Multilevel marketing (MLM) is a type of sales that distributes products or services directly to a consumer.
There is no physical store that customers walk into to purchase goods, instead they are purchased directly from an individual distributor.
MLM selling allows customers access to proprietary products at reasonable prices, and it allows individuals to be their own boss, operate their own business, and work from home.
When an individual joins a network marketing company, they are an independent contractor.
Basically, it's like buying a franchise.
Take Mary Kay Cosmetics, for example.
A consultant pays money to buy a startup kit and for that, they are allowed to sell Mary Kay products to customers.
In multilevel marketing, that consultant operates her own business.
She is responsible for the pricing of the products (which she purchased wholesale from the company) and controlling her own profit margin.
The company produces literature with suggested retail pricing, but individuals can sell those products for whatever price they would like.
Profit margin is only one way distributors make money in network marketing.
The next way to make money at this business is through recruitment.
Our Mary Kay consultant may develop quite a strong customer base, but she'd have to sell an awful lot of makeup and skin care products to make a healthy income.
So when it's time to grow her business, she will begin recruiting other people to join Mary Kay.
When those people make sales, that original consultant makes a commission.
As she adds more people to her network, she forms what is called a downline.
Sales and commissions off of her downline also earn her bonuses from the company when she recruits a certain number of people and when her downline produces a certain level of sales.
MLM and what can be gained from it by selling and distributing products is attractive to those with an entrepreneurial spirit.
It gives people a chance to own their own business and make a living without working for someone else.
Companies don't pay their salespeople a salary, and literally anyone can join.
Income is based entirely on sales and commissions, and each individual is in control of his or her own destiny in the company.
It is important to note, however, that MLM isn't for everyone and if you're considering a career in the network marketing world be quite clear from day one that selling is a big part of what you will be required to do.
In fact, most people who try, fail within their first few months.
This is usually because people were lured into the business with visions of making a million dollars within a few months.
They never truly considered that this a business.
All business owners have to work.
Ask anyone who owns a local shop and they'll tell you they work harder than all of their employees combined.
They eat, sleep and breathe their business.
MLM is no different.
In order to attract and keep customers, a distributor must always be working.
And in order to attract, motivate and keep a healthy downline, a business owner must always be coaching, encouraging and training those people.
MLM isn't for everybody, but it can be an excellent business for those who see opportunities where others see dead ends so if that's you get out there and start selling!