2017-01-12 15:57
Three level distribution: is the business of innovation or playing with fire?
Pattern description:
Beijing (January 12th) (Beijing News) brand development of a distributor, a distributor and then develop distributors at all levels. Each level of distributors, can be obtained from the lower consumer behavior.
In the three level distribution mode, the maximum level of rebate is divided into three layers back, as shown in the figure, if the transaction in the four tier distributor D, may need to three distributors C rebate 15%, two distributors to rebate to 10% B, a distributor of rebate of 5% A. However, if the five distributors in the E to generate a transaction, returned to the upper level retroactive to the three level, then no need to return to the A.
Note: this figure is divided into 30% of the cost or profit, which is different in different enterprises.
In January 7th, the micro signal startup end was deactivated because of little luxury three level distribution. Electricity supplier multi-level distribution model debate, once again into the public eye.
Three level distribution has achieved little sales miracle. A year and a half, the little black circle of friends to rely on distribution created 7 million fans, breaking the myth of billion sales.
Three level distribution refers to the brand in the sale of the development of sub distributors to the model, each level distributors can be further development of distributors, the formation of a distribution of three layers of sales chain.
Because it can quickly accumulate the amount of users, this model has been used by many start-up electricity supplier.
Although the national laws have provisions of three is the distribution of illegal pyramid schemes, but in fact, most of the electricity supplier level distribution have suffered questioned on suspicion of "pyramid".
WeChat as the representative of the network platform is a lot of restrictions on the distribution model. This is not the first time WeChat three distribution under the ban order. July 2016, WeChat has closed 3000 micro mall payment function and the top 10 three distribution platform. WeChat official said, currently only allows two level distribution mode, distribution of more than three, WeChat will stop payment function and Feng Ting account.
Insiders said that although the three level of the distribution of nominal level of three, but in fact it may be unlimited level. The potential risks can be detonated at any time. October 2016, with China's largest distributor of micro dealers, said the cloud at the fingertips were identified as pyramid schemes, confiscation of illegal income of nearly forty million.
After relying on the early social dividend fast fission, multi-level distribution model has become the bottleneck of the development of many startups. The little black founder Wang Siming told to find Chinese hit off the interview also had to reflect, "the distribution pattern of the bonus period has passed".
- Extension
What are the differences between the three levels of distribution and pyramid schemes?
Three levels of distribution and pyramid schemes have a lot in common, there are related to the upper and lower levels, after the transaction occurs, there will be a different amount of return. So easy to be used as a cloak of illegal pyramid schemes, however, there are still two essential differences.
First of all, there is no product marketing, or low-cost or even no cost of products, but the distribution of products often have a certain value.
Secondly, the distribution channels are generally divided into no more than 50%, but MLM is about eighty or ninety, or even 100%.
Third, MLM rebate no level restrictions, or even up to seven or eight, fission is faster, but the three level distribution rebate only three.
Fourth, the distribution of the three generally does not involve violations, but pyramid schemes tend to be accompanied by violence, restrictions on personal freedom and other illegal acts.
The law firm senior partner Zuo Shenggao told China looking for a passenger, from the legal point of view, whether a "one of the three elements of the distribution level is not a pyramid, if not a" level three ", but with the pyramid structure, still have to bear the legal responsibility. MLM crime, first of all, whether it is the actual product, whether to profit from trading products; secondly, not to seek illegal interests for the purpose; again, will not disturb the social order.
The three level of distribution is a pyramid scheme, is an old and strong business model. But entrepreneurs should pay attention to whether the distribution system reached three, is not a constituent element of pyramid selling behavior.
Therefore, from the public perception, although the three tier distribution model in the short term to be able to quickly from the amount, but there are MLM risk, facing policy and platform constraints. Next, the distribution pattern is still a long way to go.
A start-up business ""
Multi level distribution refers to the development of a multi-level distributor of a brand, each distributor can be re distributors.
Different distribution patterns and micro business is the distribution, do not need to stockpile, not Yahuo risk, each distributor is responsible only for drainage, delivery and inventory by customer service platform for distributors, zero cost "business". As a result, many micro providers turned to the distribution network.
Use of WeChat's early social dividend, multi-level distribution can achieve rapid fission. The luxury end little black dress founder Wang Siming told off the record for China (ID:xjbmaker), the "three distribution" will be more attractive to users in the early stage, in the three level distribution is not so at the time of the fire, we feel that this model is very fun, try to love, also caught a little bonus.
Seize the dividend results, is the little black dress sale myth. Data show that just a year later in August 15, 2016, fans broke 6 million 600 thousand, annual sales of nearly $100 million.
Consumers buy little product, will generate an exclusive two-dimensional code, as long as there are people you come in by scanning the two-dimensional code to buy little black dress, you can get cash back the corresponding proportion, and two degree connections, two-dimensional code master three contacts to scan the two-dimensional code can also bring benefits to the two-dimensional code. Little early on the line, to spread the user through the distribution pattern of monthly income of more than one hundred thousand.
Debon sales model is a typical three level distribution. Its model is that the official development of a distributor A, A and then continue to develop two distributors B, similarly, B will develop a level of three C. And when C sell the product, C get 20% divided, B get 8%, A get a 2%.
According to the search for China off the record previously reported, Hong Thai fund Sheng Xitai originally not optimistic about the little black dress, but did not expect the line on the first day, his lover's circle of friends has been little advertising scraper, he observed a little month up nearly 100 thousand fans, to Hong Thai Investment decisions, the fans have little black dress up one million.
Former Tencent, Jingdong branch analysis of electricity providers, investors Li Chengdong told the search for China to create a customer, for a new brand, multi-level distribution can be quickly paved overhead road. Foreign brands to enter the market for the customer costs, according to the traditional style of play, to gain market recognition become the traffic center, takes a long time to accumulate, but the use of distribution, is a short period of time to expand the visibility and sales.
Therefore, after the emergence of a new social platform as a representative of WeChat, with the help of social platforms to implement multi-level distribution model of electricity providers have sprung up. In addition to the little black dress, three level distribution patterns in the industry have gathered in micro shop, micro, there in the mall, WeChat blocked before they have opened a WeChat mall, and set up a distribution system, using the WeChat social circle of friends link, rapid expansion.
Distribution mode restricts enterprise brand construction
For start-ups, the significance of multi-level distribution is to reduce the business threshold. Li Chengdong said that before the construction of the channel threshold is high, big brands to do big business, and now, a three level distribution system can be built up quickly.
An investor who declined to be named, told reporters that the three level of distribution is essentially a pyramid scheme, which is an old and strong business model. Of course, is whether there is a difference and marketing products, whether the membership fee is the main source of income, and the rebate is too high. According to industry sources, the proportion of the three distribution of the return of the general can not be more than 50%.
The investor said that the capital market is very cautious about this subject. "A good product is what consumers really like, buy, consume, and continue to buy. But in such a chain, how to judge, this product is true because consumers like to buy it?"
The construction of brand, to create brand awareness, reputation and loyalty, this is a process that requires long-term investment. If consumers are for the purpose of making money and investment spending, consumers can shape the brand image?
Gathered in a micro shop distributor told reporters, gathered in the micro shop now has 800 thousand shopkeepers, regardless of their own to buy or sell out, you can get a different proportion of cash back, after 30 days to cash. But because of the difficulty of promotion, most of the platform is the distributor's own consumption.
And the consequences of doing so is to promote the brand will be more difficult.
Sales profit is divided by the distribution channels, companies do not have enough profit to brand building. Wang Siming told China looking for a passenger, in the three level distribution pattern, about 30% of the money is to be used to return to the distribution system, a few hundred dollars to sell the skirt, profit itself is not too high, because the distribution of profit space is further down.
Wang Siming said she has felt this model has long been a bottleneck restricting the development of the brand. "We still want to do the product, do the brand as heavy. As long as the product is good, no matter how the channel, there will be a group of people who follow you like your brand culture."
Three levels of distribution into the cloak of illegal pyramid schemes
In addition to the possibility of restricting the development of enterprises, the three level of distribution may also lead to more serious business and social problems - the three level of distribution as the cloak of illegal pyramid schemes.
First need to define a concept, multi - level distribution is suspected of illegal?
As a matter of fact, the state law had restricted the multi tier distribution in 2010. "Provisions of the Supreme People's Procuratorate, the Ministry of public security on the public security organs under the jurisdiction of the criminal case prosecution standard (two)" provisions "suspected of organizing and leading MLM activities and staff in more than thirty levels in three above, the organizers and leaders should initiate prosecution".
In November 14, 2013, the Supreme People's court and the Supreme People's Procuratorate and the Ministry of Public Security jointly issued "on the handling of some issues of applicable law in criminal cases the MLM organization and leadership activities opinions" to the crime, behavior further provisions were made, including the definition of level three.
This is why the current marketing are not more than three levels as the legal limits of the background source. But the problem is that the so-called three, but not enough to constitute the necessary conditions for pyramid marketing activities, it is said that the level of distribution may not constitute a pyramid scheme, but the MLM is generally more than level three or more. In other words, the law does not directly regulate the three level distribution is legal or illegal.
PCCW partner Mei Zhen told China looking for a passenger, three level distribution to determine whether it is illegal, is still to see the essence, whether involved in fraud, illegal fund-raising.
Teng Chi Zhejiang law firm lawyers in Ma policy should answer questions that the domestic so-called three level distribution, is actually the concept of speculation out, profit sharing is limited to three, but in the breadth, can achieve unlimited levels of state.
Therefore, the three level of distribution is likely to become illegal MLM coat. In July 5, 2016, WeChat issued a "public platform on rebate cashback fraud" announcement, the announcement explained that (three level distribution) Consumer Commission cash back rebates, rebates and other multi-level and multi return now, to a certain extent reflects Pyramid fraud, Ponzi scheme and other behavior characteristics. Its essence is fraud, with high cash back rebates to attract users to participate in the rebate for new users to return the funds to pay for the original user, forming a laminated chain of funds.
As a day to live more than 700 million of the super APP, WeChat faces strong pressure from regulators. WeChat multiple social networking chain characteristics, it is easy to breed MLM soil. The anonymous investor told Chinese looking for a passenger, once on this platform with several influential MLM vicious incident, "none of the platform just strange country".
In May 2015, the "Asian hypnotist" Chen Zhihua under the banner of "WeChat marketing, millionaire" slogan, WeChat mobile phone platform in more than ten city organization of illegal pyramid schemes, involved 329 people, involving up to 4 million 610 thousand yuan. In December, the "spark prairie" under the banner of "public entrepreneurship, innovation", "mobile phone play money" and other slogans, using multi-layer distribution system for MLM, involving funds of 100 million yuan in 2, involving more than 150 people.
Repeated MLM events touched regulatory red line, WeChat had to take a blanket policy, risk will be uprooted.
Distribution model hidden capital foot risk
Analysis of the industry, WeChat has repeatedly issued a ban on the three distribution, or with the pressure on the central bank.
For non-financial institutions, in order to carry out payment, settlement business, the central bank must obtain third party payment license issued. Currently, the national third party payment license is only 267, and from August 2016 onwards, the central bank is no longer set up payment institutions, the existing payment licenses become scarce resources.
To pay the company to expand demand, gave birth to a special existence, the in between the company and the business of the payment service providers, in the industry known as "an organization", as distinguished from a clear mechanism of bank and the third party payment license institution, an institution fails to obtain bank payment business license.
"An" mechanism has great risks. According to the "Economic Observer" reported that sometimes the clearance below are clear, clean ups, each additional funds, WQ, more risk. Foot risk is also very high, the emergence of large sums of money precipitation, this risk will be magnified. An amount of funds involved behind the huge, once an institution run away, their money was swept away, it may lead to social risk of malignancy.
The rise of WeChat to pay, has relied heavily on "an" mechanism. According to public reports, since the application of WeChat to open service providers to pay, the interface capabilities open to third party developers, resulting in more than 5000 registered service providers in the past 5 months. In April 2016, WeChat paid the team to start the "spark plan", has invested 100 million yuan of funds to support the marketing, platform service provider. According to the "Securities Times" quoted insiders as saying that the thousands of service providers, most did not get paid a license or acquiring qualifications, which belongs to the above said "clearance" mechanism.
Multi access WeChat distribution platform, there are some belong to an organization, such as praise, msi. In praise of previous propaganda, using WeChat to pay sales, is the company's most recommended way to pay the shop through consignment merchandise buyers praise, praise the money to enter the platform, followed by the praise and settlement of the payment business. These "an" agency businesses own resources, have to pay WeChat to bring a lot of business.
In July 1, 2016, the "financial" magazine said, WeChat to pay for access to a large number of did not pay the license or acquiring qualifications "clearance", recently has been the people's Bank of China required rectification.
Just 4 days later, WeChat released "about the treatment of rebate cashback fraud" announcement, closed 3000 micro mall payment function and 10 three level distribution platform.
After being one of the three echelon distribution platform off the MSI announcement, said it would no longer provide online automatic clearing function in July 10, 2016 from zero order income, directly into the supplier account for previously produced (including not credited) distributors and minivan account funds can cashout.
MSI as a platform, did not pay the license, strictly cannot provide any payment channels of acquiring, settlement, clearing work, so there is a risk to detonate the. But the A and micro view, the two companies have yet to receive official confirmation.
In August 16, 2016, the central bank was publicly named YeePay punishment, confiscate the illegal income and fines totaling about 50000000. According to the "Beijing News" reported that the reason for the central bank is YeePay punishment is related to an event "cash run away.
Under regulatory pressure, WeChat pay through a wide range of shutting down, get rid of the crisis may be a big burden.
Three level distribution will only transfer positions, will not disappear
After the micro signal was closed, little quick start another WeChat public number SIMING, little new public number is a simple WeChat mall, without any distribution pattern. Founder Wang Siming told China to find customers, the future they will focus on the product itself, do brand.
"We decided to abandon the distribution model, which in fact will increase the rate of consumer purchase, so that fans really pay for the product, rather than for distribution." Wang Siming said, the little black dress will do online channels, including Jingdong, Tmall, WeChat, etc., online and offline combination, to create "channel is king" brand, is not entirely on Tmall, do not rely on WeChat.
But the three distribution will not disappear. Investor Lin Huaying said that the three distribution is a commercial channel in a depression, in other channels will still exist. In the July 2016 ban, gathered in the mall gathered micro shop was closed, but less than six months, gathered on the micro shop to get A round of financing 228 million.
After the WeChat ban, a lot of three levels of practitioners to develop independent distribution APP distribution. Baidu search in the three distribution APP development, you can retrieve 700 thousand information.
Reporters through the network query, found a three level distribution APP developer phone, a salesman told reporters that the company now has a staff of more than and 100, a lot of busy recently. Rarely do the independent APP a year ago, because the public promotion is simple, low cost, but in 2016 the Tencent rectification since because of concerns about WeChat titles, more and more people to do APP, in all six thousand or seven thousand customers, account for 40%.
The clerk said, a three level distribution of APP development, take a month, the cost of 50 thousand dollars, the existing WeChat number on the public commissions and superior data, can be directly from the WeChat public number into APP, WeChat can only keep the diversion function, will be responsible for new customers into APP. However, due to switching costs caused by the loss of customers, he said it was the price must be borne.
Some entrepreneurs are reluctant to transfer positions, platform switching will bring performance impairment, they opened a struggle to circumvent the regulation of WeChat.
A practitioner claimed that although WeChat mall is two level distribution, but they can be synchronized through the community, the impact of more people to achieve the fission of information. In the WeChat group, with the rebate rebate, creating speech and commercial speech to gather everyone together to form products distributors, then they go to the development of subordinates, bypassing the supervision of WeChat.
The entrepreneur said that the next three levels of distribution may even be combined with small programs, but still need to explore.
It is foreseeable that one after another, again, the story revolves around the three level distribution between entrepreneurs, platform and consumers, and will not disappear with the frustration of several projects.
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