Network marketing, otherwise referred to as Multi-Level Marketing, is commonly regarded as a sham, and frowned upon by many traditional business owners.
To clarify, for those not aware, network marketing works where a consultant earns income as a commission of their sales. In addition, they are also entitled to a percentage of the sales made by those consultants who they recruited to the organisation.
A consultant increases their earning capacity as they grow their team beneath them, and by assisting them to grow their team, and so on. Well known examples of these business types include Tupperware, Mary Kay, Arbonne, and even Thermomix.
Although these organisations may not be highly regarded, I suspect that most women have attended at least one event, or “party” for a network marketing business.
Let’s look at the Network Marketing Model closely:
- There is no need to hold stock or products. Like the now hugely popular online dropshipping business model, products are ordered and paid for upfront by customers. At this time, the products are shipped to the customers directly, or to the consultant to deliver to the customer. This eliminates the need for large cash injections to buy stock, or to incur storage fees to store large stock supplies. It also eliminates the potential cost of spoilage for a consultant.
- There are no fixed overheads such as rent. Generally, sales are made during host parties in their homes, or on-line or over the phone.
- A consultant has the flexibility to work the hours they choose.
- The team is engaged on a commission only basis. Ie, they get paid based on the amount of time and effort they are willing to put in. Further, As their leader, the Consultant is rewarded based on the support and guidance that provided to encourage and assist them to succeed. This remuneration arrangement creates a direct correlation between skills and efforts; and financial reward.
Like any business, in order to be successful, you must be prepared to put in the hours, and take the necessary risks to achieve growth. I must admit, I have been swayed that the network marketing model is an extremely clever and sound business model.
How can you adopt these practices in to your business?