Direct Network Marketing

What Is Direct Network Marketing?

In direct network marketing, products and services are sold by a company's distributors directly to customers. There are no multiple stops for the product on a lengthy distribution chain from manufacturer to wholesaler to various middlemen to the retail store to the customer. Additionally, distributors are compensated for recruiting other people to be part of the company's sales force. These people are a distributor's team or downline. The person who recruited the distributor and those above that person are known in the industry as that particular distributor's upline. The distributor's income is based on his profits from the products or services that he sells and his commission on the products and services sold by those in his downline. In other words, direct network marketing is synonymous with multi-level marketing (MLM). These types of companies are often associated with pyramid schemes, illegal scams that enrich the people at the top at the expense of the people below that top tier. But many MLM companies have become household names because of the quality of their products and the legitimate opportunity for financial success that is given to the people who make up the sales force. These companies have earned good reputations for offering quality products at reasonable prices and are rewarded with a dedicated sales force and loyal customer base. Often people sign up to be a distributor for a direct network marketing company because they already use and love the company's products. For example, an older individual may find that the vitamins and supplements purchased from a particular company help her feel better. She notices a difference in her overall health when she doesn't use the products. Her family and friends are constantly being told how great these items are and they want to buy them, too. This gal decides to become a distributor. By doing so, her own purchases are discounted and family members and friends can purchase items directly from her so that she's earning additional income. Perhaps one or more of the family members or friends, interested in selling the vitamins and supplements, will sign on as part of the woman's downline. The new distributor, without much effort, has joined a growing number of entrepreneurs who are building businesses using the direct network marketing model.

Though this is no get-rich-quick-scheme, some motivated and ambitious people can become wealthy. But these people will be the first to admit that the process took time and effort. In the above example, the older woman is content to earn money from occasional sales and commissions from the downline. But let's say one of the family members is a college athlete who feels stronger and more energetic because of the vitamins and supplements. As a distributor, the young man promotes the benefits of the items to teammates and other students. Slowly and steadily, a customer base is built that provides the young man with some part-time income. He continues building this base and a downline team after college graduation and eventually realizes that the income from the direct network marketing company provides enough of an income to avoid taking a job working for someone else. The college graduate realizes that by putting additional time and effort into his own business that he will reach his financial goals. Several years later, this individual is financially successful and living the entrepreneur's dream. As an additional blessing, the sales generated by this young man continue to benefit the older family member who recruited him she receives a nice commission check because of her family member's success. The wise King Solomon wrote: "For a dream cometh through the multitude of business; and a fool's voice is known by multitude of words" (Ecclesiastes 5:3). The dreamer will succeed with effort, not with a lot of vain talking about reaching a dream.

In the above example, the distributors signed on to sell products that they used and found beneficial. They would have continued buying the product from other direct network marketing distributors if not selling it themselves. But other people see the MLM industry as an opportunity to reach financial goals and still maintain a flexible schedule. For example, young stay-at-home moms are often looking for opportunities to bring income into the household, but they don't want to be away from the children any more than necessary. These young women want an opportunity that gives them flexibility while still providing a decent return for the investment. In looking over lists of direct network marketing companies, it seems that almost any product can be purchased through a distributor which means that these young women, and others with similar goals of balancing an income with flexibility, have lots of options to choose from. Someone who loves to cook may want to research companies that sell kitchen supplies. An avid reader may enjoy selling children's books. The fashion diva will delight in selling items such as jewelry or purses.

Before signing up with any company, however, an individual should ask lots of questions and do plenty of research. Some companies are household names and have national reputations for quality products. Though less research may need to be done on these types of companies, the individual should still find out the nitty-gritty details of compensation, sales training, and promotional support. Aspiring distributors should be aware of the business expenses involved even with a direct network marketing company. In addition to purchasing the products or services at wholesale rates, the distributor will be paying for samples, sales materials such as catalogs, office supplies, phone bills, travel, and advertising. These expenses need to be part of the profit calculation. One simple test of ensuring that the MLM is a legitimate company and not a pyramid scheme is whether a decent income can be made without signing up recruits and building a downline. Though the additional commissions from a downline are welcome income, a quality product being offered at a fair price should provide enough income for the distributor to earn a decent salary given the number of hours devoted to the business.