What is Multi Level Marketing? 

Multi-level marketing is known as network marketing. It is a type of business where franchising and direct selling are combined. This business combines an individual with a business in an independent transaction approach. It is an approach where the company creates a contact relationship with the person who wants to develop their business.  

 

Members make their earnings based on the sales they have made for the product or service in question. This also includes the sales of the person they recruited to join the business. Most of the time, the person who has recruited the most members and made good sales on the product gets paid more because of the effort they put into operating in two different areas. 

 

There are "pyramid schemes" or Ponzi schemes, which are considered illegal. Most people associate multi-level marketing with these types of schemes because they also recognize themselves as a legitimate network business. Because of the bad image conveyed by these systems, many prefer to use the name of their business as "home business franchising" or "affiliate marketing".  

 

Commissions are earned from the sale of a particular product or service in legitimate network marketing. There can be no earnings in what they call "sign-up fees" or for simply recruiting yourself. This type of marketing is always criticized because of the dubious recruitment process by which they get their revenue and profits. They get their sales from members and new members, who are considered the end-users of the product and the distributors.  

 

These criticisms led to major changes in multi-level marketing in the early 1980s when many companies began allowing their members to focus solely on marketing and not on distributing or stocking the product. Today, most multi-level marketing companies act as fulfillment companies by handling product shipping, commission payments, and receiving orders from their customers.  

 

Many people who fall victim to illegal multi-level marketing schemes are forced to buy expensive products, but most of these schemes do not last long because most sales are not easily resold.