Network marketing, also known as MLM, multi-level marketing, and direct marketing, is a business model that relies on a network of distributors to use word-of-mouth advertising or referrals to sell their goods and services directly to consumers. Another way to look at it is for consumers to buy directly from the manufacturer or company. Some examples include Avon, Mary Kay, Shaklee, Herbalife, Monavie, Visalus and Pre-Paid Legal (now called Legal Shield).
Network marketing also offers an incredible business opportunity. You may have heard that network marketing is a pyramid scheme. Is it really? A true pyramid scheme is illegal and does not sell any product or service; they just move money from one hand to the next. Yes, network marketing is based on a pyramid structure but isn’t a traditional business based on the same thing? Think about it – you have the President/CEO on top, VP’s below him/her, then managers below, and then regular workers at the bottom. The basic difference is that in a network marketing business, anyone, even the people below can earn a tremendous income based on their efforts.
Most people join a network marketing company because it promises financial independence and free time. Stay tuned for our next post on the benefits and drawbacks of network marketing.