Network marketing, also know multi-level marketing is a 200-billion-dollar industry, with more than 90 million people involved in its operations, and tens of thousands more getting involved each year.
So, you must be wondering, what’s precisely network marketing is and how long it has been around?
While this term can be a bit confusing, this is quite a lucrative industry. For that reason, we will try to explain the brief history of network marketing and what this business model stands for.
How did everything start?
We could say that everything started when a man Carl Rehnborg, back in 1930’ started his own company. While staying in China between 1917 and 1927, he became aware of the benefits of supplements in the human diet and the additional health benefits they provide people.
When he returned to America, he launched a company, “The California Vitamin Company.” Later in 1939, he rebranded his business to Nutrilite, and six years later, Carl invented a network marketing strategy to increase the sales of his company.
The next turning point was when two consultants Rich DeVos and Jay Van Andel, became distributors of the Nutrilite supplements and noticed the significant potential of this business as the sales were growing at an exponential rate. For that reason, they established a competing company Amway and purchased a controlling interest in Nutrilite in 1972. In 1994 Amway took over entire ownership of Nutrilite, and it’s one of the biggest companies nowadays.
What is network marketing?
Multi-level marketing is a different way of selling products to a consumer. In a traditional approach, manufacturers make products, which they sell to retail shops, and then stores resell products to end-users.
However, in the case of network marketing, the product is directly sold to end consumers, cutting out the retail shop. So, instead of spending money on advertising, companies use those funds to pay customers for recommending their products. This is a much cleaner way of doing business and can bring you a significant profit.
The power of network marketing
In 2006, Yahoo conducted a poll where nearly two-thirds of U.S. citizens declared they would gladly earn their income from home business. On a daily basis, we are continuously approached by someone selling the newest home product, vitamin, skincare, and so on.
This has become one of the most effective strategies currently available on the market, and it’s the vision many companies follow. However, you need to follow specific guidelines, as well as rules, to develop a proper marketing campaign.
Networking is highly beneficial because it allows everyone a chance to start their unique business. However, nearly 95% of them fail because they never really tried to succeed. Even though the success rate is quite low, network marketing is quite popular these days.
People are starting to realize that job security no longer exists, while the job market is continuously shrinking. Additionally, the world population is growing, and network marketing is all about people. The next 50 years are going to be a very exciting time because we will see a new wave of billionaires, but also a lot of people struggling to stay financially independent.
Therefore, internet marketing might become a necessity in modern society.
Is this a pyramid scheme?
Many people compare these two, but, in fact, they are entirely different. With network marketing, you are selling a particular product, while with a pyramid scheme, money is the product, and it’s also illegal.
What is direct selling?
Direct selling involves selling products face to face, and people don’t get paid on multiple levels. The best example is the company, Avon.