Network marketing is also known as Multi-level marketing, is a business model. MLM system involves a pyramid structured network of people who sell a company’s products. In other words, this model involves a pyramid structure of non-salaried participants. These participants get paid whenever they or a person below them in the pyramid makes a sale.
I am writing this guide for beginner like you to understand the fundamental concepts of network marketing.
Let’s start with the basics…
What is MLM or Network Marketing?
MLM or Network Marketing is also known as Direct selling / Social selling / Referral Marketing in different marketing cultures across the globe. Network Marketing is an alternate form of distributing products and services
MLM company sell their products & services directly to consumers using ‘word-of-mouth’ referrals from existing consumers. Because of this called Direct Selling.
As a happy customer in this company, you take the opportunity to become a distributor and earn a retail commission for the sales generated by your referrals. Now your customers might like the products/services and decide to become distributors. When distributors referred by you refer to other customers, they earn a retail commission. You also earn team commission or group commission according to the total sales generated by your network of distributors.
Every Network Marketing distributor can earn a retail commission for the sales generated by personal referrals. And earn team commission for the sales generated by multiple levels of distributors in their network.
Instead of spending money on traditional advertisements & other marketing methods, Direct selling companies reward their consumer turned distributors for their word of mouth advertisement effort.
If you want to start your Network marketing Business read How to start MLM and Network marketing business.
Characteristics of Network Marketing
Network marketing organizations market and sell their product directly and don’t make any channel of distribution. The responsibility to sell the products is transferred to non-employed individuals. They also get a commission every time they make a sale.
Independent Business Owners (IBO)
The participants are called IBO as they work as if they are promoting their own business.
This model involves participants to use the selling philosophy of marketing. The main focus is on recruiting and selling as much as you can to earn more commission. There is no relationship. People may even trick you to buy the products or to join them.
System Of Hierarchy
Suppose a person ‘A’ has a person ‘B’ under him. Now A will get the commission whenever he makes a sale. A also get commission of a part of B’s when B makes a sale. Now, to earn more money, B will also try to recruit a person C under him and so on. This makes the system a big hierarchy.
Less Or No advertising
Dependency on direct sales helps the organization to rely less on advertising. Because of personalized contact have more convincing power than advertisements.
No Fixed Salaries
This is commission based network where participants are not paid commission to the specific task.
Everyone is accountable only to himself. The more he sells, the more he earns.
Benefits To The Participants
Participants are also the consumers of the network. Hence, they also get discount and other attractive offers to when they join the network.
Pyramid scheme of MLM Marketing
If we try to draw a scheme of the network marketing model with the company on top. The primary distributors in the second row, and all the other recruits in the rows below. It will indeed look like a pyramid. that’s why this is pyramid selling. However, despite its pyramid shape organization, multi-level marketing is not a pyramid scheme in the legal sense of the term.
There are several difference between multi-layer marketing and pyramid scheme.
Multi-layer marketing is usually transparent and built around legitimate products. While all pyramid schemes are essentially scams. Both aim to establish a network of distributors. But whereas network marketing allows each distributor to advance and generate income. Pyramid schemes are designed with the sole purpose of allowing the company to scam the distributors.
Network marketing or MLM companies won’t ask distributors to pay sizeable registration fees, memberships, etc. But companies hiding behind a pyramid scheme won’t.
Pyramid schemes will always value recruits over sales. so if a distributor makes more money by adding new distributors to the network rather than by selling their products or services. They are dealing with a pyramid scheme. However, MLM companies make money from sales, they value sales over recruits.
How important India is for MLM/Network marketing industry
The current population of India is 1,369,357,354 as of April 2019, based on the latest United Nations estimates. Which is 17.90% of the total world population. Like every other industry, the Direct selling industry is also aiming to capture a share of this huge human resource. Many network marketing companies believe that India has the potential to give this industry an exponential growth.
From FMCG to electronic goods, India’s huge customers base is an ideal market for many network marketing companies.
Rise of Network marketing in India
Things started changing slowly in the last decade. Young India was adopting technology, social media, and also turning into Entrepreneurship. Network marketing was also upgrading itself globally to improve its positioning, operations.
Some global MLM companies started doing great business in India. and then some top Indian leaders from those companies started their own direct selling companies there. Some failed terribly. But those who survived started doing business like wildfire.
Let me quote from Direct 2015- A Report on Indian Direct Selling Industry Published by FICCI and KPMG:
“The direct selling market in India has grown at a CAGR of 16 % over the past five years to reach INR75 billion today. The market grew at a lower rate of 4% in 2013-14 due to slowdown in the industry.”
Is Network Marketing Just a Scam?
I know very well there are many questions in your mind like Networks marketing is a type of money game or pyramid. This is illegal and many more. in this phrase, I will discuss what is legal and what is illegal?
To help you understand what network marketing is, I must first explain what it isn’t. Firstly, network marketing is not a pyramid scheme. pyramids are programs similar to money chain letters where people just invest their money.
Network marketing is a legitimate business. It is based on providing people with real, legitimate products. While some people do make a lot of money through network marketing. Pyramids are illegal and are based on taking advantage of people. Network marketing has proved itself as a part of the new economy.
Before join the any network marketing company, You should check the Best compensation plan for you.
Top MLM & Network Marketing Companies in India
MLM companies can offer you a great opportunity to make some extra money in the right way. But the best thing about working for a network marketing is that you can work part-time and earn a passive income without affecting your regular 9 to 5 job.
So let’s get started and read more about some of the genuine MLM companies operating in India.
1. Mi Lifestyle Marketing Global private Limited
MI Lifestyle Marketing Global Private Limited is a direct selling company that was established in 2013 in Chennai. Right now it is India’s one of the most popular MLM companies.
The company offers wide range of quality lifestyle products for day to day use which are approved by Ministry of AYUSH.
They also offer wide range of Health and nutritional products. Go here to know about their products.
To join the MLM network you don’t have to pay any registration fee. Just go their Registration page and fill out the form. The company’s current revenue is more than Rs. 1500 crore.
2. Amway India
Amway is one of the oldest network marketing companies in India. This is not an Indian company but it has got a huge presence in India with 140 sales offices and warehouses in 34 cities.
To join Amway MLM network go Here. There is no registration fee.
You have a great opportunity to become a business person. By earning 6% to 21% of business volume depending upon monthly sale.
Oriflame a Swedish beauty company has a huge presence in India. This offer mainly beauty and also skin care products.
You can take a look at all of their products brands Here.
Oriflame is not 100% network marketing company. People can buy products from their website directly and need not to buy from direct seller.
4. DXN India
DXN a multilevel marketing company based in Malaysia but very popular in India. The company was founded by Lim siow jin in the year 1993.
People join DXN as a direct seller because of remuneration given by the company.
You can earn 15% to 20% in retail profits and also earn 21% as a group bonus depending upon your sales number. Here is the breakdown of different types of bonuses.
- Start Bonus – 25% to 37%
- Development Bonus – 15%
- Leadership Bonus – 15%
It is important to note that Modicare founded by Sameer Modi is of the fastest growing Indian MLM company. It offers a wide range of products from categories like wellness, Skincare, Personal care and also Homecare, etc.
You earn commission depending upon your level in the organization. You also get an Accumulative performance Bonus ranging between 7% to 22%. In this company, there is also much other income like Director Bonus, Leadership Bonus.
To become consultant register Here!
These were some of the best direct selling and network marketing companies in India. Before you join them please visit their website and also talk to their customer support on phone or in other ways.
Well, I hope this guide helped you to understand about network marketing as a business. If you have additional questions, feel free to ask in the comment section below.
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