Anyone who has ever been approached by a family member or friend about joining companies like Amway or Herbal Life has some experience with network marketing. The question many want to know is if it is legal.
So What Is Network Marketing?
This is a business model where people earn, both when they sell products direct to consumers and when others in their “downline” sell products. A person’s downline are those people within a group. If person A recruits persons B, C, and D and person B recruits E and F, then all of those people are in Person A’s downline and persons E and F are in Person B’s downline.
Because of the structure where one person is on top and then a few under them and even more under those people, it begins to look like the shape of a pyramid. Once someone sees this structure they begin to worry if this is a pyramid scheme.
The average person doesn’t really know what a pyramid scheme is, but they have heard the term and it worries them. Network marketing, also known as MLM or multi-level marketing, is a legal structure and business model where each person earns money by selling products or services to others and by recruiting people to sell products and services. The top person receives commissions from their own sales and from the sales of those in their downline.
A pyramid scheme is an illegal business model where the primary function of the business and all of those in the business, is to recruit others. The only real money that is made is by the sale of the kits sold as a condition to get started in the scheme. This business model was outlawed both because it served no real business function and because this model ultimately will fail because even if all the people in the world joined, the last several people would have no means of success.
Does Anyone Make Money In Network Marketing?
There are many successful companies and successful people in those companies. Some of the most successful network marketing companies have millionaires who started just like anyone by being recruited by someone they know.
Starting a business is tough no matter what type of business someone chooses. Most network marketing companies allow a person to start with no experience and usually not more than a few hundred dollars. But it is a business. For someone to be successful they will need to sell products or services and they will need to recruit others into the business as their downline.
It will be necessary to teach and work with the downline to help them succeed. Anyone who understands that it is hard work and will require them to invest time, effort and money into their business, then they have a decent chance of success. If they think they can buy a $300 kit and then wait to see if they will get lucky, then that person is likely to fail.
The most important thing to know regarding what is network marketing is understanding it is a real business opportunity. If the person starting is willing to treat it like a business and work to make it successful, then they have a legitimate chance of doing so. Like any business, it is up to the person to determine its success.