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What Is Multi Level Marketing Business?

 

According to Direct Selling Association (DSA), there are18.6 million people involved in direct selling in the United States in 2017.

As describes in Wikipedia, “Multi Level Marketing (MLM) is a marketing strategy for the sale of products or services where the revenue of the MLM company is derived from a non-salaried workforce selling company’s products/services, while the earnings of the participants are derived from a pyramid-shaped or binary compensation commission system.”

Some people join the Multi Level Marketing company as a consumer to buy the company products at a discounted price.

Another group of people join the Multi Level Marketing company as a distributor to build a part-time or full-time business.

Multi Level Marketing is a sales strategy that a lot of companies use nowadays. Some find it very efficient, others find it controversial. But what you will notice is that it does work very well, and if you know how to do it right, you can make money from multi level marketing business opportunity.

If you heard about affiliate marketing , where you make money by selling other people’s products. If you do it right, you will make lots of money. These two businesses require you to put in time and effort to build the business.

What is Multi Level Marketing Business?

Multi-Level Marketing (MLM) or network marketing is a system that involve selling of products or services through a network of distributors. You can be very successful if you enjoy selling and talking to people.

The company that creates a MLM program is focused on encouraging existing distributors to recruit new people to distribute the products. The distributors are getting paid by recruiting new distributors and by selling the company products.

There are many multi level marketing companies.

Amway, Avon, Herbalife, Market America, Young Living are just a few of them.

MLM is not for everyone. Those who like selling and meeting with people, will enjoy doing it and make money. Some will find it very difficult to get started and they end up selling to family, friends and relatives.

What makesMulti-Level Marketing stand out for a lot of people is that it can help you earn some money on the side. If you already know people that need the product you want to promote, you get to earn a portion of that sale, which is really exciting. While it’s not the ultimate way of making money, it still helps you earn a little bit on the side.

But this is not a new job for you. Sure, it works OK if you want to sell some stuff on the side for other companies, but unless you are an authorized reseller for that company you will end up with some pretty small commissions. That’s why Multi-Level Marketing works great as a side income system for most of us.

How Does Multi Level MarketingWorks?

Multi level marketing company recruits distributors also known as independence contractors, to sell their products or services to customers. At the same time, the company encourages their distributors to recruit new distributors.

Distributors make money by

  • Recruiting new distributors
  • Selling company products or services to customers

When you sign up with a MLM company, besides the registration fee, you will be required to purchase a starter kit which includes some company’s popular products.

By recruiting new distributors, you will earn a portion of the income generated by them.

You will also earn a portion of the income from those distributors recruited by your distributors.

Those distributors recruited by you are known as your downlines.

The person who invited you to join the company is your upline.

Your upline get a portion of the commission you generated.

You can see by now how you can make money by joining a MLM company.

Once you are a part of that program, the only thing that you can do is to start promoting. But you have to realize that promoting this is not going to be a walk in the park.

It requires a lot of hard work and commitment, and you have to make people believe and understand that the Multi-Level Marketing company you are working with will actually deliver the results they expect.

Doing that is not going to be easy as you may imagine. Some companies will offer you good commissions, but then again their products are very hard to sell.

All MLM companies have their own commission system. You have to sell certain amount of products and services to

  • qualify for bonus and commission
  • advance up to various level

You really have to take your time to do your research to identify what MLM program is good for you and which one you need to avoid.

How To promote?

Promoting Multi-Level Marketing programs is usually done by meeting and talking to people. If you want to generate sales, you have to talk to people, show them the type of value they can expect and how much will this be able to help them.

You can also promote them on your blog, it will be a good option if you have an audience that already trusts you.

But the problem here is to actually find the best Multi-Level Marketing that suits your needs. You don’t want to go with a MLM approach that is not good for you.

For most MLM company, whoever is your upline will train you how to promote the company products as well as how to recruits new distributors. Your upline will be more than happy to help you because they will earn commission from the income you generated. You will do the same to your downlines, and you will earn commission from the income they generated.

Multi-Level Marketing works quite well, but you also have to understand that iworks well as long as you put hard work into it. Unlike other ways of making money, there’s no guarantee here, and you have to show people the value in it.

Pros and Cons of Multi Level Marketing

Pros:

  • Multi-Level Marketing is very easy to join with small investment.
  • You can earn quite a lot of money, if you put hard work into it.
  • There are many Multi-Level Marketing companies that you can choose from.

Cons:

  • Recruiting downline takes time.
  • It can take a lot of time until you earn, especially if you can’t find people to promote the program to.
  • There are lots of scams in the industry. They are not MLM programs but pyramid scheme.

Difference between Multi-Level Marketing & pyramid scheme

Multi-LevelMarketing :

  • Legit in U.S. and Canada
  • Small start-up cost
  • Companies make money selling products or services
  • Companies buy back unsold products with re-stocking fees.

Pyramid Scheme:

  • Not legit in U.S. and Canada
  • Big amount of start-up cost
  • No real products or services to sell.
  • They want you to recruit people to invest in their scheme

Conclusion

It’s safe to say that Multi-Level Marketing offers you a nice way to earn some money on the side. If you like selling and like meeting people, this is a good business for you. It is not easy to get started. it is a good idea to research the Multi-Level Marketing program before enrolling in it, just to be safe. Also, make sure that you understand their commission system!

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This is free to get started. You can at least give yourself a chance to try the system to see if you want to proceed further.

Christine

Christine is passionate about building a successful online business and helping others to do the same.

18 Comments

  1. Hello, 

    I don’t like multi level marketing businesses as you have to get other people in, in order to get paid. I mean, if the product is good it is wise to promote it, but promoting a product you don’t believe in to make money? No, thanks. If there are endless successful products out there, why would I commit myself to promoting a product which I think is not good?

    I have never participated in a multi level marketing scheme, but I am involved in affiliate marketing, with which I promote products that I really like and that I like to recommend to my customers. 

    • Hi Dreamgirl93,
      Thank you for your comment.
      I agree with you. Not everyone like MLM and it is not for everybody.
      I wish you success in you affiliate marketing business.

  2. Hi this is very informative about MLM and I’m glad you highlighted the difference between this and a pyramid scheme. The two are very different. Can I ask, is there a better way to make money online not through MLM? Are there any sites you would recommend for a beginner?Thanks 

    • Hi Kenny,
      Thank you for your comment.
      MLM is not an easy business to get started. It is suitable for someone who is good at recruiting people as downlines and good at selling the company products.
      A better way to make money online is through Affiliate Marketing. The system I’m using to make money online is Wealthy Affiliate. They offer free starter membership which includes training, support and 2 free websites and free hosting.
      If you are interested in making money online, you should give Wealthy Affiliate a try. It is free.
      I wish you all the best.

  3. This is a nice write up of what a MLM business is, Christine. I have several comments that may help put the MLM business model in perspective. MLM companies choose the MLM business model and pass the marketing/sales/training functions to an independent business owner/distributor sales force. The IBO is responsible for recruiting, training, motivating, and managing their sales team of subordinate IBOs. From my personal knowledge and experience, the successful distributors are good at leading their sales teams to sell products. 

    • Hi Glen,
      Thank you for your feedback and sharing your experiences.
      I appreciate that.

  4. Hi,

    Your topic is very clear-cut to easy to understand. Now there are MLM  online, basically the system are still the same as tradition. only differ from how to promote. Nowaday they can do recruiting and promoting online without meeting up in person. They even can have meeting or discussion live or within a classroom online. So it’s perfectly easy for MLM to recruit more members. All there direct line or direct senior will come to help out until their downline have recruiting at least one member. So maybe you add this point in? 

    Just two cents thought from me,

    Kitty

    • Hi Kitty,
      Thank you for your feedback.
      You seems to know the MLM business. Have you joined any MLM?
      It is easier and more productive these days that many people do their MLM business online.
      I’ll add the point that I missed. Thank you!

  5. Thank you for sharing with us this great review on Multi Level Marketing.Many people are interested in earning money and it is very clear that making good choice of the program to work through is a good start.

    According to this post, I found Multi Level Marketing a good way to earn money when people understand well how the program works.

    Even if convincing people to follow them asks much effort,when people arrive at finding the downline who are active,it will be a big source of income for them.

    • Hi Julienne,
      Thank you for your comment.
      For those who are good at recruiting people as downlines and selling products, they are good for MLM business. They make good money from MLM.

  6. Thanks for this education on Multi Level Marketing Business. I thought MLM is equal to Pyramid Schemes. Now I know I’m wrong; the difference being that the formal is real and the latter is scam to rip people off of their hard earned money.

    I almost got involved in an MLM some time ago called NeoLife but I ended up changing my mind. There is quite a lot of money that can be generated from MLM but it is not my thing.

    • Hi Barry,
      Thank you for your comment.
      I’m glad that you know the difference between MLM and Pyramid Schemes.
      For those who are good at recruiting people as downlines and good at selling the company products, they are earning good money.
      MLM is not for everyone.
      All the best to you.

  7. I have always confused multi level marketing programs with pyramid schemes or actually thought they were the same thing. I guess that confusion has been cleared with this post. MLM business is not an easy business. It is definitely not for everyone. If you are not good at talking and convincing people then it is not a type of business that I would encourage you to be a part of.

    It does take some amount of time depending on the amount of work you put in before you start earning some good money. It is a good business and can create a stream flow of passive income.

    • Hi Jay,
      Thank you for your comment.
      I agree with you that MLM is not an easy business. To be successful, you must be good at recruiting people as your downlines and also selling the products.
      It takes time to build the business.
      All the best to you.

  8. Hi, I’m glad you provided this clear information about what a multi level marketing is.

    I know there are many of these and I was always keeping my hands off so far. I think it’s fair to say that the system must be a good one if someone is able to communicate well and knows how to sell.

    What I heard though is that some MLM s ask to buy a quite expensive stock and don’t take it back if you don’t sell. Another time I heard you need to have a minimum of sales to be qualified to earn commissions.

    I know, this is not what I’m good at, recruiting people in the down line. I prefer to sell a product and not have to think who else could sell for me to make me more profit.

    I’know people doing this and are successful by now.

    • Hi Stefan,
      Thank you for your comment. MLM is not for me as well.
      You heard it right. To get started in MLM, you have to spend money buying certain amount of products from the company.
      I wish you much success in selling your products.

  9. I’m not that familiar with MLM, until you mentioned Herbalife. They are pretty well known, even where I live. In the past I thought about promoting them and earn a living that way. My former boss had a wife who did sell Herbalife products, mostly to family and friends, now I think about it and she asked me to promote them as well. Unfortunately our paths went different directions before i had the chance to sell Herbalife. I got another job and my interest went away.

    Now I’m considering to join a MLM company. Can you tell me which products sell easily and whom not? And what kind of fee is reasonable when joining?

    • Hi Reader39,
      I tried Market America as a distributor many years ago. It didn’t work out for me. Now I’m just a customer buying products at a discounted price.
      It is hard to tell you which products sell easily. Most MLM companies has their good products. It all depends on how good the sales person is to recruit his downlines and promoting the company products.
      When joining MLM, most companies will require you to purchase certain amount of products to get started. As for the fee, it depends on your budget.
      Do some research before you join.
      Thank you for your comment and I wish you all the best.

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