Multi-level marketing is not new. It isn’t even new in the communications business. Excel Communications did it in 1988. ACN continues to do it. Lightyear Wireless has been doing so since 2009.
Solavei is among the latest to try multi-level marketing in the mobile business, selling T-Mobile USA mobile service for about $50 a month, to “members” who pay a $50 a month fee to join.
As is typical for any multi-level marketing business, the business itself is “micro franchising,” more than the actual sale of products. True, a true MLM organization does not last if it doesn’t actually sell products.
But the real “business” is the franchising, not the sale of mobile services, one might argue. Solavei has been active for only several months, so its ultimate success is not possible to predict.
Some would say the chances of outrageous success, in terms of disrupting the mobile market are slim, for mathematical reasons. But that is probably not Solavei’s objective. An MLM business model rests only partly on product sales. Some would say the bigger part of the business is the building of distributor networks; the micro franchising process itself.
That doesn’t mean financial success is unlikely, or impossible. Amway is among the best examples outside the telecom industry. So multi-level marketing can work, and does work, up to a point. But MLM opportunities will dwindle, as in any market, when the potential customer base becomes saturated.
And that, some might say, is why an “international” approach makes sense. One might argue that MLM does best when not too many layers of distribution have to be supported. Some would also say MLM is best suited to consumer products people generally understand.
What is important about Solavei is not that it sells a fourth generation mobile service. What is important is that it is a multi-level marketing business. What Solavei sells is, in some ways, irrelevant. Solavei succeeds as its distribution network succeeds.
Solavei said in January 2013 that after three short months, it had signed up more than 100,000 members. And the key to viewing Solavei is that it already is preparing to add other products to its network: “2013 will be the year that our first goods and services offering beyond mobile service will be introduced,” Solavei CEO Ryan Wuerch says.
In other words, Solavei really is about building a network of distributors, not selling mobile service in different ways. There’s nothing wrong with building a company around micro franchising a “home based business.” But Solavei is not likely to revolutionize the consumer mobile business.
Indeed, that is not even its intended goal, one might argue. Solavei is about building an MLM distribution network.
Edited by Brooke Neuman