9b. Which is Better, a Product, or a Service Site?, IUH 2009-12, 2ND Ed, R513A

Author Notes: Reference Copy, links to Oringnal Copy removed due to the Age of the Content. See the top Blog Menu for Copyright Concerns, Some Content Removed.

Dr. Don, Founder ICFO

9b. Which is Better, a Product, or a Service Site?, IUH 2009-12, 2ND Ed, R513A

This is one of the fiercest (and most childish, in my opinion) debates in network marketing, and I feel the need to address it head-on for two reasons. The first and most important reason is that infighting between network marketers for the sake of making their individual home-based business opportunities look superior is silently one of the biggest cancers that attack the credibility of all of network marketing as a whole.

The second reason is to provide some clarity for those unfortunate prospects and/or distributors who may have been confused, misinformed, or misguided (probably a mix of all three) by this catty nonsense.

Here’s the simple answer: it really depends on YOU. What inspires you, what jives with you, and what you feel most comfortable with? Contrary to its notoriously cookie-cutter image, network marketing is one of THE most customizable home-based business opportunities   or businesses period that has

ever existed, which is one of the things that I absolutely love about it. So now for the longer answer! The first time I caught wind of this little debate was about 10 years ago when I had started my first home-based business in MLM. It was a well-respected service company that is still going strong to this day. A leader from the front of the room was making a snide, tongue-and-cheek remark about how he didn’t want to “sell lotions and potions or fill up the trunk of his car with products”.

I didn’t think much about it at the time. I was one of the flocks, and what he said made perfect sense to me. The more experienced team members that surrounded me nodded their heads in agreement like pew-sitters in a Baptist church. (It was much later that I would find out that almost NONE of them were making any real money after YEARS in the business but that’s another article!)

So, my first impression on this whole issue was formed: service companies were the way to go, and product companies were absurd, laughable affairs where you had to carry a trunk full of stuff. This was my way of thinking for years until I joined a product company!

I can’t speak for ALL companies (neither product nor service), but here are just a FEW startling comparisons between my first two companies—one product, one service. The biggest eye-popper was the fact that in my first product company, people were making bigger checks with much smaller organizations. The #1 money earner (my upline) at that time was making about $100,000 each month (I saw his checks with my own eyes). He had 1,000 distributors and 10,000 customers in his organization.

The leader of my former team (in the service company) was making about $30,000 each month. This guy had at LEAST 10,000 distributors and tens of thousands of customers. My jaw dropped when I realized this.

In my product company, it was easier for me to help others be successful. In the first service company that I was in, you’d never make any decent money unless you were able to recruit large numbers of people into your business. So what about people who weren’t that good at recruiting?

In my first product company, I noticed that each time I or one of my distributors got an additional customer that equated in several additional dollars in RESIDUAL income. In that company, I was making

$100 per month in residuals with just 16 customers. In my service company, I had 20 customers and made about $5 in residual each month.

In my service company, your residual never amounted to much unless you had a huge organization that was at least 6 levels deep. The problem with this is that most people will NEVER see 6 levels in their organization. And in home-based business it is critical that people make enough money to keep them in the game until they either “wake up” and start producing, or eventually recruit a superstar.

There was a huge difference in the attrition rate. Because almost nobody made CONSISTENT money in my service company (recruiting bonuses don’t count. These are promotional. In network marketing, the only income that REALLY matters for longevity is a residual check from real customers); the attrition rate was the typical 90% that exists in MLM. In my product company, that attrition rate was much closer to 50%-60% percent.

The people that I brought in made more money. This was what struck me the most. Due to where I was mentally at that time, I never had much success in that product company due to my own unwillingness. However, I learned THE most valuable lessons of my entire network marketing career. One of them was that I noticed was that due to the compensation plan, EVERY person that I ever brought in made money-

–that was not the case with my service company. Because of this, even when people quit, none of them could say that they had not made money and this helped to not put a strain on my friendships as people decided not to do the business anymore.

Now, please understand that this is NOT a cheerleading article for product companies vs. service companies! I am comparing two very specific experiences from two companies that I have personally done business with.

If you were to choose a random service company and a random product company and compare the two, you would find a great deal of variation as far as which one was “better”-and that is my point.

There is no “hard and fast rule” of “which is better” when it comes to the service companies vs. product companies debate. As a matter of fact, as soon as I hear anyone, and I do mean ANYONE going in the direction of making the argument one way or another I immediately know that I am dealing with an amateur that does not get the bigger picture of the network marketing home-based business world outside of their company. So should you. LawrenceCole


For me that was a question when I started online. As I have said, offline many years ago, I had done the AMWAY, Tupperware etc. Online, I can still do all those; but here is the problem. If you are located in the USA, then products are easy to deal with; you can load your car and garage and sell your products. If you are overseas, many products have to be approved for import unless you claim for personal consumption. In some case, the country must license any products to do business in that country. Even then, some of the products that you may want may not be importable.

Not all products are properly labeled. If health or diet-related, may be dangerous. Often these types of products do not come with USDA approval and all you have is the claims and guarantees of the manufacturers. You take the risks. Nowadays, health drinks of one kind or another and healthy chocolate seem to be the rage. Unlike going out of business in the USA, you cannot easily return products; most online companies are once sold, and there is no return policy.

Over my beginning years online, I tried several product affiliations since most product sites typically have a better compensation plan than do service sites.


XXXXXX Health Net, now out of business, where I learned to understand “autoship” and “bundling” You will receive a shipment every month and you don’t get to pick individual products; you have to take one of the pre-bundled packages. Good for them; not so good for you.

XXXXXX, a health drink, was a terrible experience, If you like downlines, they give you spillover, lots of it – nearly 30,000 names, but the downline is useless to you – if it is even real?

Because you only have a name, no access, the sponsor retains access. With downline, you need access to your team, to motivate them, help them, etc.

Sponsors claim to be available to solve problems, but they were not. Too busy getting more signups than taking care of present members.

They wanted a US address, because when I first signed as they were not shipping to Malaysia, at that time. I would have had to re-ship for personal use.

This should have been disclosed in advance of any sign-up or upgrade.

I upgraded for a $500 shipment during their transition to open Asia operations. Several attempts to get sponsors, support, and management, to stop the shipment for re-shipment to me in Asia,

The company did not attempt to reconcile the matter; then claim backs the shipment, since no one was there to accept it, etc.

Failed. Lost $500. Nobody helped or even read their emails.

XXXXXXX Chocolate, similar problems, wanted a US Address, willing to ship to local and reship, lots of workarounds, helpful, but for $1300 I passed. I had already joined, but wasn’t made aware of the problem until I tried to upgrade, and then only after I had made the order and they wanted to ship.

Most of the better, organized product sites, advise you in advance before your signup that they do not do business here or there. Check the FAQ’s and Terms.

Most products pay better, if you can manage your shipments, etc. For me, I have learned that I prefer to babysit paper as opposed to products. Make sure the company can do business in your country.


I have a concern about all the dietary, sliming, health drinks, and beauty products that are pushed via our online affiliate programs. Some come with certifications, research, etc. Few if any are FDA or equivalent agency-approved. And yes, I have seen those that even after stringent FDA approval guidelines still suffer the recalls.

Many companies that market their products through distributors sell quality items at competitive prices. But some overpriced offer goods, have questionable merits or are downright unsafe to use.

The Federal Trade Commission warns consumers to apply a healthy dose of caution before buying products advertised as having “miracle” ingredients or techniques and guaranteed results. Many of these “quick cures” are unproven, fraudulently marketed and useless or even dangerous. Before using one of these products, the best prescription may be to check with a health professional. FedTradeCommission


These days we can all use a bigger income, but it is easier said than done. But the Internet has given us all opportunities that were never possible before to create our success.

Many people make a good living online and many claim to have gotten rich, but many people are trying and trying but nothing is happening. I tried for several years before I started making a good living online so I would like to share some of the things that helped me increase my income. Although I have not tried every method listed below, I have tried several of them and they have worked for me.


Find quality products and services that offer a commission and sell them on your site. Be sure they are relative to your site and if possible try the product out first so you can give a personal recommendation. Personal recommendations can help increase your sales. You can find affiliate products at AffiliateSeek, Clickbank, and AffiliateTips.


Organize some informative classes and workshops to teach your visitors how to do ‘whatever’.

Sell space to attend these events. Offer a variety of classes such as a week-long class, month-long, etc. You could also produce some effective webinars. You can also recruit affiliates for these services as well.


You see this more and more often these days. People offer a lot of free resources and content on their sire and ask for donations from the people who utilize this information. You can get the buttons directly from PayPal and place them on your site. To do this, you must provide quality content and value to your visitors so they feel a donation would be appropriate.


Dropship means you can sell products without having to ship them or stock them. You find a company that offers drop shipping, sign up with them and start selling their products on your blog. Anytime you get an order, you send it to the main company and they ship the product out to your customer. The customer will think the product came from your store and you get a portion of the profits. You make money simply by taking orders and the dropship company does the rest. Dropship companies will usually require a membership fee, either monthly or annually.


You can easily add a digital product store script to your existing blog and sell eBooks and software with resell rights. EBooks are very popular and the demand for them is increasing. You can also sell videos, music, and other downloadable files from your digital store.


Offer private content, forums, classes, etc. to members only. Charge a monthly or annual fee for this membership. People will pay for valuable information they can’t seem to find anywhere else.


This is not my favorite but it does work well for some people. What this entails is placing numerous ads on your site, chosen by Google. Anytime these ads are clicked on, you will get paid a portion of what the advertiser has paid Google. Google will choose ads that are relevant to your site’s contents. So, what this means is that if you sell jewelry Google will place ads on your site to other people who sell jewelry and related products. So, in essence, you are sending people to your competitor’s sites. Although I do not agree with this, many people claim to make a good chunk of change each month using Google AdSense!


Offer advertising space on your blog. You can offer text ads, banner ads and even video and audio ads. You can charge monthly and annual fees to give your customers a better value.


Companies like Blogvertiser will connect you with advertisers who will pay you to write reviews about their products and services and place them on your site. You will have the option of accepting or declining any deals the advertisers offer. Other sites that offer this service are PayPerPost, SponsoredReviews and ReviewMe.

The methods above might not make you rich, but they can earn you a good income or add to your existing income. Some of these methods might not be for you but it could be worth your while to check them out. David


Write an eBook about your area of expertise and put it for sale on your site. You can sell it outright, offer resell rights, or recruit affiliates to sell it for you as well. I did this with my first eBook and it worked out very well.


The types of Internet businesses that fail or should I say are more prone to failure are the ones that try to market goods that are widely available in the supermarket and the high street shops.

Do not try and sell bulky goods like furniture, pet food, clothing, or groceries on the web. These demands are already being met by well-established retailers online and offline.

Do not try to compete with large brands like Dell computers or Viking Direct as they have perfected the art of delivering products like computers and stationary direct to the end user. Their buying power is massive and they already have the infrastructure to keep most newcomers from succeeding in the marketplace.

So what kinds of Internet businesses are more likely to succeed? The best Internet business ideas are the ones that allow you to generate repeat orders from hard-won customers. The products supplied will be either expensive or very light or both with decent profit margins built in. The products should also not be readily available in supermarkets or high street stores.

In the best cases you will not be delivering any physical product but instead providing a service on the web whether it is subscription-based or an application like software that can be downloaded instantly and sold repeatedly.

Be wary of the advice that is offered by so-called experts on the Internet. Most of them have never run an Internet venture before, and make their money solely by giving misleading or incorrect advice for a small payment. I call them “the hopeless Internet gurus.”

If you have already run a business successfully then you are much more likely to succeed in an Internet business, as the same business skills are required in both. I would go even further and say that even more skills are required to succeed online as you also have to learn specialist skills like search engine optimization and creating great landing pages.

A final word of warning; do not give up your day job unless you have ample capital to launch your new business and survive the first year.

Chances are that you will struggle to make a profit in year one. It’s not all doom, and gloom though… for those of you who do have the right idea the world is your marketplace, and growth can be dramatic once you move into profits.  InternetBusFranchise

Thanks for Reading -9b. Which is Better, a Product, or a Service Site?, IUH 2009-12, 2ND Ed, R513A

Dr Don, Founder, ICFO

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