What Is Multi-level Marketing?
Multi-level marketing is a controversial marketing strategy where companies recruit salespeople to act as "distributors” or “consultants" to sell products and services directly to consumers.
In traditional direct selling, a company sells goods directly to consumers through independent contractors called distributors. However, in multi-level marketing (MLM), the company pays these consultants not only to sell its products but also to recruit other people to become distributors.
Typically, in order to join an MLM scheme, you must pay a fee and purchase the products. The company offers the product at wholesale price, while the distributor is permitted to sell it at retail price. Distributors can also earn money by selling the products of other MLM businesses. To be successful in MLM, you must recruit new distributors under you and train them on how to sell the product and recruit other distributors themselves.
You don't have to be a product expert or celebrity to be a successful direct sales consultant. You just need to buy the products yourself, find people who want to buy them, and get them to buy from you!
The real benefits comeMulti-level marketing is a business model that involves selling products on behalf of a company by unsalaried and hierarchical sales teams – earning commissions based on their sales and recruiting efforts. from recruiting others. The more people you recruit, the larger your hierarchy or downline becomes. Your downline grows when your recruits recruit others, advancing you up the organizational hierarchy.
MLM is legal in most countries, but it's a business structure that has been the subject of much controversy over the years.
You've probably seen ads with claims like "Earn $500 a week from home!" or "Earn $1,000 a month in your spare time!" It’s these types of advertisements and get-rich-quick schemes that make MLM a subject of controversy.
You may have dismissed these ads as scams, and for the most part, you'd be right. Many of these are multi-level marketing (MLM) schemes, where you're paid not based on the work you do but on the work other people do.
But if you think all MLMs are scams, you are wrong. Some MLMs are perfectly legal, and a few have even grown into major corporations.
Pyramid Schemes vs Multi-level Marketing Schemes
Despite the seemingly similar structure, pyramid schemes and MLM are different. The ultimate difference between MLMs and pyramid schemes is intent and legality. MLMs are legal, whereas pyramid schemes are not.
Multilevel marketing (MLM) programs — also called network marketing or referral marketing — are structured so that participants earn money from both their own sales of products or services and the sales of others they recruit to join the program. Pyramid schemes, by contrast, require participants to invest money upfront for products or services with little chance of recouping their investment.
The key difference between MLM and pyramid schemes lies in how you make money:
In a pyramid scheme, you pay to join. You might be required to buy some product or service upfront — whether real or just "membership" — with no guarantee that you'll ever make your money back.
