Multi-level marketing, or MLM, is a business model in which a company manufactures and sells products or services to its distributors, who recruit other distributors to sell the company’s products or services. One of the most common business opportunities based on MLM is direct selling, which requires the business owner to be fluent in the sales process and have a motivated team. Network marketing companies (NMCs) primarily distribute health and wellness products and services and are popular with current and potential consumers and distributors.
In NMCs, distributors are the primary sales force of a company. An NMC’s sales model uses multiple mechanisms to increase its distributors’ chances of earning commissions. These include setting up an ideal sales environment, compensation plans and training programs. Typically, network marketing companies use a multi-level marketing structure, which involves three distribution levels: primary, secondary and tertiary. The primary level involves top producers, usually the company’s founders and owners. The secondary level consists of lower-level distributors who help the primary level and are motivated to earn higher commissions. The tertiary level comprises upper-level distributors who typically have larger teams and are only interested in higher commissions than the secondary level. In addition, some NMCs pay bonuses to top producers at each station for increased sales.
Network marketing companies usually require a high initial investment from new distributors since they must purchase inventory, recruitment tools and other business expenses for their business activities. Furthermore, some NMCs charge monthly or daily quotas for retail customers to maintain their business profit margins above their competitors’ profit margins. Once these expenses are covered, new distributors may start generating profits by selling their company’s products or services to others.
Some network marketing companies — such as Avon Products Inc. — provide products that depart from traditional wellness models by emphasizing direct interaction between consumers and providers versus rigid product specifications and the placebo effect. Avon promotes its Avon representatives as Caravans of women who go around towns selling products directly to consumers. Instead of commanding “sequential Pygmies,” most NMCs hire now from new college graduates with thousands of dollars in debt each year with little experience other than filling out applications online. For example, one current NMC distributor said she applied through her company’s website after graduating from college because she needed experience but did not expect much from it since she had low expectations for her situation. She added that it was hard for her to find a job because she had no prior sales experience but was willing to do whatever it took to succeed in her chosen profession.
Since many people compete in the direct selling market, they must know how to market their businesses effectively— especially since product sales typically account for only a tiny part of a direct seller’s income. In addition, NMCs require strong team leadership skills from their distributors since they must lead others towards success by teaching them about the company’s products or services, motivating them with commissions and keeping them on track with quotas. Therefore, anyone interested in entering this dynamic field should learn as much as possible about this business opportunity before deciding whether to pursue it on their own or join an existing team within this industry segment.
Top 7 best business opportunities in network marketing
1. Network Marketing
Network marketing is a type of direct selling where independent salespeople (called distributors) sell products directly to consumers. In this model, each distributor recruits people who become their downline distributors. As they recruit more distributors, the size of the organization grows. Most network marketing companies have a pyramid-shaped organizational structure, with the company at the top, several levels of distribution underneath, and individual distributors recruiting new distributors beneath them.
2. Direct Sales
Direct sale is a term used to describe any business model that sells its product directly to customers instead of going through a third party. An excellent example of a direct sale business would be a florist shop. Instead of selling flowers to wholesalers and retailers, the florist shops directly sell their flowers to customers.
Multi Level Marketing is a term used to refer to a business model whereby the manufacturer/distributor pays a commission to the salesperson for each customer they generate. The salesperson’s compensation is based on the total revenue they generate.
Affiliate marketing is a method of promoting brands by being paid per conversion. An affiliate marketer earns commissions from their sales of products or services. These commissions come from other businesses.
5. Home Business
A home business is a business operated from the comfort of your own home. Many home businesses include drop shipping, online shopping, and consulting.
6. Online Shopping
Online shopping is buying goods and services over the Internet. Online shopping often uses electronic commerce technologies such as credit cards, PayPal, and e-wallets.
7. Drop Shipping
Drop shipping is a style of eCommerce in which a retailer ships directly to a consumer from a supplier, eliminating the need for the retailer to maintain inventory.