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07 Sep

The Status of Network Marketing/MLM in India

Before we discuss or try to understand the current situation of Network Marketing /MLM or Direct Selling Industry in India, it is important to understand the Industry first.

A simple definition of network marketing or Multi-level marketing (MLM) is that it is a marketing strategy wherein a company does not hire sales force or marketing team to market and sell its products. Instead, they have independent representatives who use their personal network to promote the goods and services of the particular company and make a certain percentage as commission on the overall turnover made by them and their team. Network Marketing enables the company to reach its potential customers that it might not otherwise be able to reach with a traditional online or offline marketing strategy.

Network Marketing, also known as Multi-Level-Marketing is actually a part of Direct Selling Industry. Direct Selling companies remove the traditional distribution channels in between the consumers and sell their products directly through their independent representatives. In this industry, a person can be a consumer, distributor or a network marketer. Consumers are the ones who only use the products and services from the Direct Selling Company.  A distributor is typically someone who is a consumer and also sells the products and services directly to people and earns retail commission for every sale he makes. Network Marketer is not only a distributor and must sell products and services directly, but also refers and trains other distributors to sell the products and services and build their own businesses. They not only earn retail commissions, but also commissions for the total turnover generated by their entire Network.

This allows people to leverage other people’s effort and earn residual income. So contrary to the misconception, in network marketing, no one is paid for recruiting people, but for the personal sales one makes or for the overall turnover generated from one’s entire team.