What Is MLM?

What is MLM or what is network marketing? Many think they know, but is the opportunity you’re looking at right now the real thing, or a wolf in sheep’s clothing waiting to pick your pocket.

Legitimate MLM is a business model that many companies use to sell their products or services, using an army of independent representative to promote by word-of-mouth, rather than through a “bricks and mortar” retail system.

This model is particularly effective when offering products or services that are so unique and effective, that a billboard ad or a 30 second media spot cannot communicate their real value.

Those independent representatives, and their sponsors, receive commissions for their efforts in a multi level sales structure. When you take a closer look, MLM is not much different from the “bricks and mortar” sales structure; it is just more transparent. Let me explain.

MLM Compared To “Bricks And Mortar”

Manufacturers do not retail their products. They sell to wholesalers in bulk, and those wholesalers distribute to Jobbers. Jobbers then deliver the inventory to the retailer, whether it is a big box store, an online seller or the “Mom and Pop” shop down the street. At each of these levels, someone gets a piece of the profit on the sale of the product to you, the consumer.

In MLM, the manufacturer cuts out all of these middlemen, and pays the commissions directly to the independent sales representatives, and their sponsors who trained and support them. These folks not only facilitated distribution, they also saved the manufacturer the cost of advertising the goods as well. It is a win-win.

MLM/Network Marketing Goes Mainstream

At one time asking what is MLM or what is network marketing were fair questions. Manufacturers using these methods of distribution were once on the fringe of the retail structure – many thought this sales method a fad that would soon pass.

But soon it became clear that this business model could foster better distribution, by a more highly motivated sales force, at lower advertising and distribution costs. Many major manufacturers are now using this direct sales model and it is even taught in such places as Harvard Business School. MLM has gone mainstream.

The Wolves In Sheep’s Clothing

While the reputation of the MLM or Network marketing system of distribution has improved dramatically, as more people understand it, there are still a few bad apples that spoil the bunch by their sharp practices.

Most are legitimate companies offering real tangible products or services at fair prices. The wolves are in the minority, but their practices taint the industry

If a company offers a shoddy product of no real value, or no product at all, in return for your money, it is a wolf;
The so called “gifting programs” are not only wolves, they are illegal “ponzi schemes”; and,
If the company offers a good product, but at a price so high no one would buy it, except to qualify for the pay plan, it’s a wolf.

I’m sorry, but I really get angry with the few bad guys, among so many good companies. These wolves tarnish the image of an industry that I love, and that has fed and clothed me well for almost two decades.

The Question, What Is MLM? / What is Network Marketing?, Answered!

So, here's the bottom line. Any opportunity worth considering must have:

A legitimate product or service of real value and appeal;
Offered at a price that you would pay, even if a compensation plan was not attached to it.

I hope that answers your question about “What is MLM” or “What is network marketing”?

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