One week after a 79-point loss to Port Adelaide, the Demons were humiliated against Essendon on Saturday night to the tune of 148 points.
It was the third biggest defeat in the club's history and largest ever at the MCG and their percentage of 28.39 is the AFL's lowest after two rounds in almost 30 years.
Melbourne coach Mark Neeld and chief executive Cameron Schwab are under enormous pressure and Demetriou admitted the situation was "disheartening" for Demons supporters.
Speaking during a visit to Greater Western Sydney's new home base at Sydney Olympic Park, Demetriou said the AFL was ready and willing to assist Melbourne if it asked for it.
"In a competition where you want every team to be competitive, it's not where we would like Melbourne to be," the AFL CEO said.
"As a Melbourne supporter, that's the most disheartening (thing).
"They're a club that was established in 1858; they're the oldest club in the land that we know of, and everyone wants to see them succeed.
"Hopefully there's people at the club that understand what needs to be done to turn it around, and any support that we can offer, we will."
On Monday morning, Melbourne president Don McLardy wrote an open letter to Demon fans imploring them to stick with the club and stating there would be no knee-jerk reactions to their current plight.
"We do not believe that the results to date are a true reflection of the quality of our playing list, or the effort and improvement they have shown over a tough and demanding pre-season campaign," he wrote.
But Demetriou is clearly worried by the situation, suggesting Gold Coast and GWS may have gone past the Demons.
"If you look at the way our two newest clubs are going, the Giants on Saturday night (against Port Adelaide) and of course the Gold Coast Suns, they've performed particularly well and probably ahead of people's expectations," he said.
"If you look at Melbourne, it's going to be hard. They're struggling at the moment, and hopefully they turn it around because they need to.
"Everyone at Melbourne would understand they've got their rightful place in the competition and we all want to see improvement.
"We're all desperate to see the Melbourne Football Club improve."
The Demons and Neeld received some support from Giants coach Kevin Sheedy on Monday, who interviewed for the Melbourne coaching job in 2007 that ultimately went to Dean Baily.
Twenty years ago Sheedy's former club Essendon lost to Hawthorn by 160 points, but just over 12 months later was celebrating a flag.
"I can look back to 1992 when Essendon and myself went to the 'G and got smashed by over 20 goals," he said.
"About 27 games later, we won the premiership, so you never know what's around the corner when you get a belting.
"The most important thing is to give each other confidence and obviously try not to let it happen again when you've had a loss like that.
"I've had a few of them in my career."
Sheedy also believed Neeld could rectify the situation.
"From a coaching point of view, just believe in yourself and believe in your players," he said.
"Camaraderie is so important with huge losses and he'll get it right.
"He's been around coaching for quite some time."
James Dampney is a reporter for AFL.com.au. Follow him on Twitter: @AFL_JD
