Multilevel Marketing (MLM Meaning)

multilevel marketing

Multilevel marketing (also known as MLM is a way that allows the sale of goods or services via a network of distributors. Multilevel marketing is often known as Network Marketing and Direct Sales.

How does a typical MLM Function?

The standard Multilevel Marketing program works through recruiting. You will be invited to join as the distributor (or contractor or consultant or associate) often through a different distributor of the products of the company or through a publicized meeting.

If you decide to become a distributor for the direct selling company you’ll earn money through the sale of the products of the MLM and by the recruitment of other distributors, as well as getting a percentage of the revenue the distributors earn.

If those distributors are able to recruit distributors for themselves You’ll earn money on the profits they generate.

The distributors you join with the Multilevel Marketing program and those they sign up for are known as your downline. The distributor who initially brought you on and the person over them in the chain of recruitment is known as your upline. The distributor that hires you will offer assistance to get up and running, which includes instruction.

Are you interested in becoming a distributor? Learn more about Are Direct Selling (MLM) an ideal business Chance?

How big is the MLM Market?

Big. The top three MLM businesses are:

  • Avon Products, Inc. was founded in 1986. Avon is a company with annual revenues of $11.3 billion and more than 6.5 million sales representatives. Avon sells a variety of cosmetics, jewelry, and fashion clothes.
  • Amway founded in 1959, was founded by a group of people. Amway is a company with annual revenue of $10.9 billion and more than 3 million sales representatives selling health, cosmetics, beverages, and food products.
  • Herbalife Ltd. was established in the year 1980. Herbalife is a company that has annual revenues in the range of $4.8 billion and boasts over 2.7 million associates in sales. The products include personal care items, cosmetics products, nutritional supplements, and other items. In the year 2016 Herbalife was cleared of an illegal business model after an inquiry by the FBI was unable to uncover enough evidence.

Three of them are about the top of a massive iceberg. As per the Direct Selling Association, the year 2016 20.5 million people across the U.S. were involved in direct selling, with a total value totaling $35.54 billion. More than 75 percent of the American population has bought goods or services from direct sales.

Multilevel marketing sales worldwide are also booming, with $189,641 USD in 2017 sales (World Federation of Direct Sales Associations). It is believed that the United States and China are the top two markets worldwide with a market share of 18% and then Germany and Korea each have a market share of 9 percent, Japan which has 8%, and the last one is Brazil with 6percent.

Why is Multilevel Marketing so popular?

It’s likely that the majority of Multilevel Marketing programs operate on an “the sky is the limit” promise that comes with an amount of “easy money” included. If you’re working hard and do what the MLM selling pitch promises that there’s no limit on how much you can earn. Through your downline, you can actually earn cash doing nothing.

The best part is that MLMs are typically relatively inexpensive to join, which means that becoming a distributor can be less expensive than setting up a business on one’s own in many instances or purchasing something like a franchise.

In addition, many Multilevel Marketing programs are carefully created with attractive rewards. Avon agents can be rewarded with trips to exotic destinations. Amway gives cash bonuses depending on the performance of each month. Who doesn’t remember those pink convertibles that were awarded to the top-selling Mary Kay consultant for example?

What are the chances of earning money through MLM?

Poor poor, as per Jon Taylor, who runs the website. In his e-book, which is free MLM Unmasked, he explains that Multi-Level Marketing is a scam If operating costs, as well as other costs, are considered, 99.7% of people who join MLMs are losing money. Also for every 1000 members of an MLM company just three be able to earn more money than they pay for it.

This is due to it being a “pay to play” feature included in multilevel Marketing programs. As distributors, you need to buy x quantity of goods and services to be eligible for bonuses and commissions, and to move up the different levels of this pay plan (commonly known as “rank advance”. Alongside purchases of products, the Topps of most MLMs will require downline participants to cover training, conference, and other events, as well as books, recordings, and sales literature as well as other “tools” required for success.

Is MLMs Legal?

The legality of Multilevel Marketing is in the United States and regulated by the Federal Trade Commission (FTC). It is also the case in Canada MLMs are allowed as provided they do not violate regulations of the Competition Act. MLM businesses are generally mostly unregulated, and the current laws that govern MLM practices are ambiguous or not well-defined. Thus, prosecutions against infractions by MLM businesses can be lengthy and tiring and are extremely rare. The larger MLMs have the ability to afford strong legal representation to deter prosecutor’s charges.

If you’re thinking of joining an MLM business, you must examine the potential thoroughly, as you do with another business idea. There are many different Multilevel Marketing plans created to be equal. Some may not be MLM in any way or pyramid schemes which are considered illegal.

For more information on how to discern the distinction between them, read What is A Pyramid or Multilevel Scheme?

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