Updated: Sep 16, 2019
Network marketing (MLM - multi level marketing, multi-level marketing, Network marketing). This is one of the branches of direct sales, which consists in offering goods and services to consumers through direct contact with customers, outside permanent retail outlets. The sales system in multi-level marketing is based on building the structure of distributors. The network leaders who recruit, train and motivate sellers are responsible for this. The salary of the salespeople reflects both the results of their own sales and the value of transactions finalized through the network of independent salespersons they created. One of the most important assumptions of MLM is to shorten the path "from producer to customer." A network of distributors and direct reaching of customers allows almost completely to give up "traditional" forms of advertising. This allows you to reduce the costs associated with expensive advertising as well as wholesale and retail intermediaries.
Enterprise features as part of network marketing
One of the advantages of a company operating under network marketing is the ability to receive benefits from both the company's current turnover and passive income. In addition, whether you succeed depends on the individual and the degree of their involvement in the business and cooperation with partners. You do not need large financial and material capital (including free time) to start working as part of an MLM company. Employees are not required to operate under this type of enterprises, which results in no employment costs. Work in MLM enterprises gives the opportunity to use proven products, ideas and the image of a well-known brand. Advertising and marketing costs are also lower than in traditional small enterprises, because it is the direct contact of the seller with the customer that allows you to recommend and present the product. Companies operating within MLM attach great importance to training and consulting offered to their employees, thanks to which they have the opportunity to start their business easier. In addition, the level of risk involved in such activities is small.
Working at MLM also brings challenges. One of them is delayed gratification, because to achieve visible financial benefits it is necessary to build a stable structure that requires time and perseverance, as well as commitment. Another challenge that people working in this industry will face is the lack of a boss, it will be a particular difficulty for people who need someone to tell them what and when to do. For this reason, John Kalench in his book "Multi-level marketing MLM - join the best" strongly emphasizes the great importance of commitment to work and faith in success.
Development of network marketing
The beginnings of network marketing activities began at the end of the 19th century in the United States. At the beginning, companies operating under MLM were compared with American financial pyramids, which in the 1950s and 1960s pulled millions of people. Enterprises operating on the basis of network marketing use a ready-made operating system based on the pyramid. It consists in the fact that participants of the pyramid are encouraged by commissions to recruit as many new members as possible. That is why, in the minds of many people, companies operating under multi-level marketing are associated with fraud, spoofing and manipulation. It wasn't until the 1970s that MLM began to grow all over the world. Currently, there are over 1,500 companies operating under Network Marketing in the United States alone, for example: Amway, Mary Kay, Avon, Tupperware. MLM companies usually offer household appliances, household chemicals, wellness products and cosmetics.