Logically, the differences are crystal clear:
Customer spends money, buys stuff (from distributors).
Distributor earns money, sells stuff (to customers).
However, in the MLM world, things are never so clear. And one of the arguments proponents often use is "if the distributor enjoys the product for internal consumption, they could not be considered having suffered financial loss".
Or as someone argued on reddit /r/vemma...
Because even those "poor souls" who join the business but don't earn commissions still aren't losing money, just like when you buy anything else in life that you ultimately consume or use you don't think of it as losing money.This is bogus logic. Can you imagine a bar owner drank all his own stock of liquor, and need to close the bar, and then tell himself, "I didn't really lose money because I got drunk"?
There's another reason though... consuming the stock prevents distributor from getting a refund.