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Internal consumption in the directselling industry has been at the heart of many debates over the past couple of decades. In this article, we contend that internal consumption is a widespread practice at all levels of the distribution channel and not something limited to the direct selling or the multilevel marketing (MLM) retail arena. While government regulators in some countries attempt to use this practice in MLM as prima facie evidence of illegal pyramiding, the results presented here provide evidence of the widespread use of internal consumption in all aspects of retailing. Thus, to attribute internal consumption as a negative aspect solely within the direct selling marketplace shows a misplaced understanding with regard to personal use, discounts, and company recruiting efforts. At the same time, however, our research shows that discounted purchasing of product for personal use likely brings little value to the company since it does not appear to result in increased job satisfaction or organizational loyalty from either the affected employees or the customer base.
4. Internal consumption is here to stay. . .but who cares?
Internal consumption occurs in various types of marketplaces. It is not a phenomenon restricted to the direct selling industry; rather, it appears that companies in many industries entice individuals to partake of internal consumption so as to have a positive impact on company sales and to incentivize employees. We contend that to tarnish the image of the direct selling industry by focusing on internal consumption as a corrupt practice specific to direct selling is discriminatory–—it happens over and over again in a variety of retail outlets. At the same time, however, we question the company’s motivation behind engaging in this practice, regardless of the type of retailing marketplace.