How to open a kitchenware store. Network marketing or MLM: what is it, how do you make money from it and why is it dangerous?

• • History of MLM business development
  • The essence and essence of MLM business
• 2. Conclusion

Only infants have not heard this sensational and somewhat scandalous abbreviation. Some believe that this is yet another scheme to deceive gullible consumers, others believe that there are many possibilities. Let’s try to figure out what MLM really is in this article.

1. What is MLM business or network marketing

MLM (MLM in Russian version) is an abbreviation for English multilevel marketing, MLM– multi-level marketing. Or as it is also called – network marketing.

The basis of this method is not direct sales through classic retail stores, but sales through a network of sales agents (partners, consultants, dealers).

MLM business structure

History of MLM business development

The history of network marketing begins in 1927 when the creator of dietary supplements K. Rehnborg began distributing his own vitamin supplement and achieved very good results. When the demand for his supplements exceeded his capabilities, he came up with the idea of ​​inviting friends and acquaintances to distribute his products for an appropriate fee. Later people from his company "Nutrilite Products" Lee S. Mitenger And William S. Casselberry developed the basic principles of MLM, which soon became popular throughout the world. And at the end of the 50s, employees of the same "Nutrilite Products" founded a well-known trading Amway network .

MLM business and MLM companies gained the greatest popularity in 1980 -e – 90 -s years.

These days, online companies offer a very extensive list of products: from vitamin supplements and cosmetics to dishes and household appliances. Multi-level marketing is the basis of companies such as "Avon", "Oriflame", "Faberlic", Zepter International. According to some estimates, the annual turnover of network companies is about $200 billion.

The essence and essence of MLM business

The core of the business is made up of distributors.

Distributor is a sales agent whose activities can be divided into three components:

1. Product promotion.
2. Attracting new distributors and creating your own subnetwork.
3. Conducting training events (trainings, seminars) aimed at achieving the goals of the first two points.

The distributor's remuneration consists of payment for personal sales and for goods sold by his subnetwork.

The larger the personal network, the more bonuses the agent who developed it receives.

Another distinctive feature of such networks is out-of-store sales. Sales are carried out, as a rule, on the territory of the potential buyer (home, office) or on neutral territory (shopping centers, cafes, etc.).

Success in Network Marketing

Legality of online mlm business

Disputes over the legality of MLM companies are still ongoing. This is due to the fact that dubious structures are disguised as multi-marketing networks, the purpose of which is to build financial pyramids.

Many of these companies generate income by forcing future agents to pay for numerous stages of “preparation” - making a down payment, purchasing a minimum batch of “products,” and obligatory payment for expensive trainings.

As a result, only the organizers of such pyramids benefit financially, and all participants at the pyramid level are left with nothing, because as such, promotion of the product, as well as the product itself, does not exist.

For training purposes, impressive conference rooms are rented, and dummies are invited who supposedly achieved colossal success.

Business trainings in MLM companies

In order not to fall into the network of these scammers, you should not trust organizations whose work requires significant financial investments. The dubious quality of the product or its complete absence should also alert you.

The goal of a serious network structure of an mlm business is to promote goods (usually of fairly high quality) and develop distributors in particular and the network in general.

In some countries (Korea, China, USA), the activities of MLM companies are seriously limited at the legislative level.

2. Advantages of MLM business and its advantages

What is attractive about working in this business?

• Underemployment. According to statistics, most sales agents are busy from 1.5 to 5 hours a day. This allows you to work on a flexible schedule, which is important for students, retirees, etc.
• Partnerships that allow the employee to choose the pace of work, content and companions. There is no negative “superior-subordinate” effect.
• The ability to create your own business with minimal investment, using a ready-made scheme and receiving comprehensive support, which reduces the risk of failure to a minimum.
• A gradual transition to this type of business, without the need to dramatically change the scope of activity.

The companies themselves also have significant advantages when choosing the MLM format:

• Low advertising costs.
• No expenses for maintaining offices and stores.
• Selling exclusively your own goods, which eliminates the risk of “getting lost” on the general shelf.
• High customer loyalty.
• Additional income from paid training events.
• The distributor replaces an entire staff of employees: advertising specialists, customer service, and recruiting managers.
• In times of crisis, when classic linear trading companies are suffering losses, there is an increase in sales agents in the MLM business. The specialists remaining as a result of layoffs go to these structures in search of alternative income.

Active "anti-network" The policy will be carried out as long as the multi-level marketing format itself exists. Some see this as an intensified competition for the consumer of large retail chains, while others rightly blame the creators of illegal pyramids. But one way or another, there are more than enough examples of successful network companies. It is important to make the right choice.

Watch the video: MLM business, what is it - its trends and prospects

2. Conclusion

Having complete information about what an MLM business is, you can make an informed decision - use it to access certain products that are not available in regular stores, receive additional income, or develop your own trading structure with a solid income.

Hello, dear readers of the online financial magazine “RichPro.ru”! The topic of today's material is network marketing (MLM): what it is, which MLM companies in Russia have a high rating, how network business works, and so on.

After all, for many centuries the model of distribution of goods and services “ manufacturer – large wholesale – small wholesale – retail – buyer"was the only possible one.

ButV30's years XX century The product distribution system was born in the USA and subsequently developed. manufacturer – distributor — buyer».

At the same time, the activities of MLM companies for many years have been surrounded by various rumors, comparisons with financial pyramids and ambiguous public opinion. Based on this, for an objective look at this type of business, you should consider in more detail all aspects and nuances of network mlm marketing.

So, from this article you will learn:

• What is MLM - the history of the network business industry;
• The main advantages and disadvantages of network marketing;
• Which MLM business network companies are the most popular (ranking by sales volume in the world).

After reading this article, you will decide for yourself whether it is worth engaging in network multi-level marketing, find out which companies are better to choose and why, and read reviews from “experienced” mlm marketers.

What is network marketing and how does it work, what is the basis for the scheme of cooperation with MLM business, which MLM companies have high ratings and much more, read below in the article

Network marketing is a system for selling goods and services from manufacturer to buyer, which is carried out through recommendations from person to person.

The essence of MLM business is in non-store retailing, in which the distributor independently establishes contact, advertises and sells the product to a potential buyer.

In addition to earnings from retail sales, the sales agent offers consumers, for a percentage of sales established by the company, find new buyers , which “attract” new clients under similar conditions. As a result, a multi-level network is formed.

Network Marketing Objectives

• Product pricing optimization. Before 70% The retail price of everyday goods consists of the costs of the distribution network and advertising. Changing the distribution structure allows you to reduce costs.
• Providing customers with high-quality, authentic products. With traditional product promotion, there are obvious prerequisites for the appearance of counterfeits on the market, but in the direct sales method they are absent: the product is not as widely known as analogues from the traditional market, the manufacturer, distributor and buyer are not interested in the appearance of counterfeit products.
• Improving the product delivery system. The manufacturer's control over the logistics and storage of goods allows us to provide the consumer with a product of appropriate quality and in optimal time (read the article at the link).
• Improving the distribution of profits of the manufacturing company. Reducing costs allows you to direct financial resources to incentive programs for sales agents, various bonuses and incentives, as well as improve product quality.

Below we will consider the principle of network marketing.

2. How network business (marketing) works - the operating principle of MLM companies 🗺

Multi-level marketing is the interaction of a manufacturer, an entrepreneur and a buyer.

How multi-level network marketing works - 3 sides of profitable cooperation with MLM

2.1. Network marketing from an MLM company

The MLM company produces products at its own factories. It also develops a marketing and sales plan, based on which revenue from product sales is distributed.

As a rule, a business plan motivates distributors in several areas:

• a) consume the products themselves;
• b) sell goods to customers;
• c) create a network of entrepreneurs.

Manufacturers organize delivery of products to their own warehouses in different countries and cities, and also ensure that distributors receive the goods at home.

For proper efficiency, entrepreneurs receive all the necessary materials on products, master classes and seminars are held aimed at developing a variety of skills.

2.2. Network marketing from the consumer side

A distinctive feature of the direct sales method is the creation of convenient conditions for the buyer:

• Delivery. Entrepreneurs, as a rule, deliver goods to their homes.
• Service. Before purchasing, the buyer receives all the necessary information about the product. Also during operation it is possible to consult with the distributor.
• Quality guarantees. Most MLM companies guarantee the quality of their products, with the possibility of a full refund if the client is dissatisfied.

2.3. Network Marketing from the Entrepreneur's Side

Multi-level marketing - a very attractive type of activity for people who do not have large initial capital and business experience.

An entrepreneur has the opportunity to independently plan his employment based on his capabilities. Students, housewives and retirees are most involved in this type of business.

Some terms and definitions used in the network marketing business:

Distributor - a sales agent who has an agreement with a direct sales company and receives a remuneration for product sales, as well as a percentage of commissions for the turnover of the network created by this entrepreneur.

Sponsor (partner) of the 1st level – a sales agent who introduced the consumer to the possibilities of this business and helped to conclude an agreement with a network marketing company.

Sponsorship (affiliate) line – a list of entrepreneurs directly interested in the success of the distributor’s activities, which includes a 1st level partner, his sponsor, etc.

Side Entrepreneurs – a set of distributors that do not belong to either the sales agent’s subnetwork or the sponsorship line.

Bottom line partners – a list of agents included in the distributor’s network.

Organization width — a set of partners of the 1st bottom line.

Depth of organization — all agents of the 2nd and subsequent lower lines in the distributor’s subnet.

Active income – monetary reward for work performed by a person. Income depends only on the quantity and quality of labor invested.

Passive income- profit received by a businessman constantly, for one-time work performed. To obtain this income, a prerequisite is the presence of assets, which can be real estate, bank deposits, shares, etc.

8. Advantages and disadvantages of network marketing - an overview of the main disadvantages and advantages of the MLM business 📃

MLM business has a number of advantages and disadvantages. The assessment of this type of activity in the media, among reputable businessmen and politicians varies greatly.

Advantages of MLM business and its advantages

Let's consider the main ones:

1. Low barrier to entry into the market. When opening any business, an entrepreneur evaluates the resources he needs to start in the market. In a direct sales business, you need little money to start your own business. There are also no costs for renting premises, warehouses and other fixed costs.
2. Possibility of doing business on the Internet. Since the end of the twentieth century, more and more consumers, manufacturers, and businessmen have been making purchase and sale transactions on the World Wide Web. Doing business online is an undeniable advantage of business.
3. Product quality. Thanks to the peculiarities of MLM marketing plans, companies have the opportunity to allocate large sums for the production of quality products compared to competitors who use traditional marketing to promote goods.
4. Training programs. To develop the skills of sales agents, direct sales companies introduce training programs that include books, CDs, seminars and a variety of trainings and presentations. This information allows you to develop not only in sales, but also contributes to personal growth, improvement of family relationships, etc.
5. Part-time employment. The opportunity to work in your free time and at the same time have income from your main activity.
6. affiliate program. The sponsorship (affiliate) line is interested in the success of the distributor. More experienced partners support, help and advise newcomers in every possible way. Relationships are built on equal terms, regardless of income.

As you can see, there are significant advantages for which you should start this business. We also suggest you read the article “”, perhaps you will find useful information there.

Disadvantages and disadvantages of network marketing

Let us now consider the main disadvantages:

1. Reputation. Due to the lack of restrictions and selection of agents, sometimes new entrepreneurs conduct business incompetently: they impose products and the business itself, give false information and thereby compromise this type of activity in every possible way.
2. High likelihood of deterioration in relationships with friends and family. The majority of the population prefers to work for hire. If you run a business without an office, warehouse or employees, friends and relatives have a negative attitude towards this business.
3. Slow or no business growth. As a rule, an entrepreneur receives the first significant results within a period of six months to two years, subject to systematic work and training. A very large number of distributors have not been successful in this business.
4. The vast majority of proposals for cooperation are rejected. With active participation in building a business 80 — 95% of the work does not bring results.
5. Only a few entrepreneurs achieve significant success. On the path to success, a sales agent encounters many difficulties, which require perseverance, education and self-improvement to overcome. Not everyone is ready to overcome all possible obstacles.

Above we presented the main disadvantages and disadvantages of cooperation with MLM companies.

9. Rating of network companies in Russia - list of the most popular MLM companies 📑

The first mentions of network marketing in Russia are dated 90s of the twentieth century and are associated with the company " Herbalife" The company's products were rapidly distributed throughout the country. Tempted by the possibilities of new business, thousands of people decided to cooperate with this organization. Expecting quick success many distributors suffered collapse , attributing to the fact that the activities of this company are illegal .

At the same time, many financial pyramids have appeared in our country that have an external resemblance to MLM companies. All this affected the reputation of this type of activity.

Despite these factors, the direct sales business in Russia has grown significantly in the coming decades.

By the beginning of the new millennium, all the global leaders in network marketing were present on the Russian market.

In this table you can consider the most popular network companies in Russia.

The table shows that the world leader in this industry is the company “ Amway"in Russia it ranks only third in terms of sales.

Corporations have the largest market share " Avon" And " Oriflame».

Is it possible to make money in MLM, what do you need to make money in network marketing?

10. Is it easy to make money in network marketing, and what is needed for this 💰

Due to its advantages, network marketing is a fairly popular activity.

According to the Russian Direct Selling Association based on the results of the last five years 6% population was employed in business based on multi-level marketing.

Distributors' earnings vary significantly, which does not depend on the level of education, profession, number of children, marital status and other factors.

A small percentage of sales agents achieve results quickly and easily. This is because success requires knowledge and experience.

To achieve significant results in business, you should follow the following tips:

A dream is the main factor that allows an entrepreneur to overcome difficulties and achieve success. To maintain motivation, you should “break the path to your dream” into intermediate goals.

A sales agent must realize that the result of his activities depends only on his efforts and dedication to the business.

Tip 3. Learn and develop

Most network marketing companies have training programs. They include business literature, CDs with recordings of speeches by business leaders, and training seminars are also periodically organized.

To be effective, you should write a list of your acquaintances in a notebook and update it periodically.

Tip 5. Present business and product

Based on the list, you should “get in touch” with potential partners or clients. The number of presentations influences the final result.

Tip 6. Consult sponsorship line

It's better to learn from other people's mistakes. Top line partners have more experience and are always ready to help the distributor, as they are personally interested in the success of the entrepreneur.

Tip 7. Build a business based on the developed strategy

A stable, long-term result can be achieved only if there is a balanced development of the “width” and “depth” of the structure.

Tip 8. Repeat the actions and methods of achieving success used by higher-level partners.

It is also worth noting that downline partners also observe the distributor and will repeat his actions.

11. FAQ - answers to frequently asked questions

Before engaging in multi-level marketing, potential distributors have a number of doubts and questions.

Question No. 1. Should a beginner start?

It's worth it, but you shouldn't expect quick success. No risk of being in the red, small initial investments, high-quality educational programs, help from partners - factors that can influence success.

Question No. 2. How to make your first money in network marketing?

When starting cooperation with a “network” company, sales agents strive to do so as quickly as possible. The activity should begin with simple retail sales.

Buying a product at a wholesale price and selling at a retail price - distributor makes money . First of all, products should be offered friends, relatives and acquaintances, since they will be more loyal to an inexperienced seller, and in the future they will be able to become regular consumers or business partners.

Question No. 3. Network Marketing: Is it Legal?

The direct sales business is a legal activity, which is confirmed by the very fact of the existence and development of these companies for decades.

Many illegal structures disguise their activities under the guise of network marketing companies.

Important! The potential client is asked to deposit an initial fee, pay for mandatory training and purchase a minimum quantity of goods. This is accompanied by the absence of receipts and invoices confirming the purchase of products or the provision of services.

Also the consumer should be wary of poor product quality or lack thereof.

Network companies offer good quality products and do not require significant financial investments to open their business.

Question No. 4. What reviews does network marketing have - is it possible to really make money from it?

There are many different reviews about network marketing on the Internet.

Here are some of them:

Review 1."At first 2000s a colleague at work suggested trying the company’s products “ Oriflame" I really liked the product and became a regular customer. A couple of months later, she invited me to become her partner in business and told me how to make money.

At the first stage, I managed to have a fairly large income, but then everything changed. I am raising two children alone, and as my network grew (at that time I had 34 people on my team), it became increasingly difficult for me to combine household chores and business.

As a result, income began to decrease, and at a certain point 12 people “left” my network. Later, I decided to switch to the classic business. In order to have great success in this direction, you need a lot ambition, determination and activity. One girl from my structure achieved great success in " Oriflame" I don’t regret anything, the knowledge and experience gained at that time allow me to now successfully do my business.

Olga, Samara»

Review 2.“In the second year of university, our stream was “swept by the virus” of network marketing. Earning opportunities from " Faberlic» fellow students discussed everywhere. I've never been a fan of sales, but I still decided to give it a try.

Over time, I realized that it’s hard to make money in this business; the bulk of the income from your turnover goes to your higher-ranking partners. To achieve success, you must be able to sell products.

I do not advise anyone to engage in network marketing.

Alina, Rostov»

Review 3." IN 2009 I had to close my own business and ended up owing money to the banks $40,000, of which 2 000 it was necessary to pay every month. I urgently needed to get out of this situation. I was in search of a solution, considering various options for making money.

Unexpectedly, an old friend, whom he had not seen for many years, approached me with an offer to do business in collaboration with the company “ Amway" At the presentation, he told me about the possibility of decent earnings in a year or two. But I was told as quickly as possible that I should focus on personal sales of expensive products that have a significant margin. So I started in business by selling water filters and cookware sets.

I have enough wealthy friends and, to get out of my situation, I had to actively promote the products. During my first year in network marketing, I spent about 2-3 meetings with clients, and on weekends - 6-7. The result was not long in coming - I paid off my debts and, without actively “attracting” partners, achieved 9 – 12 % levels of achievement.

Next, I studied the company’s marketing plan in more detail and began to more actively develop my own network of distributors. I'm currently at the level Platinum Independent Entrepreneur.

I agree that making money in this business is not easy, but if you have the motivation, then anything is possible.

Andrey, Peter»

Question No. 5. How to distinguish network marketing (MLM business) from a financial pyramid?

Most conduct their illegal activities under the guise of direct sales companies.

The table presents the comparative characteristics of these organizations.

Question No. 6. How to choose an MLM company to start?

Beginners who consider the direct sales business to be a suitable activity are faced with the question of choosing an organization for cooperation.

For an optimal solution, a number of aspects should be taken into account:

• Reputation and age of the company. It is better to choose an organization with a good reputation and significant experience in this field.
• Products. The basis of any trade is the product. Its quality will directly affect the result. It is also worth paying attention to the features of the product. It is important that it ends after some time, and clients turn to the sales agent again. The diversity of the product range is also a significant factor when choosing a company.
• Tutorial. The education system has a significant impact on business success.
• Availability of the company's business on the Internet. Not being online significantly reduces opportunities for business growth.
• Business plan. It is important to evaluate the company's marketing and sales plan against the criterion of fair distribution of the organization's profits. You should also find out if there are restrictions. The best type of business plan is " multi-stage plan with compartment».

Question No. 7. I want to try myself in network marketing at Oriflame, Faberlic, Amway - what do I need for this?

In order to become a distributor of direct sales companies, it is necessary to draw up a cooperation agreement with this organization; the age of the applicant must be at least 18 years old.

To register an agreement, it is necessary for the newcomer to have a sponsor who will help prepare the documents.

12. Conclusion + video on the topic 🎥

In recent decades, various methods of product promotion have been rapidly developing in Russia, one of which is network marketing. Despite its controversial reputation, this method of trading has become convenient and popular among customers.

Possessing thorough information about what constitutes direct sales business , the consumer can make the best decision about its use - to access quality goods that are not available in retail stores, receive additional income or develop their own online business with the prospect of significant income.

In conclusion, we also suggest watching an interesting video about online business:

MLM or network marketing is a way of managing a business based on creating a network of distributors who, in addition to selling products, have the right to attract new distributors to the MLM company. Income in the MLM business is always calculated as a percentage of the distributor’s turnover and an additional bonus for the turnover of the invited group of distributors.

The history of the MLM business is associated with the name of Karl Rehnborg, who in 1927 began creating food supplements, the basis for which was alfalfa, which contains many vitamins, minerals, protein and other useful components.

Information about useful supplements became widespread (Rehnborg offered supplements to his friends, and they in turn offered them to his friends), more and more people asked for a meeting with Rehnborg, but he could no longer satisfy all requests. And then a brilliant idea came to his mind. Rehnborg invited his friends to provide information about the supplements to their acquaintances, and if they bought them, he promised to pay a commission. He also decided to pay those acquaintances of his friends who, in turn, would promote his product further, using their connections.

Thus Network Marketing (MLM) was born, in 1934 Carl Rehnborg founded the California Vitamins company, which he then renamed Nutrilite Products in 1939. The further history of MLM (MLM) is connected with the names of Nutrilite employees Rich De Vos and Jay Van Endel, who, after ten years of successful business in the structures of Rehnborg, created their own company in 1959, called the American Way Corporation, abbreviated as AMWAY. .

AMWAY still exists very well, it is one of the world's largest MLM companies, and NUTRILITE is still part of its structure.

In Russia today there is a generally negative attitude towards the MLM business.

Reasons for negative attitude towards MLM business:

Incorrect conduct of the MLM business - persuading people to join the business, pursuing candidates, attributing non-existent, mainly (medicinal) properties to the products of MLM companies. People meeting such MLM entrepreneurs along the way form an opinion about the business as a whole;

High expectations. Often, when presenting an MLM business, they present it to us as a “magic pill”, just sign the contract and everything will go by itself, like clockwork, millions will flow into your pocket as stable passive income, and you will sit on the ocean shore and rule the empire. And it turns out that the MLM entrepreneur simply hasn’t worked hard enough physically, and has formed a negative opinion about the business in general;

Beginning MLM entrepreneurs have a misconception about the meaning of MLM business. MLM business is built on turnover, that is, when doing MLM business, you need to sell and attract other people to sell the product. Oddly enough, not everyone understands this;

There is also an opinion about the existence of a cult of money and wealth in the MLM business. I think there is no need to generalize; in any business you can find people who “languish over gold”, who work for an “idea”, who work for “interest” and many others.

But it is enough to understand that in MLM business is possible:

Be a client of an MLM company and buy quality products;

You can sign an agreement with the company and buy products at a discount;

You can earn extra money in your free time from work, offering products to your friends and acquaintances; over time, one of your regular customers will become your partner, this way you can earn several thousand and even tens of thousands of rubles;

You can engage in MLM business professionally, constantly learn business skills, communication skills, technical innovations, etc. Of course, if you engage in an MLM business professionally, like any other, you will have to work a lot, learn a lot, invest your time and money and all your creative potential, but you can also earn a lot - up to tens of thousands of dollars.

But for some reason no one thinks about the colossal benefits of MLM business:

The company grants you the right to work on behalf of its promoted brand;

You and only you choose for yourself the degree of your involvement in the business, the degree of effort, the amount of time and money invested;

And most importantly, you get the opportunity to build a truly large business, acquire a new lifestyle for yourself and your family, while the initial investment will be disproportionately small compared to a traditional business. It is impossible to build a large traditional business without solid initial capital and without connections with officials.

If you do not want to become victims of scammers, then you need to know exactly what an MLM business really is. Because it is too easy to fall into the trap of a financial pyramid and end up without money.

In this article we will look at how to distinguish a real MLM business from financial pyramids. And is it really possible to make money in MLM?

And first, let's figure out what the essence of the MLM business is, and why it is so disliked “by the people.”

What is MLM business in simple words

The name "MLM business" comes from the English MLM - "Multi-Level-Marketing" (literally - "multi-level marketing"). Other names for this same phenomenon are network business, network marketing and the new “fashionable” name - “network marketing.”

This designates one of the options for organizing marketing - a distribution scheme for the company's products. A classic business is when there is a store where people come to buy our product. A network version of a business is when many people take our product and distribute it among their friends.

That is, in MLM we do not hire employees on a salary, we do not rent stores. Our task is to recruit as many volunteers as possible who will distribute our products themselves, receiving a percentage of sales for this.

In addition, these volunteers of ours will recruit their own volunteers. And then they will already receive a percentage not only from their sales, but also from the sales of all their “recruits”.

Who invented MLM?

MLM as a type of marketing was invented, of course, in America. The first organizers of online companies realized that people are much more willing to buy certain categories of products when they are recommended to them by their friends. These are products such as floor cleaners, shampoos, cosmetics (note that almost all of these are products “for women”).

And, in principle, it turned out to be a good thing. The goods of network companies were usually cheaper because there were no expenses for renting premises and salaries for employees. And in quality they often surpassed analogues from stores. Thus, networkers were able to bypass the fiercest competition in the household goods market.

But here's the question. Why do “the people” dislike this same MLM and network business so much?

Why do they dislike MLM so much?

If you don’t believe that MLMs are not loved, look at the advertisements they advertise in newspapers and on websites. They will never write directly - they say, we are recruiting people for a network business, come to a meeting at such and such a time.

No, everything will always be hidden there and disguised as “opening a branch of the world’s largest company” and under “need an assistant to the head of a business, I’ll teach you everything, salary from 50 thousand per month.” Why such secrets and enticements? And because if you directly write that you are recruiting for MLM, no one will come to you. Because they don’t like MLM =)

And there are two main reasons for this.

Reason #1 - Destruction of the foundations of relationships

Have you ever wondered why we (people) recommend anything to anyone? Why should we tell our work colleague where they make delicious sushi? Why should we advise a friend which car is better to buy? After all, this, in fact, does not concern us.

But nevertheless, we really want to come running from the other end of the city, if someone needs our recommendation, and at least force him to listen to us. What is the reason for this behavior?

You might think it's because you're such a kind and nice person who just wants to help everyone around you as much as possible. But actually it is not. We are ready to recommend with pleasure, because in this way we dominate those to whom we recommend something.

Judge for yourself - we have a certain Knowledge. which the person opposite us does not have (be it knowledge of where you can eat sushi without getting poisoned, or knowledge of which car has better characteristics). And by sharing this Knowledge, we show that we are better. Yes, yes, we are better and higher and smarter than a person who does not possess this Knowledge.

And the higher the result a person gets on our recommendation, the stronger our dominance will be. Accordingly, we sincerely try to recommend only the best. And the one who asks us for advice subconsciously feels all this, and therefore believes our recommendation.

MLM should be based on this principle, but here money spoils the whole thing. When a networker we know recommends something to us, we always have a suspicion that he is doing it solely for his own monetary gain. Even if he really likes the product and would recommend it for free. But an unpleasant aftertaste remains.

Thus, MLM interferes with the fundamental set of unspoken laws of human relations (it is also called the “social contract”). And this destroys friendships, friendships and even family relationships. And that's why people don't like him.

Reason #2 - Overmotivated Zombies

If you have ever met a real “networker”, then of course you understand what I’m talking about.

The basis of MLM marketing is strong training and strong motivation of network participants. People by nature are very lazy and timid creatures. Getting them to sell something to strangers and people they barely know is not an easy task.

And therefore, every new recruit undergoes intensive training, where the emphasis is on motivation. They are brainwashed with promises of huge profits. They are told that they are the chosen ones, and everyone else is only jealous of them. And they are also very convincingly told that their product is almost the most ingenious invention since the light bulb.

And people are gradually losing their minds. Can you imagine what it’s like to be the only one who knows the whole truth (that the best job is a network business, and the best cream is Oriflame), but no one believes you and shies away from you like the plague?

As a result, it becomes very difficult to communicate with networkers. All they talk about is the network business and their product. All they do is try to pull everyone they meet into their structure, to the “light side”.

Again, this leads to rifts in friendships and family relationships. That's why they don't like MLM. In people's minds, getting into MLM is the same as getting into some kind of sect. And those who fall into the “trap” will soon begin to sign over their apartment to some of the next “Herbalife witnesses.”

But there are, of course, positive sides. If you don’t lose your head, then an MLM business can be an excellent development option for you. You will keep your friends and find new ones.

How much can you earn in MLM?

Networkers love this joke:

A man comes to the city and sees that on one side of the street all the houses are large, beautiful, well-groomed. There are expensive cars next to the houses, and all the people walk around cheerful and happy. And on the other side of the street the houses are small, dirty, dilapidated. All the people are in rags and eat rats.

He approaches one of these dirty houses and asks a passerby why the houses opposite are so beautiful, but here they are so bad.

The passerby replies: “Oh, there live networkers across the street who are involved in MLM.”

The man asks, “What are you doing?”

Passerby - “We don’t believe them!”

The joke is funny. But, unfortunately, as in any other type of business, most people involved in MLM do not have any income at all. A very small percentage of networkers have an income comparable to the usual salary of a qualified specialist. And only tenths and hundredths of a percent of all millionaires make really big money.

How to develop in MLM correctly?

Yes, you can earn money in MLM, and even a lot. But only on condition that you really work. And to earn money, you will mainly be engaged in recruiting people into your structure, and not in selling the product itself.

If you want to develop in network marketing, you need to conduct a huge number of personal meetings every day. And we also need to ask our friends to organize parties at their home, and bring their friends - for whom we could hold an “impromptu” presentation of our product and business.

And most likely it will take you several years to build a large and loyal structure with which you can have large incomes. Therefore, please do not be fooled by promises of quick money. Like everywhere else, you have to work here.

And most networkers eventually understand that MLM is not the option to which they would like to devote their entire lives. Therefore, they go into other types of entrepreneurship. But they retain the skills they acquired while working in MLM.

And today there are projects that masquerade as MLM, but in fact are something much worse.

How to distinguish MLM from a financial pyramid

If you haven’t noticed yet, today there is a huge offer on the Internet to participate in some super innovative projects. As a rule, we are talking about decisions that will change the whole world in some area. In the field of housing, in the field of transport, in the field of the Internet or in the field of telecommunications.

The only problem is that this ingenious solution is still under development and cannot be used yet. Or you can use it, but it is so inconvenient, crooked and weak that it loses even to free analogues.

And you are offered to either buy a share in this project, or buy a product and pay for it every month. And people do it, and with great joy. The question is - why? And then, they can attract new members who will also pay every month, and you will receive some percentage from their payments.

Almost like MLM, but with one difference - there is no specific product that you could use. That is, you pay not for the product, but for the opportunity to receive money from those who are below you in structure.

And such an organization is possible precisely due to the “virtuality” of the proposed product. It does not need to be transferred or stored. You don't have to use it at all. The main thing is to attract more and more new participants “for yourself”.

How financial pyramids collapse

All these projects always end the same way. One day, people who can be attracted to the pyramid simply run out. And then the participants in the “lower layer” stop paying their monthly fees. Why should they pay someone if no one pays them (because there is no one below them)?

Then the penultimate layer stops paying because the last one does not pay them. And so on until the pyramid burns out to the very top.

Some pyramids appear and disappear in a couple of weeks. Some last for years. But the main thing is that they always have the same ending. And if you are offered participation in some kind of “network business” where there is no product, or it is very complex (too innovative for a mere mortal to understand its idea) - most likely you are being lured into a financial pyramid.

Here are some more indirect signs of a financial pyramid:

• Promises that there will be no need to sell anything or recruit anyone.
• Mandatory monthly payments.
• Inability to personally check the quality of the product (or poor quality of the product).

In general, it is the quality of the product that distinguishes a real MLM in the first place. Recommendations are certainly good. And your friend will probably buy something from you one day if you recommend it to her. But for her to pay you a second time, she needs to really like the product.

Therefore, pay attention to indirect signs and do not fall for scammers. Otherwise, they feel like fish in troubled waters on the Internet. Is it really possible to do a real network business via the Internet?

Is it possible to do network business via the Internet?

This is the golden dream of any networker. You don’t need to go to any personal meetings, you don’t need to recruit anyone. Stay at home, spread links to your product on social networks and websites - collect the cream.

But it seems to me personally (and this is just my personal opinion) that network business in its original understanding cannot exist on the Internet. There are two main reasons for this:

1. MLM business is a business of recommendations. We recommend the product to our personal acquaintances, and they recommend it to their acquaintances, and they recommend it to their acquaintances. This is how the structure is assembled. And if we recommend a product to everyone, then this already becomes ordinary advertising.
2. MLM business is based on a high-quality physical product. That is, you can touch it, try it. And you definitely need to give the buyer the opportunity to “touch” it before buying. Accordingly, there is no escape from personal meetings.

And if you really don’t want to go to personal meetings with anyone, but work via the Internet, then it’s better to engage in affiliate programs. This is the same as MLM, but you simply advertise a product and receive a commission on sales.

That is, MLM via the Internet is possible. And it’s called “earning money from affiliate programs.” Look at my article and a lot will become clear to you.

By the way, there are also multi-level affiliate programs. That is, you can also earn money there by attracting new partners, and not from personal sales. Watch my video about how I make money from affiliate programs (opens in a new tab).

Conclusion

I in no way want you to get the impression after reading this article that I am against MLM business. In fact, I'm a big proponent of people starting to take responsibility for their own income, and trying to provide for themselves through their own efforts, rather than relying on someone else.

And for starting an entrepreneurial career, network marketing is a very good option. You will gain experience, make your first bumps, and learn to resist public pressure. The main thing is to approach everything head-on and look at things objectively.

Otherwise, there is a high probability that you will be disappointed in ordinary MLM, and instead of using the acquired skills to open your own business, you will get bogged down in financial pyramids and financial bubbles.

Don't forget to download my book. There I show you the fastest way from zero to the first million on the Internet (a summary from personal experience over 10 years =)

See you later!

Yours Dmitry Novoselov

MLM business, or network marketing, began to conquer the Russian market back in the 90s of the last century, and still remains in trend, attracting new entrepreneurs to its ranks. Thanks to this form of sales, we distribute all kinds of additives, cosmetics, detergents, dishes, etc. According to the Direct Selling Association, 43.5% of the market is occupied by personal care products, 29%- products that promote a healthy lifestyle. 11.2%- clothing and accessories, 9.5%- household chemicals, 5% - household goods and others. But, despite the fairly high demand for goods, and the growing turnover of companies engaged in network business, our attitude towards MLM is very ambiguous.

• What is attractive about MLM business?
• Why people don't like MLM: 3 reasons for distrust of business
• How to start a business from scratch in MLM
• How to choose the right company to work for and start earning money
• 3 tips on how to make money with network marketing
• Internet network marketing: a second wind for business?
• MLM business trends 2018
• How to develop a business mindset using MLM

On the one hand, hundreds of thousands of people come to the MLM business who want to earn money and build a career: at the end of 2017, 3.8 million people were engaged in network marketing. With another- They try to avoid network marketing and often do not consider it as an opportunity to make money, preferring a stable job with a stable monthly payment. The thing is that often people have no idea about the true face of network marketing. Let's try to figure out what MLM business is today, what positions it occupies in Russia, whether it has prospects and what awaits it in the future.

What is attractive about MLM business?

The name MLM comes from the English multilevel marketing, that is, multi-level marketing, sales. Network marketing is a certain type of sales of goods and services by independent distributors. Each of them can not only engage in sales, but also attract new partners, and they, in turn,- theirs. Thanks to this approach, a “network” is formed, each participant of which can receive interest both from their own sales and from the sales of people they attract. The larger the distributor network- the higher his income.

Let's say you have a store that sells cosmetics. You can only make a profit when buyers come to you. Opened - earnings will also depend on its customer attendance. Network marketing will provide completely different opportunities. People themselves will order the necessary goods, buy them and distribute them among their friends. It is for this reason that it is so attractive to companies producing certain products. "Dinosaurs" of the market, such as Avon, Mary Kay, Oriflame, Amway do not have worthy competitors for the simple reason that their products are often sold out almost immediately, even at prices that are several times higher than “store prices”. Sales through stores are fraught with competition and unnecessary problems that can be solved through network marketing. The manufacturer does not need to spend money on advertising, renting retail space or incurring other expenses. But for networkers, the big plus is that companies not only earn money themselves, but also give everyone the opportunity to earn money.- those who like their products.

In network marketing you can:

- have a flexible work schedule;

- get by with minimal financial investments;

Make a career;

- create passive income;

- transfer the contract by inheritance or sell.

But despite all the advantages, not everyone manages to achieve success in MLM.

Millions on MLM: how American multi-level marketing differs from Russian

American MLM marketing differs from Russian only in the attitude of representatives of two nationalities towards it. Americans most often consider network marketing to be a side hustle or second job. They are ready to devote some time to it, but not their whole life. If things are going well, and there is not enough time to manage a multi-level company, a few leave their jobs and engage only in MLM business. Some people can actually become millionaires through MLM. But this is only the top of the pyramid, at the foot of which there are thousands of less successful entrepreneurs.

In Russia, newcomers often try to invest all their strength and resources into a new business and constantly run around among acquaintances and strangers, offering goods and trying to sell them at any cost. To build their own network, many lack the skill or desire. Beginners mostly see only a system of bonuses and bonuses plus the opportunity to purchase goods cheaply.

Network marketing today, like any other business, requires a reasonable approach and a clear plan of action. And one more thing: if abroad the times of trials of network companies are a thing of the past, and business has become completely legal and profitable, then in Russia the possibility of encountering fraud still exists.