About Network Marketing
Network Marketing, also known as multi-level marketing or MLM, is form of marketing based on word-of-mouth and many small, independent representatives or distributors.
It basically works like this: a company sells products or services via a network of independent distributors who buy at wholesale prices from them, and then sell at retail prices. The distributors are also allowed to bring in other people to sell and market products. The referring distributor then also earns commissions on the products that the referred distributor sells. If the distributor they referred also brings in other distributors, the original distributor also receives commissions on those sales – and this can continue for several levels. This why the concept is sometimes called “multi-level marketing”.
What Network Marketing is NOT:
A pyramid scheme
In pyramid you usually don’t have real products, or the products don’t have a real value in the market place. Furthermore, in a pyramid the people at the top always make the most, and the people on the bottom pay the people above. All legitimate companies have great products that customers buy at retail without being a distributor or getting paid. Also, there are never transaction between distributors. All sales are made from the company directly to the customers and the distributor receives a commission based on the volume of sales in his network. Finally, in a network marketing company you can always make more money that the people above you in the system and the compensation is fairly distributed based on effort and results
An affiliate program
There is a distinct difference between MLM/Network marketing models and affiliate programs. In affiliate programs, the commissions usually are only on your own sales, or sometime on 2 or 3 levels. If you do get paid on more than your own sales, there are usually no personal volume requirements to receive comissions on the levels below you. Affiliate programs are mostly online programs, while network marketing programs are usually promoted both online and offline
A get rich scheme
While it is true that some people have made a lot of money quickly in network marketing, this is usually not the case. Most participants in the industry just earn a few extra hundred dollars per month. It also takes time to build solid and successful business. A realistic time frame in order to build a full time income is at least 2-4 years of effort (7-10 hours per week). The great benefit of this form of marketing is not the quick cash generated, but the fact that the income can be extremely residual. That means, after a while you can stop working while the income still keeps coming in.
What Facts:
Network Marketing/MLM has been recognized as a legitimate form of business for over 40 years by the U.S. Government and most other countries around the world.
Today there are thousands of Network Marketing companies operating throughout the world. Network Marketing is reported to be a $45 billion dollar industry, internationally, made up of Fortune 500 and New York Stock Exchange (NYSE) companies
According to the Direct Selling Association (DSA) over 13 million people in the U.S. are working in the network marketing / direct selling industry. Traditional sales method companies such as Colgate-Palmolive and the Gillette Company have Network Marketing subsidiaries. Rexall Drug is now using Network Marketing ith its subsidiary, Rexall Showcase. Network marketing companies such as Melaleuca outperformed Liz Claiborne, Mary Kay is bigger than Johnson & Johnson, Amway is bigger than Revlon, and Avon is bigger than Estee Lauder
