- What is the Multi Level Marketing (MLM) concept?
The MLM concept is a unique distribution model to manufacture, sell and distribute products and services. In Multi-level marketing, the parent company manufactures a product, warehouses it, and processes orders. It relies on its independent sales force to advertise and sell the products. The company simply processes the orders, ships the items, and pays its distributors. This eliminates the need for a store-front, branches, and a large employee staff. Simply put, it allows the company to improve its bottom line and minimize risks. And it is the direct link between consumer n the parent company which again reduces the cost of products as there is no retailer in between and the extra costs that retailers incurs is also not there which makes the products more cheaper and the quality of products also remains the same .
The network marketing concept has been around for approximately sixty years. The concept started in the United States in the mid to late 1950s.In today’s society, there are hundreds, perhaps thousands of MLM Companies located world-wide.
Many local MLM companies having quite large spread in the market are joining hands with leading insurance brands to promote their products along with an assortment of their own products. Insurance sector makes available long term debt for the economic development of the country. At the same time, the MLM route provides employment opportunities to lakhs of people and enhances their social status. The MLM members also get tremendous opportunity to develop themselves personally.
MLM is very effective and efficient. The independent sales force promotes the products word-of-mouth and takes orders. Compare that to a traditional business model. A typical product is made by a manufacturer and then sold to a distributor. A distributor warehouses the product and supplies the product to one or many different retail establishments. In return, the retail establishments sell it to consumers. The manufacturer sells it to the distributor for a profit. The distributor sells it to the store for a profit. And the store sells it to you for a profit. The average product is marked up three to ten times from the time it is made to the time it reaches the consumer. In multi-level marketing, the independent distributor sells products directly to consumers. When this happens, a portion of the profits are shared with distributors.
In most businesses, advertising is one of the biggest expenses. In some cases, it can equate to fifty percent of the company’s revenue. When a company decides to use the MLM concept, it practically eliminates its advertising costs. Instead, it relies on its independent distributors to advertise and sell the products and services. The money that would normally be reserved for advertising costs is now distributed to the independent distributors. I’ve found that most MLM Companies are very profitable. And some of the best MLM Companies even pay out up to 50% of all sales to their distributors.
The network marketing concept also presents lots of advantages for the consumer. First of all, it gives people to the chance to go into business for them. Many aspiring entrepreneurs never start their own business because they can’t afford to. With the MLM concept, anyone can get started in their own business for less than a couple hundred bucks. Even better, they can work from home. This eliminates the need to purchase inventory, hire employees and lease a building. As you can see, the up-front investment is minimal compared to a franchise, store, or traditional business.
Why should you take advantage of the network marketing concept? You should participate in multi-level marketing because it works. It’s one of the best business models ever created. It’s streamlined. It’s profitable. And you can earn passive income. Very few business opportunities offer the average person the chance to earn passive income. The MLM concept is a viable business opportunity. It presents a win-win situation for the manufacturer and the consumer.