Whether it’s direct sales, WeChat commerce, or the newly merged term “social e-commerce,” any kind of referral marketing within the realm of organizational sales faces an epic-level problem – referrals are becoming increasingly difficult.
Whether you call this referral “sharing”, “duplication”, or “viral growth”, the fundamental reason for this issue became clearer to me after completing two years of retail management studies at the University of Hong Kong and experiencing two years of COVID-19 firsthand. Yesterday, I wrote a sentence: “Subscription models are rising, while Melaleuca members are immune.” There is a key phrase in this sentence called “herd immunity”. This word is borrowed from biology. It fundamentally explains why companies operating on the principle of market duplication face the problem of increasing difficulty in referrals at a certain stage.
When a virus spreads to a certain stage and proportion, herd immunity appears. Various forms of direct sales, WeChat commerce, and social e-commerce that operate on the principle of market duplication have a scary synonym – viral marketing. Just like when a virus spreads to a certain stage, the same herd immunity situation will appear.
Today, the name “Amway” has become synonymous with “sharing,” and the company faces the same problem worldwide. I still remember a classic quote from a marketing leader many years ago: “We are the most well-known company in the world, but the least understood.” Why? When people hear your name but don’t want to learn or haven’t learned about you, they’ve already put you into the “deadlock” of information overload.
The brand reputation of social e-commerce formed a stereotype of “pyramid schemes” at a certain stage, becoming the death knell of herd immunity during the dissemination process.
At its core, it is the large-scale spread of the market and the saturation of information bombardment during the process of the market sinking, coupled with various low-quality practitioners flooding in and creating a large number of low-quality consumer experiences.
“Good news doesn’t leave the house, but bad news travels fast.” The negative feeling of low-quality experiences always spreads faster and farther than the positive feeling of peak experiences.
As a result, the negative effects of the brand begin to emerge … social stereotypes are formed. This vicious cycle of social e-commerce is truly a generation-by-generation “retribution”.
How to solve the problem of herd immunity? In other words, how can brand reputation be accepted by more audiences and potential consumers who form stereotypes after being widely known?
Since it’s “viral marketing,” of course, we should learn from smart viruses. Look at COVID-19, which, from its initial large-scale spread to herd immunity, chose one of the most important behaviors in evolution – mutation.
Therefore, we now have Alpha, Delta, Omicron…
Broadly speaking, the market duplication theory of multilevel direct sales, which originated with Amway, has undergone mutations and evolutions lasting almost half a century, from zero-sum systems and cumulative systems to dual-track systems and matrix systems. By 1985, Melaleuca’s birth brought about a genetic mutation for the entire business model – revolutionary direct consumer mode (Consumer Direct Marketing) was born. In just 35 years since then, it has gradually surpassed Mary Kay, Herbalife, Avon, and Amway to eventually sit on the throne of the North American market.
Melaleuca also realized that its business model had gradually diverged from traditional multilevel direct sales. It withdrew from the Direct Selling Association, industry evaluations, and became a new retail species – subscription-based. If Amway did not have the Chinese market, its position as the world’s largest revenue generator would have been difficult to maintain.
However, Amway is admirable because it continues to evolve and cater to and guide the market. Unconsciously, you can no longer see the negative reputation and stockpiling of Amway in the early market, and even careless consumers may find it difficult to see it in their daily lives. Where has Amway gone? In fact, it has evolved to lead the new concept of “social e-commerce” on the Chinese mainland. Its strategy is seemingly to use its marketing influence to occupy the term “social e-commerce” and become its exclusive name one day.
Historically, it has succeeded in doing this several times: Amway = pyramid scheme, Amway = direct sales, Amway = legal store + salesperson… Now, it is about to succeed in making “Amway = social e-commerce.”
Fundamentally, all of this logic at the bottom layer is to constantly evolve and mutate its form and model, avoiding negative reputation and herd immunity from existing consumers.
What will happen to Melaleuca? Has Melaleuca really achieved herd immunity in mainland China? The answer is also – evolution and mutation.
Our market is still largely stuck in classic operating models of the past. I call it the classical, traditional, or even classical market operating system. Now that you see Amway has already abandoned its successful eight steps from the direct sales era, should Melaleuca abandon its successful seven steps and other classic education? Any conservative force is powerful, as the creator of the successful seven steps in mainland China, attempting to propose the idea of evolution and mutation faced the biggest opposition from conservative forces. And I have always been a non-conformist.
Reformers are usually prone to sacrificing their lives for change, but don’t think that there won’t be any blood and fire in an economic war. It only manifests elsewhere. In fact, the North American market never had successful seven steps or any unmentionable classics. After a brief two to three years of hesitation, the North American market set off again, obtaining a new wave of high growth. If viewed from an evolutionary perspective, the North American market is a gradual mutation. Without evolution, entropy will only increase, and the ultimate result is stagnation. The most important thing in life is constant iteration.
On the administrative side, Melaleuca’s localization process in the Chinese market under Danny’s leadership has evolved and changed immensely into “new retail”: WeChat mini-program membership, Yigou, one-click member recovery…and more. However, the market has not kept up with this iteration. The market is still immersed in past glories and clamoring to use an eternal and unchanging strategy to dominate all competitors. I can only smile bitterly…pigs that fly in the wind don’t know what wings look like.
Isn’t the long half-life effect evident enough during the pandemic?
Passion is certainly a good thing, but passion like a spear and sword in gun and cannon fire is just a repeated suicide charge.
Direct purchase? Eco-supermarkets? Successful seven steps? Light entrepreneurship? Consumer merchants?… almost every concept is a fuzzy concept that cannot be distinguished from traditional direct sales and WeChat business. The illogical frenzied shouting of goals, income screens…almost every behavior is a low-level repetition of all pyramid schemes over the years, with the same blood-stirring and mind-numbing tactics. It’s time to reflect on these waves of suicidal charges.
From excellence to excellence, it has always been difficult. Because excellence is the greatest enemy of excellence.
Melaleuca’s fortress has always been very strong. This is thanks to the high walls established by its unique model over 35 years and the deep moat it dug. The wall is its core product and research and development capabilities over the 35 years. The moat is the ultimate cost-effectiveness and repurchase rate created by its low fixed order price and rigid demand consumption mechanism pioneered 35 years ago.
Combined, evolved to today, we may have better terms to annotate it, that is subscription-based. Combined with consumers’ KOC (Key Opinion Leaders) sharing promotion, or more precisely, it should be the subscription-based creator model.
There are many subscription-based models, but Melaleuca is the only one with creators. Today, when direct sales and WeChat businesses have disappeared, and “social e-commerce” was represented by Amway, Melaleuca should become the leader in subscription-based models, the only spokesperson for subscription-based creators. What do you think?
The road ahead is long and winding! The root cause of the increasing difficulty in recommendations has been found, and what remains is to find people who can solve the problem.