Multi Level Marketing (MLM): Top Companies, Working & Schemes
Created on 28 Oct 2022
Wraps up in 7 Min
Read by 2.6k people
Updated on 09 Dec 2022
MLM, or multi-level marketing, also known as network marketing, or referral marketing, is a sales technique in which a person sells a company's goods or services directly to customers. It gets its name from multi-level marketing from the practice in which the salesforce is incentivised to recruit and sell to other salespeople.
What Is Multilevel Marketing (MLM)?
The fundamental goal of MLM is to increase the sales network and, by extension, increase sales. Distributors get paid based on the revenue they generate from sales. They also get a percentage of sales made by their recruits.
MLM companies hire these salespeople as independent contractors who don't have fixed pay or other employment benefits and operate as distributors instead (Salman Khan’s JAI HO concept). They generate income in two ways:
1. By offering goods or services to customers directly. For example, S works as a distributor for ABC Cosmetics. She receives cosmetics from the company at a discounted price and sells them to her bigger network of clients at a higher price or MRP.
2. By adding new distributors under them, or "downline", which entitles them to a share of the sales made by their recruits. As an illustration, S convinces V to join as a distributor too. When V joins, S receives a part of V’s sales.
How Multi-Level Marketing Works
Distributors with sizable downline teams do not promote products on their own. They earn enough commissions through sales made by their downline. Existing distributors are encouraged by the commission structure to grow or diversify their downline. It enables the business to hire a larger sales force, giving it access to more clients.
Multi-Level Marketing Schemes
Multi-level marketing schemes usually come in three different types. They are:
Single-tier marketing: This strategy is thought to be the most genuine because it pays employees through direct commissions. They are not frequently needed to hire employees from a higher level. This uses affiliate marketing techniques such as pay-per-click (PPC), pay-per-lead (PPL), pay-per-acquisition (PPA), etc.
Two-tier marketing: Salespeople who use the two-tier marketing strategy receive commissions from their direct sales. However, they also receive indirect commissions or rewards for bringing on recruits. More frequently, only the top two layers of salespeople are eligible to receive indirect compensation.
Multi-tier marketing: There are more than two levels of salespeople in this strategy. Up to five or six tiers, they are eligible to get direct and indirect commissions. Some businesses offer incentives to top salespeople as long as their recruit tier increases.
Difference between MLM and Pyramid Schemes
Because multi-level marketing is sometimes mistaken for pyramid schemes, they have developed a poor reputation over time.
A pyramid scheme is a kind of con where no tangible goods are involved. All you have to do to get paid is bring in new members. You have to trick your relatives and friends into thinking they have a chance to make tons of money. They continue to fool more people, and the network keeps expanding. No goods are exchanged. For each new hire a person refers to the business, they will receive a portion of the joining fee.
On the other hand, network marketing involves sales of goods or services. The product is also prioritised, in addition to recruitment. Hence, despite having exactly similar appearances, pyramid schemes and MLM are different at their core. While MLM is legal, the legitimacy of pyramid schemes has often come under severe questioning.
The Party plan was probably the earliest and only successful iteration of network marketing.
Top 10 Network Marketing Company in India
A network marketing company in India offers people the chance to increase their income, typically as a side business. The various examples of network marketing companies in India are:
Amway is an American company that was founded in 1959. Operating in India for over three decades now, it is one of the biggest and oldest MLM firms in India. It sells more than 140 daily-use products to consumers from warehouses in more than 34 locations and has over 150 offices across the nation. Amway can sell its products directly to consumers; however, it is not allowed to sell its products through pyramid schemes.
Eazyways is a subsidiary of Eazyways Arogya Pvt. Ltd and is one of the most reliable and successful MLM companies in India. It is a manufacturer and supplier of Ayurvedic products in India. Eazyways further has two brands: Natural Antioxidant and Aarogya Vatika. More than 50 lakh users have joined the organization since its start.
Founded in 2004, Vestige is an Indian network marketing company. It offers 5-11% in cumulative performance bonuses and has attracted a vast network of distributors across India. The company is certified by ISO and operates in all parts of the country. Their sales of luxury, personal care, and health products have been remarkable.
Herbalife Nutrition Ltd. is an American MLM company. Since it was founded in 1980, Herbalife has built a sizable network of nutritional and wellness products. It came to India in 2009 with weight management and lifestyle products. Herbalife's product line includes more than 100 items, including dietary supplements, weight-loss and weight-gain products, etc.
RCM, formally known as Jaishri RCM India Pvt. Ltd, was founded in 1967 in Rajasthan. It has a network of more than 10 million people and more than 150 product categories like lifestyle, healthcare, agricultural and other products
Modicare was founded in Delhi in 1939. and offers products related to personal health and hygiene, entertainment, tea and beverages, agriculture, etc.
This Swedish cosmetic brand was founded in 1967 and had been operating in India since 1999. The company sells more than 100 products, including in segments like personal care and hygiene, skin and hair care, and cosmetics.
8. Safe Shop
Safe Shop was founded in India in 2011. But despite being a relatively new player in the segment, it has experienced tremendous growth in recent years. Safe Shop offers products related to fashion, health, lifestyle, kitchen and dining, and spiritual learning.
9. Forever Living Products
Forever Living Products was founded in 1978 in Arizona, US, and has been operating in India since 2005. It markets and sells dietary supplements and goods made from bees.
10. Avon Products
Avon is a British MLM company that dates back to the 1880s. It started India operations in 1995. Avon produces and sells perfumes, cosmetics and beauty products. It is only second to Amway in terms of revenue in this sector.
The Bottom Line
MLM is a company that makes you think you’ll be rich in a short period; you just need to hire salesmen to hire more salesmen without realising that they have been hired as an (audience, say it with me) salesman. What nobody understands is that in order to be rich in this scheme, you need to be at the top of the pyramid. And who are we kidding? You know you’re not.
MLM is a dream-selling industry like any other industry. The difference is just the probability of making you rich is as low as an office worker being 100% productive (me being an exception).
By the time you will realise your place in the pyramid, you’ll be another brick in the wall. Investing your money is totally your call but think about it, how can a company which will "make you a millionaire" have hardly any fame, and you’re being pitched in person? Finology suggests taking calculated risks, but this is a clear example of miscalculation.
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