MLM - what is multi-level network marketing?

Posted by: Ganesa

Network business

Probably, each of us has heard what MLM or network marketing is, but their meaning is sometimes left behind by a thick screen of misunderstanding, and many can be drawn into the very concept without even realizing it.

And it is in vain, because the principle of multi-level marketing is widely used in everyday life and in business. We understand what MLM is, what is the essence of MLM activity, and how networkers earn money on it.

Network marketing (MLM) what is it?

It is difficult to imagine, but the very concept of MLM, like the principle of its existence, developed into a whole business concept in the distant post-war years in 1945. Then two enterprising Americans Casselbury and Mitinger decided to succeed well by selling the products of one of the cosmetic companies and at the same time creating a whole network of buyers-sellers, that is, the so-called distributors. After that, the active use of this strategy began and the MLM network spread throughout the world.

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The concept penetrated the CIS immediately after the collapse of the Soviet Union and became widespread. According to unofficial information today there are more 5 000 large MLM-structures, what can we say about the smaller networks of independent distributors. What is the basis of this super popular system? Everything is very simple. Any company that produces something needs to sell its goods somewhere.

If, however, we organize a scheme of buyers inviting other buyers to the system and so on to infinity, then we can sell large volumes of production, deducting small dividends into these pawns. But MLM-business is not limited to trade, and he successfully managed to penetrate into other areas of life, for example, investments (read the article "Investments in business").

MLM companies

MLM is a system for the sale of goods or services, in which new agents are attracted to the structure, with the help of which the network is expanded and goods or services are sold.

In fact, MLM can be called a pyramid - the network marketing pyramid is exactly that. At the same time, whole reward systems are developed for such independent agents, with their own hierarchy, bonuses and valuable gifts.

Network Marketing on the Internet

It is not surprising that network marketing has penetrated online, where all progressive and actively bringing in money is penetrating. Connecting to the network greatly simplifies our lives and simplifies business practices when the entire target audience of a billion people sits in front of the monitor screen here and now, and there is no need to run around the world and look for ways to sell services and goods.

For network marketing, the inhabitants of social networks and forums are a real find, and their ignorant minds are very easily captured by the tempting prospects for earning money in the structure. Thus, network marketing has practically migrated to the online space and we run into agents less and less often who run around the houses and offer to buy cream. At the same time, networks are expanding on the Internet, which concern not only trade and the realization of something, MLM successfully masks and transforms and, at times, it is not so easy to notice the pyramid.

Network Marketing on the Internet

The difference between offline and online MLM is that the expansion of the network on the Internet is faster and more global, whereas real network marketing will soon completely exhaust itself, as an unproductive method.

Speaking of MLM online, imply investment in the Internet (more precisely psevdoinvestatsii). The principle of network marketing is the basis of their work, but instead of a service or product, an investment proposal appears, and project participants, inviting new users in this way, increase their earnings. Whatever the MLM company, online or offline, it is important to understand that financial pyramid and network marketing are not the same thing, we note that these are even different concepts that are combined by social ignorance.

Work system MLM

The invention of network marketing has become a real salvation for the owners of large corporations. Just think of what super-profits the heads of these structures have that stand at the very top of this pyramid, because they do not need to open a chain of stores, buy equipment for sales, hire vendors and pay them a salary - it’s enough to allocate penny bonuses and there will be a whole crowd of followers who will be right serve the cause. This, of course, is a crude example taken from prosaic life, but this model can be applied to other varieties of MLM, not only trading. On the other hand, MLM today, like 60 years ago, does not lose its popularity among the public, although knowledge of the pyramids is becoming more common.

Work system MLM

First of all, this can be explained by the beautiful presentation of cooperation and the incredible prospects that are drawn by the organizers, most often unattainable for independent agents, but no less desirable. We will not talk about small participants in MLM projects, but large referral bosses earn really good money in the system, because they have a lot of talent in attracting new representatives gathering thousands and even tens of thousands of followers.

MLM companies

The lion's share of profits in the MLM structure belongs to the organizing company of this network. It must be said that such a company can exist both real and only online, to be a real organization that produces something, and a company that is a bubble. The active growth of consumers for them is an important component of their existence, therefore, in such organizations, whole departments are established that develop programs for attracting new partners with various rewards and bonuses.

MLM Company

You will say what the benefits of MLM business are for the organizer's company, if it is obliged to pay bonuses, rewards, this is not so profitable. In fact, not many people realize that a larger percentage of the cost of any product or service includes the cost of advertising and distributing the product. In MLM, these costs are not, because distributors themselves will tell about the product, they will bring it to the client, whom they themselves will find. As you can see, having avoided one of the main items of expenditure on the implementation of the product, the company saves large sums, and scanty bonuses do not reduce the space revenues from the MLM business.


The buyers in the MLM-structures are ordinary inhabitants, who find the offer of the company convenient, profitable, attractive. MLM organizations make the purchase (of goods, services) as attractive as possible for the customer, simple to implement and affordable. Well, who will refuse to buy cosmetics, clothes, household items at a low price, when you bring everything and show you home or show it online?

Many are attracted by the possibility of product testing due to samplers of goods, tasty product catalogs, promotions and special offers. It is noteworthy that, as a rule, distributors themselves have the status of buyers in the MLM network, and some companies raise agents to the rank of corporate ethics, which further increases the percentage of sales, and thus the company's profit.

Seller (distributor)

For most merchants, consultants and agents, MLM is an opportunity to achieve financial independence, build your own business and achieve a certain status. Why this way? First of all, the MLM company offers development on everything ready: many already know about the company, there is a finished product, advertising materials in the form of websites, booklets, catalogs, a built system of sales organization.

Thus, a person who wants to build a career or organize his business does not need to start his way from scratch - all he needs to do is to enter the finished system, assemble a team, realize as much as possible and it will bring the desired earnings. As a rule, sellers who run around the apartments and offer to buy a cream or a frying pan are a thing of the past. In our realities, when technological progress has significantly advanced, there are many ways to expand the MLM structure, and therefore your earnings, while sitting on your couch.

The history of MLM business, how it all began?

Like so much progressive in business, the history of network marketing began in the USA. It was a United States citizen named Karl Rehnborg who organized the first MLM company in 1934, and it happened quite by accident. Karl lived in China for a long time and worked as an employee until he had the idea that he should move on and earn some other way. He was inspired by the idea of ​​creating nutritional supplements based on alfalfa, which contains many useful and nutrients.

Rehnborg distributed his goods for free to his friends, hoping to earn a good name, but free in our material world was never appreciated, and the additive was of little interest to anyone. When Karl began to take money for his goods, the alfalfa caused a real stir. Everyone wanted to know what this wonderful tool is and how it works. At one moment, Rehnborg was tired of telling everyone about his product — he placed this function on his own customers by offering them commissions for distributing information. It was the beginning of a huge MLM company, the ancestor of a business movement called network marketing.

The history of MLM business

“Nutrilite Products” (namely, that is how Rehnborg called his company) in the first years of its work gathered a huge 7-million capital, despite the fact that its creator did not spend a cent on advertising. In the business of an entrepreneurial businessman, Rehnborg, two of his distributors named Casselbury and Mitenger, who are mistakenly called the fathers of network marketing, earned good money, although in fact they only developed the idea of ​​their boss. And two other "agents" Renborg, Rich Devos and Ray Endel will create another well-known company Amway (Amway) in the future.

It will be in 1959 year and the success of the company significantly outweighs its ancestor, and it is this organization that will for the first time penetrate, as a network of distributors, into the territory of the CIS. The peak of the development of MLM companies fell on crazy 90-e, when they began their active emergence and rapid growth. Through network marketing, they implemented absolutely everything - from cosmetics to technology, and domestic MLM organizations began to emerge. Today, network marketing is very confident penetrated the Internet space and indirectly or directly exists in the global network.

At the same time, it spawned such technical progress and the negative side of the MLM movement - many Internet projects emerged, and in the philistine language of financial pyramids, often fraudulent, that simply blackened the very essence of network marketing, which now began to be associated with something illegal and immoral.

Advantages and disadvantages of network business

No matter how much he praises network marketing or denigrates his name, like everything else in our world, he has pros and cons. Both about the first and about the second it is necessary to know and clearly understand all the key nuances. If you set a goal to penetrate into the MLM-business or even deal with it, because the agitators who will try to draw you into the scheme are unlikely to tell about the other side of network marketing.

Pros and cons of MLM

Network marketing will be for you one big plus and a springboard to financial well-being if you are an active, purposeful leader who doesn’t care about people and can give anything to anyone. If the above metaphors about you, then boldly hurry to join the MLM-team and you will get into your environment, where you will feel like a fish in water. In this case, you will have a great opportunity to buy quality products at a nice price.

But, if you do not strive to conquer the heights of this world, are a passive person who is satisfied with the work for hire, a moderate life rhythm and a narrow circle of communication, then you have nothing to do in MLM. Be content with your life and do not try to grasp what will cause you total discomfort and the need to contact with people you do not know, who often will not be interested in your suggestions. The disadvantages of the network business include the above-mentioned negative reputation among the public. Most people perceive MLM as fraudulent enticements and will fight with your hands and feet. In such a position it is extremely difficult to persuade something to acquire or attract new members to cooperate.

Table of pros and cons of MLM network marketing:

Advantage For Против
Opening your own personal business
The structure can be accessed with little or no personal investment. Without investment, development will be very slow.
Internet income
The web is huge! Every user is your customer. Cold contacts, almost impossible to interest the buyer without having salesman skills
The price of the product
Giants like Avon or Amway sell their partners goods much cheaper, and you sell more expensive. Such companies as Zepter - asking for their goods, too much money. Therefore, they are almost not audible.
Team, training
Many go to such network companies only because of the atmosphere. The spirit of leadership, competition, seminars and training - that's what touches. But not everyone can listen to all this, watch and learn. From the start it's all pretty boring.
Developing yourself and your skills
In the process you can learn to communicate with other people. Achieving goals and making new acquaintances. Someone is too lazy to educate themselves, and they prefer boring routine work in the office.

Network Marketing in Russia

As already mentioned in the previous sections of this article, multi-level marketing reached its time in the CIS countries, in particular, it moved to the territory of Russia. Our compatriots showed no less interest in MLM than in his homeland and eagerly entered the game. I must say that the peak of the development of network marketing in our country fell on 1996 the year when the Direct Sales Association emerged, whose activity not only influenced the development of the industry, but also created the necessary positive image of MLM among the people.

MLM in Russia

Speaking in numbers, it can be noted that in recent years, according to the statistics of this organization, the number of participants involved in the network business process has made 6% of the total population of the country. This is a multimillion figure, which speaks only of the number of distributors, whereas there are an even greater number of buyers, which are important links in the chain of MLM structures. In the Russian segment of the market, MLM online companies appear more often, which often only hide behind the name of network marketing, and actually carry out various fraudulent schemes, so it is important to be able to distinguish real MLM from fiction (under the MLM cover, there may be a hyip mutual funds).

MLM companies (rating)

The number of MLM in our country, there is a huge amount, and buyers of their goods and services is extremely difficult to choose the right one. It does not clarify the situation and the fact that a large number of fraudulent organizations hide behind the form of the MLM structure, denigrating this essentially harmless business tactics.

Rating of MLM-companies, which will display the best of the network of enterprises that conduct honest and legitimate activities, have experience in the field, have proven themselves on the positive side and whose names are well known to many. We will update this rating if some companies emerge and confidently conquer consumers or disqualify those who have completed their work. MLM companies, the list of which we have presented below, will be suitable in order to learn from personal experience what network marketing is.

Answers to MLM business questions

Many have heard about MLM, but sometimes they have heard about network marketing and are limited to this. We will try to answer the most burning questions on this topic, after reading which you clearly indicate for yourself whether it is worth cooperating with MLM and whether it is realistic to make money with it. First of all, it is worth noting that the MLM business really exists - it is not a bubble or an invention of fraudsters.

At the same time, MLM in the classical sense is not a financial pyramid, with which network marketing is often confused with the similarity here only in the need to attract new participants, receiving incentives for this. This is where the similarity ends. Network marketing has existed for a hundred years, retaining its good name and comparison with fraudulent schemes is completely incorrect. Work in network marketing can bring a good income, but before you "enter the game" you need to know some of the nuances, because this is not investment in goldin which you can sit back and get rich - MLM-distributor will have to sweat.

Questions about MLM

How to start a newbie?

First of all, soberly assess your chances of becoming a major MLM leader. You must have that set of qualities and skills that will allow you to attract newcomers to the structure, enter the goods and expand their branch. If you understand that you are not quite fit for this role, then for the sake of MLM, do not quit the job and do not jump into the pool with your head - try to start cooperation with one of the companies and see how it goes with you.

If you nevertheless decided that network marketing is for you, then join the ranks of partners of an MLM company and try to sell goods for a start - even the first couple of hundred rubles will bring a considerable allowance and stimulate them to work activity. Sales should not stop - try to expand its branch. To do this, find several partners and help them find their partners - the profit from such a minimal structure will be significantly greater than from simple sales.

How to attract customers to your structure?

Nowadays, expanding the MLM structure is much easier than it was 10 or 20 years ago. Today, unlimited possibilities in this regard represent the existence of the Internet, with the help of which one can find new members and carry out quick and comfortable sales of goods. Going for an example is far from necessary, and for the first, and for the second, the audience of regulars of forums and idlers hanging around on social networks is perfect.

This audience will gladly connect to the structure, inspired by the prospects that network marketing offers, semi-passive earnings and flexible working hours. (If you are interested in completely passive income, then there are articles on the blog about PAMM accounts and investment strategywhich will tell you how to invest successfully and passively). In addition, today many companies that work on the principles of network marketing create their own bright and colorful sites that attract new users, attracting them like a magnet, and make the work as comfortable as possible, and therefore interesting for job seekers.

Choosing a company to start your business

Finally, we’ll open some small secrets for you to choose a network company. We hope they will help you find a good company that will allow you to earn and achieve certain heights in this business.

  • Duration of work - if the company is recently on the market and nobody has heard about it, then it will be very difficult for you to earn. Conversely, an experienced MLM organization with a certain popularity will allow you to earn without effort.
  • Cooperate with a company whose products are constantly in demand, that is, they are the subject of our daily use and end quickly, which causes a regular need for them (cosmetics, household chemicals, food).
  • Choose a company that has its own website - in this case, you just make it easier for yourself and will not explain on your fingers what you are selling and where you are proposing to join.
  • You should not cooperate with those networkers who do not pay enough attention to personnel training, because both the company's income and your possible profit depend on it, because well-trained distributors work more efficiently.

Network marketing is the real tactic of doing business that offers earnings without investmentswhich has proven its worth over the decades of its existence in many countries and continents. With the right approach, if you choose the right network business, then you can become a millionaire - just set a goal, persistently go to it and be a born MLM leader.

Author Ganesa K.
A professional investor with 5 years of experience with various financial instruments, maintains his blog and advises depositors. Own effective methods and information support for investments.
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Comments (8) (Comments)
Denis Zorov (05.07.2018 to 09: 18)
MLM is gradually becoming obsolete, but this is quite predictable, because everything goes away, something new comes, something changes. And the principle of attraction has been known since antiquity, so the technology itself will be used for years, they can simply call it smarter.
Investor (03.07.2018 to 09: 29)
I love it when everything is transparent and fair, and in network marketing, with all its flaws and sometimes very weak points, it is worth highlighting the main advantage - transparency: sold for so much money - got this and that, did not sell - did not get anything . Similarly: brought the client - keep a bonus, did not bring, sit hungry.
Lora (30.06.2018 to 18: 52)
I do not believe that in this way you can get a profit, except for ice cream. You must admit that it is necessary to have a huge number of payment-capable clients in order to sell them and live on the fact that they will bring new comrades into the system.
Irina01 (28.06.2018 to 08: 36)
Of course, I am not inclined to believe in phenomenal commercial offers, but I will say this: you can make money in network marketing, even if it is focused on different levels and subsystems. It is clear that it is necessary to work, sometimes hard, but you can earn. I do not share the fanatical delight of the fact that in a year or two a company that produces laundry detergent will give an apartment or car to the coolest "attraction", but if there is a working audience, why not use this way of earning.
Ruslan (25.06.2018 to 10: 14)
An interesting opinion of Ganesa that MLM is a pyramid. To some extent, I agree with this, with some - not and categorically deny, because the former still require investments, MLM in most cases invite us to donate our time and effort, but not money.
Neb (17.06.2018 to 14: 10)
Of course, the same Avon and Oriflame - this is what the first comes to mind when you hear about network marketing. But! If we work with online projects, in fact, each HYIP uses the basic tools: referral and affiliate program. I think that this is right when money makes new money or pleasant bonuses for being sociable and can normally offer a product or service.
Alan (16.06.2018 to 06: 41)
The disadvantage of working in multi-level network marketing is that you burn out very quickly, and then you hear only people who are involved in it that they hate to sell and hate to communicate with customers. Although on the other hand. This is a universal scheme that is suitable for the realization of spirits, and in fact, is used in every religious organization. I think the principles over the years will only increase, and MLM itself will not disappear.
Wick333 (13.06.2018 to 13: 41)
Of course, I am really shocked that the use of MLM was used immediately after the war. In fact, I work in SEO and product promotion. But such subtleties sometimes lead to shock. For the fact that in 34 was able to surprise me, a separate respect.
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