Today network marketing is a 183.5 Billion pound industry. It is also called multi-level marketing With over 103 Million people involved and tens of thousands more getting involved each year this type of business is quickly becoming the place to work.
So what exactly is network marketing, how long has it been around for?
What is the difference between network marketing and direct selling? Is this also different from pyramid selling and pyramid schemes?
It can be a little confusing when first learning about this lucrative industry. In this post, I am going to show you exactly what this business model is and how it originally got started. You will also learn the difference between the different types of terminology that you may have heard of.
The History of Network Marketing
Network marketing has a long, rich history in North America, dating back to the 1600’s when “ Yankee peddlers” would canvass city neighbourhoods and travel back roads from village to village peddling much-needed household wares, such as pots and pans, candles and the like.
Then, in the late 1800s, Richard Sears, founder of sears and roebucks, installed the first formal network marketing compensation system by rewarding catalogue customers with a point that could be exchanged for merchandise or cash for referring friends and family members to Sears ’mail order division.
In the early 1900s, an African-American woman named Madam CJ Walker laid the groundwork for modern networking opportunities by recruiting ambitious but underemployed black women to sell her hair and skin products for the commission.The uneducated daughter of slaves, Walker quickly recognized that personal growth was essential to success, and she opened training centres in several cities to teach her reps strategies for success.
By the time of her death in 1917, Walker’s company employed 20,000 independent sales reps across North America.The Guinness book of world records cites Walker as the first American female self – made millionaire.
Back in the 1930′, there was a man by the name of Carl Rehnborg. Whilst in China in between 1917 and 1927 he was first introduced to the benefits of using supplements in your diet and the additional health benefit that it gives people.
When Carl got back to America he set up a company called The California Vitamin Company. In 1939 Carl re-branded the company as Nutrilite. It wasn’t until 6 years later that Carl invented the multi-level marketing strategy to help boost the sales of his company.
The big turning point came when two new consultants Jay Van Andel and Rich DeVos became distributors of the Nutrilite products and noticed the real power of this business modal as sales were growing at an exponential rate. They set up a competing company called Amway and bought a controlling interest in Nutrilite in 1972.
What Exactly IS Multi-Level Marketing?
Network marketing is basically just a different way of selling products to the end user. As seen above, in traditional business, products are made by the manufacturer, then they are sold to a retail shop and then sold on again to the end user.
Network marketing is different as the product gets made by the manufacturer and then sent straight to the end user cutting out the retail shops. The companies then use the money that would have been spent on advertising on paying their customers for recommending the products. It is a much cleaner way of doing business.
Is This What They Call A Pyramid Scheme?
No. They often do get confused though. A pyramid scheme is when there are no actual products being sold. People are asked to invest money. Money is the product. They are also illegal. However, pyramid selling would be a technically correct comparison.
So What Is Direct Selling?
Direct selling is when people are just selling products to people face to face. The big difference between network marketing and direct selling is that people do not get paid on multiple levels deep as you do with multi-level marketing. The most famous direct selling company is Avon.
So What is the Difference Between Network Marketing and Multi-Level Marketing?
Nothing they are the same thing.
Why Is Network Marketing The Business of the 21st Century?
The reason why network marketing is starting to explode is that people are really starting to see that job security no longer exists and that the job market is shrinking. Also, world population is starting to explode.
Building networks of people are what network marketing is all about. As population explodes this is going to suit this type of business model ideally. Here is a visual of what is happening with the population.
As you can see, the people who wake up and realise what is going on in the world and begin to act on it and that get in now are going to be richly rewarded in the years to come.
The next 50 years are going to be a very exciting time where a whole new wave of millionaires are already starting to breakthrough or a where lots of people are struggling financially. Does it depend on which side of the fence are you going to be positioned?