A Brief Overview of Multi Level Marketing

Multi Level Marketing, or Network Marketing as it is known throughout the globe, is a rapidly expanding phenomena.

The fact that anybody, anywhere can become a distributor and earn money from growing the network without having to give up any other job or make any extra investments into this company makes it extremely appealing to individuals from all walks of life to try to join the network.

It is estimated that Network Marketing accounts for more than 70% of Direct Selling Revenues in the United States alone.

Though no statistics are available to corroborate income estimates at the national level, it is believed that over 50 million individuals worldwide are involved in Multi Level Marketing.

Though there is no recorded history of the birth of Multi Level Marketing, it is widely assumed that this idea originated with ‘Nurtralite,' previously known as California Vitamin Company, which manufactures dietary supplement products.

The Company used to participate in Direct Selling in the early 1940s.

The idea of Multi Level or Network Selling seems to have evolved by chance when Distributors found that they were producing greater sales for the Company by introducing their friends and known individuals to the Nutralite business opportunity.

There was no mechanism in place at the time to recognize and reward distributors for their efforts in recruiting additional distributors for the business.

With the understanding dawning on the Distributors and the Company, the practice of paying a 2% incentive to the sponsor Distributor on sales made by the Distributor and the network that he sponsored or created was implemented.

This resulted in the modern-day method of 'Pyramid Selling.'

Nutralite saw extraordinary development and profitability in the following decades as a result of its rapidly expanding network not only in the United States but also on other continents.

In the early 1960s, two individuals, Richard DeVos and Jay Van Andelc, who were Nutralite Distributors, broke away to form their own firm, Amway, which grew to be the largest in the MLM industry world over.

This business began by selling household and cleaning goods before purchasing Nutralite Company and including food supplement items into its portfolio.

Another distributor, Dr. Forrest C Shaklee, broke away from Nutralite about the same time that ‘Amway' was founded and founded the new company Shaklee, which deals with Nature's Sunshine goods.

Today, hundreds of businesses use Pyramid selling, Multi Level Selling, and other compensation systems to market their goods.

Numerous companies, including Avon, Tupperware, Electrolux, Discovery Toys, Herbal Life, Kleenez, Oriflame, Reliv, and others, have been very successful in expanding their company worldwide by using this sales approach.

Despite many complaints and allegations leveled against this system and firms by industry observers, trade associations, and governments, statistics show that the idea has been effective in the development of more enterprises in recent years.

The Direct Selling Association of the United States reported that approximately 25% of its members were engaged in the MLM channel of selling in the 1990s, but by 2009, it was discovered that over 94 percent of the members were practicing this method, accounting for approximately 97 percent of total Direct Sales.

While the figures show positive trends and companies frequently promote the success stories of individuals who have become millionaires in business, it should be noted that there is growing concern in the trade and governments of various countries that have raised concerns about the authenticity of the pyramid compensation method, which they believe is an inherently flawed model.

Since 1998, China has prohibited this kind of Direct Selling.

However, commerce seems to be expanding at an unparalleled rate across the rest of the globe.

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A Brief Overview of Multi Level Marketing

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