MLM-Network marketing has been around as a business model for over 50 years. It’s been through court cases and economic cycles and still, the MLM network marketing opportunity has emerged as one of the few business opportunities that anyone, from any background can use to make a solid residual income. Still, people are confused about MLM-network marketing and don’t know what it is, much less how viable it is as a business. So here are the basics.
What is MLM-Network marketing? It is a distribution method used by companies to get their products and or services delivered to the end consumers by way of a network of people called distributors. It differs from direct selling because distributors have the opportunity to earn a portion of the bonuses or commissions on sales made by other people in their network. Another difference is that distributors are also purchasers of the product.
Distributors can make money from developing a customer base and making retail sales and also from bringing in other distributors to act in the same capacity. The additional distributor can also bring in other customers and distributors and so on. That is how the network is created. Depending on the company requirements, sales made within that network provide commissions up the organization to the original distributor as well as those distributors in between.
What is an MLM network marketing opportunity? This is where a person is introduced to an MLM network marketing company with the invitation to become a distributor. A current network marketing distributor may ask the person to review or try the products or services, look at the pay plan, see how the management, owners and officers of the company are helping the network of distributors succeed. They may also have the opportunity to talk to other members of the network, or to the upline to become comfortable with working in this environment.
When looking at an MLM network marketing opportunity it’s easy to get excited about the income possibility and forget to consider that this is a serious business that takes time to develop. This is one reason MLM network marketing has been thought to be a scam. It’s sometimes presented as a way to get rich quick or that little to no work is involved. Nothing could be further from the truth.
What is an MLM network marketing scam? There are legal requirements that a company must present in order for the MLM network marketing opportunity to be a viable business and not a scam. Three of the requirements are that there be a legitimate product or service involved that people are paying for.
For example, gifting programs and chain letters are illegal because, although they are sometimes set up in a multi tier fashion, there is no legitimate product or service.
Another requirement is that distributors can’t be paid just for signing someone into the company. Commission is only made on the sale of goods and services. Look at it this way. No one makes any money just because you walk into the mall. It’s only when you buy something that the store makes money. It’s the same with a legitimate MLM network marketing opportunity.
A third requirement is that the company be set up to service retail business and not just bring in distributors. If the company on promotes selling distributorships and there is little to no focus on creating a customer base, this can also be a scam. The information I’m giving you here is not meant to be legal advice and you’ll to check competent sources to get all the details as well as any other laws or regulations. My point is that there are companies that use the MLM network marketing structure to pay that are not network marketing companies because they don’t meet the requirements and some of them can be scams. So that creates confusion.
MLM network marketing could not have survived for over 50 years if it was a scam. As I said initially MLM network marketing is a distribution method, not a particular company. Just like retail marketing, direct marketing, mail order marketing, wholesale marketing and internet marketing, MLM network marketing is a viable business. And just like these other forms of business you have to take care to choose the right company to be a part of.