians prefer not to risk their fortunes and prefer to forget the stories of magical sums of money.