What is MLM (Multi-Level Marketing)? Top 10 MLM Companies (2023)

What is MLM Business & How Does it Work?

Multi-Level Marketing also known as the direct selling industry, is a marketing concept used by companies to sell products to consumers using a chain of distributors. When you join an MLM company you become a distributor and to get a commission or a profit you sell those company products to consumers.

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The direct selling business model eliminates the middle man such as suppliers, wholesalers, and retailers. Products are made available directly from the company to the distributors also known as members. Those members, through the word of mouth, bring more members which are referred to as downlines in his/her hierarchy.

This trend continues, which results in more and more new people in the company which makes the structure Multi-Level. With Network Marketing you get a commission based on your direct referrals and the group volume, depending on your company.

History of MLM (Network Marketing):

In 1949 two entrepreneurs named Rich Devos and Jay Van Andel joined an American healthcare company called Nutrilite. For the next 10 years, they continue their journey with the company as successful executives. Finally in 1959 after a decade both entrepreneurs realized that it’s not fair for employees who work their whole life and do not get what they deserve.

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So, they decided to start their own company called Amway with a product distribution system using the idea of Multi-Level Marketing. This system allows them to give a win/win situation to the distributors and the company by eliminating all the middle man.

Suddenly in 1975, the FTC (Federal Trade Commission) in the US decided to take Amway to the law court accusing them of a pyramid scheme business. The term Pyramid scheme comes when a business is operating with an illegal transaction without a legal product or service. This idea manipulates consumers with rewards to recruit more new distributors, paying old members from the revenue generated from the new ones.

1979 Amway wins the case and created the wave of the Network Marketing industry in the world. Since then many companies have started using the concept of MLM to distribute and generate revenue with direct selling. In the last 60-70 years many Multi-Level companies have come and gone, but few of them survive long enough because of lawful & honest business conducts.

Is Multi-Level Marketing Legal?

Multi-Level Marketing Business is completely legal provided the companies abide by the FTC terms or the government guidelines. Network Marketing companies which follow lawful conduct under section 5 of the FTC act, with a legitimate compensation structure with a product or services are legal.

However, there is much confusion concerning pyramid schemes, and MLMs, since many companies enter the market with deceitful practices. In fact, the pyramid structure is legal and also considered one of the most solid structures concerning businesses.

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Every hierarchy in businesses across the globe has a pyramid structure, starting from the CEO to CFO, Directors, Senior Managers, Managers, Executives, and so on. If the pyramid structure is illegal, every business has to be illegal too. An MLM pyramid structure becomes illegal when companies try to lure people with unrealistic schemes.

Such an illegal pyramid scheme pays old distributors with the revenue generated from new distributors without a legal product or services, in exchange for the money. And hence, when the flow of new distributors joining the company stops, the payout will also stop. Many such companies have created a bad impression of some good companies in the direct selling industry.

Why Do People Hate Multi-Level Marketing (MLM)?

Well, not only in the Network Marketing industry, you will find haters everywhere. When you are dealing with Millions and Millions of people, how in the world can you satisfy everyone? That is Impossible. But considering the fact that MLM is one of the most controversial Marketing concepts in the world, let’s see both sides of the coin.

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On one side the Direct Selling industry is highly regarded and preferred by big entrepreneurs like Robert Kiyosaki, Bill Gates, Tony Robbins, etc. On the other side, there are entrepreneurs who are completely against it and will not join any MLM companies even at gun points.

The reason why many people hate it may be because of many reasons. Some of them might be:

• They hate selling products and services to people

• Many of them got cheated by illegal Ponzi schemes

• Some people face rejection after rejection and never succeeded.

• You invested a lot and never got a penny back.

• People think products are expensive and rip-offs.

Whatever the reason might be, some people think it’s the best and some think it’s a rip-off business. I myself am not involved with any MLM companies and I use technology to build a passive income through blogging. 

But I still considered some of these Multi-Level Marketing companies and their concept to be the best to create passive income if you are good with people. Anyway, success and failure, all depend on the person who is in the game. You and your action will ultimately decide who you become.

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Top 10 MLM Companies In The World (2023):