What taxes do network operators pay? Who is a networker? What networkers

What is network marketing - the path to success or a mythical way to make money? Historical facts about MLM + pros and cons + TOP 5 companies in the Russian Federation.

What is network marketing?

Most people agree that these are some kind of fraudulent schemes that allow only a few lucky people to make money.

Such thoughts are related to the main problem of MLM - these are extremely high promises to clients.

Today, after reading the article, you will learn what the essence of network marketing operations is.

And, of course, you will get an answer to the question: is it possible to get real income using such a business scheme.

What is network marketing: historical background

Network marketing (MLM) in its current form was not a separate business development model. It appeared as a manifestation of the need to sell goods.

Who was the first to discover such a scheme and become the founder of a network business?

The founder of the first network sales scheme is Karl Rehnborg.

If you thought that this person had been building his policy for decades before opening a business, this is not so.

All complex things began with a banal approach.

Karl Rehnborg grew alfalfa on his property. At that moment, an idea struck his bright head:

“What if all the beneficial substances from alfalfa can be converted into an edible form for humans, so that its intake can increase the vitamin tone of the body?”

Undoubtedly, Karl had a good goal.

Later, he opened his own line of healthy food and began to offer it to friends and work colleagues, explaining all the usefulness of the new product.

It is interesting that out of the kindness of his heart (this cannot be explained by other reasons), Karl gave away goods just like that, without demanding any money in return.

Do you think there was an effect from promoting free useful products?

No. Nobody believed Karl. Everyone was very confused that a person could simply give away a useful, worthwhile product.

Carl Rehnborg came to an unexpected conclusion: if a nutritional supplement was sold at the average market price, and not just given to friends, demand would appear.

And it hit the nail on the head!

Karl began to use this business scheme, giving birth to one of the main tenets of MLM - mutual assistance and team support.

Rehnborg's friends began buying his product. They no longer thought it was a cheap deception for one simple reason - it was no longer cheap.

Then Karl began to look for new ways to expand his network of buyers. And again I came to the correct conclusion!

They consisted of a percentage of sales of the dietary supplement. Now do you recognize how a standard network company works? That's how it all started.

The result of the work of Karl Rehnborg:

• 1934 - Carl founded the California Vitamins company, thereby expanding the range of products sold.

In 1934, Rehnborg renamed the company Nutrilite Products.

The operating principle remains the same.

A whole network of product distributors, so-called partners, has formed.

Each partner attracted new employees by offering a percentage of product sales and dividends for quality organizational activities.

Karl Rehnborg is known throughout the world as the “father of network business.”

After a short historical sketch, it’s time to turn to the realities of modern MLM business.

What is modern network marketing: terms and definitions

Network marketing- This is one of the types of retail sales of products, based on immediate, direct interaction between sellers and consumers.

A feature of network marketing is the opportunity for each client to become a marketer.

It would be most correct to compare a network business with a multi-level dealership. MLM also consists of several levels.

It’s not for nothing that such organizations are often called financial pyramids!

Let's look at the main components.

The first stage of the pyramid: manufacturer – distributor

The first stage of activity under the MLM scheme is that the manufacturing company provides its products to the partner.

A partner is an individual who enters into a cooperation agreement with a supplier.

In the CIS, this agreement is not included in the labor format, i.e. does not provide you with social guarantees and has a special form of taxation.

The terms of the contract have similar clauses in any area of ​​network business:

• mandatory use of the manufacturer's products by the partner;
• attracting new partners to the organization;
• work according to a clear scheme defined by the organizers;
• unquestioning adherence to the moral principles and policies of the company;
• minimum monthly sales volume.

Subject to fulfillment of each clause of the contract, according to the MLM company, you get access to unlimited earnings.

Second stage: second-order partners

The whole essence of the MLM activity scheme begins with the second order.

Each partner who was invited by a participant of a higher level (1st level) performs all the same functions as his supervisor.

There is only one difference - part of the income from sales remains in the pocket of the superior curator.

Each participant ultimately strives to form his own structure, since this brings real income in the form of dividends from his own sales and the activities of his “subordinates.”

P.S. The word “subordinates” is deliberately placed in quotation marks: in the structure of network marketing there is no concept of line management.

All relationships between colleagues at various levels are based on mutual assistance - this is simply beneficial for all partners.

Third stage: entry-level partners

Lower-level partners differ from founders only in that they have less income. At the same time, functional responsibilities, as units of MLM, remain unchanged.

Work at the first or second level involves manifestations of maximum activity not in selling products, but in promoting and forming one’s own structure.

An intermediate summary should be made:

The interaction pattern of network sales involves the development of the structures of each employee.

The explanation of this process is very simple - each subsequent seller receives a percentage of sales + dividends from the entire network organized by him, in the form of a percentage of the profits of “new” participants.

Network marketing - is it that simple?

The concept of network business and MLM structures has negative associations, especially in the CIS, where people have learned from the bitter experience of financial pyramids.

This section provides the reader with a comprehensive overview of how network marketing works - an unbiased assessment of income opportunities.

Positive aspects of network marketing

Lack of a linear management system.

You work for yourself, which is very similar to entrepreneurship.

Close-knit team.

Each partner is interested in supporting “junior colleagues”, as this brings him financial benefits.

There will always be someone who can help organize your networking activities in the right direction.

Supervision is the basis of a network business.

Possibility of constant growth.

Another positive aspect of MLM.

Everything depends only on your abilities, including earnings.

Very significant experience in interacting with people.

This is a useful skill for everyday life and the development of your own entrepreneurial project.

A network business can be considered as a platform for the further implementation of your own.

Flexible schedule.

Representatives of MLM structures can devote from 10 to 30 hours a week to work, thereby combining it with work or study.

You must understand that an online business cannot replace your main source of income.

At least in the first stages of activity.

Negative aspects of network marketing

Possible destabilization of the network structure at any time.

This process may be triggered by the activities of individual partners, which will not meet the company’s standards.

You should consider the possibility of the collapse of the entire structure, since many years of experience of MLM participants proves this possibility.

Uncertain payment standards.

An example is the American company Starcom, whose representatives promised high payments to each participant.

The result is that the partners took out loans, pledged property, and the company paid less than 25% of the announced amount.

It is not difficult to guess what kind of material damage the clients suffered.

Opportunity to get into a financial pyramid.

Imagine a situation in which you invested in an MLM structure by purchasing an initial package of products.

Several months pass, the customer structure expands, they also make deposits and purchase products.

Another month passes, you have not yet been able to cover even your own expenses, since the product is not in demand.

The company is closing...

In this situation, approximately 50% of participants remain without profit.

They were unable to sell the product, but made a significant investment.

If you have never dealt with entrepreneurship, it will be very difficult to “stay” in the MLM operating mode.

The specificity of the activity lies in the constant moral tension, since you are responsible for your sales and the entire organized structure.

After analyzing the pros and cons of network marketing, we can assess the degree of risk of such business activities as quite high.

A special feature of working under a network scheme is constant responsibility for one’s own work + training and control of lower-level partners.

You already know what network marketing is and can independently assess the prospects for development in this direction.

If you are confident in your organizational talent, as well as the abilities of a manager and financier, it’s time to move on to choosing an employer.

Network marketing: choosing an employer

Your network income and confidence in stability depend on the right choice of employer.

First, we need to consider possible options for the Russian business space.

Top 5 Russian MLM market

Network company name	MLM market share (%)	Description of activity
	~30	Sale of cosmetics, pricing policy - acceptable for the middle class. Be prepared to meet a huge group of women and find your place in it. Networking activities at AVON are more suitable for girls.
	~30	Marketing area: cosmetics, souvenirs, healthy food. One of the leaders of the Swedish MLM market. The advantages include increased loyalty to your employees. Working in this network company will allow you to have a small but stable income.
	8	Stability is the most suitable word to describe the activities of the AMVAY company. The scope of marketing is from household utensils to dietary supplements. Unlike the companies mentioned above, it provides equal chances for development, regardless of the gender of the employee. This fact is derived from the wide range of products offered.
	5	A company that only accepts women. Specialization: cosmetics, beauty care products. One of the most experienced network organizations, but still not widespread on the Russian market.
	4.5	Large manufacturer of natural cosmetics. It is one of the most progressive companies on the Russian market and has a strong base for network marketing.

The main criterion for choosing an MLM company is experience in the market. The explanation is very simple: you will get the expected result, verified by others.

Working for “newbies” in the MLM market is dangerous, because you cannot be 100% convinced of the veracity of all obligations.

You can learn about the many benefits of network marketing from the video:

What is network marketing? After reading the article, you are already able to independently determine the meaning of this term.

Network marketing evokes a subjective attitude in every reader.

Only one thing can be said with 100% confidence - it is possible to make money working in the MLM system and you cannot argue with that.

A completely different question: will you be able to do this?

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MLM ( Multi Level Marketing) or network marketing is a method of selling products from the company that manufactured them directly to the end buyer. To promote and sell products, as well as disseminate information about them, the manufacturer attracts the consumers themselves (agents, distributors), who are offered various types of rewards in return. In turn, consumers who become sales agents also attract new members, which ensures the constant growth of the network.

Network marketing from a manufacturer's perspective

A well-built MLM business can quickly capture the market and build a stable network. The creators of this marketing scheme call the reduction in the final cost of the product for the consumer the basis for the success of promotion and the fight against competition. Thus, the production cost may differ from the final price in the store by 2-3 times. This markup is formed as a result of the formation of a complex structure of the traditional distribution channel, which includes dealers, stores and their service personnel, the presence of service centers and much more. By cutting them off, the network business reduces the market price without losing its own profit.

In addition, network companies do not have the problem of building and monitoring a management system, as well as selecting qualified personnel and motivating them. Training the necessary sales skills, attracting new employees and encouraging them to achieve high results is transferred to the agents themselves.

Another important advantage is the protection of products from counterfeiting and maintaining the required level of product quality. This is ensured by the manufacturer’s ban on selling online goods in regular stores or from mobile street counters. Thus, even if a counterfeit batch is produced, it is unlikely to be sold without attracting attention.

Initially, network marketing was also based on the goal of ensuring faster delivery of goods to the end consumer, however, taking into account the realities of the modern market, this side of the network business has become less pronounced.

Network marketing from a distributor position

When entering an MLM business, the average consumer receives three possible options for cooperation:

1. Attracting new sales agents (network expansion) and receiving bonuses;
2. Purchasing goods for yourself at a personal discount and without an agent’s markup;
3. Selling products with profit from the markup (the difference between the cost of goods at personal discounts and the final price for which the goods will be sold).

The work process itself consists of the following stages:

• Concluding an agreement with the company;
• Purchase of a starter kit of goods and promotional materials;
• Search for buyers and new distributors;
• Conducting presentations and sales at home, in a rented office, or during personal meetings in public places;
• Receiving commissions or bonuses from the company.

The relationship between the main company and distributors in network marketing is built according to a specific marketing plan, which determines according to what rules and calculation schemes remuneration will be paid. In practice, there are four main types of marketing plans:

• Classic or linear- all invited new network members (not buyers, but new distributors) are the main (first) line from which bonuses are awarded. From agents invited by first-line distributors, the original agent is not entitled to bonuses.
• Binary- is based on the fact that only two new agents can be attracted to the network, each of whom also invites only a pair of distributors. As a result, balanced (ideally) branches are formed, called “legs”. Such a marketing plan allows you to speed up the promotion process, but profit can only be obtained if the branches generate income in the ratio specified in the agreement (50x50, 60x40, 70x30).
• Stepped- the agent receives remuneration for all participants in the structure he has formed. After reaching a certain level, the founder of the branch gains access to elite bonuses and premiums.
• Matrix- bonuses are paid only when a certain number of distributors are attracted to the first line and the further construction of a given number of levels.

Also in practice, combined methods can be used, which is determined by the strategy of a particular company.

Agent registration system

An important component of building an effective MLM business is an accounting system that allows you to control the relationship between sponsors and distributors, track sales and purchase processes, and also calculate bonus deductions. Initially, when most companies used a linear marketing plan, the use of standard spreadsheets was enough to accomplish this task.

With the advent of more complex structures, the need arose to create specialized automated systems (Ritos, B2B-MLM, OKsoft, Easy MLM accounting) that allow working with a load of up to a million network participants. Large companies with substantial start-up investments often develop their own programs.

The difference between MLM companies and financial pyramids

Network marketing is based on building a pyramid in which each higher level receives income from system participants located at lower levels. This principle is also used by fraudulent organizations called financial pyramids. The fundamental difference between them and network marketing is the emphasis of MLM companies' policies on selling products that have real value, and not on attracting investments from new participants.

To distinguish network marketing from a financial pyramid, you need to pay attention to the following signs:

• The company offers high-quality goods that have value outside the company’s activities and are in demand (household chemicals, dishes, household appliances, clothing, vitamin supplements).
• You are given the opportunity to earn income only from the sale of goods, without recruiting new agents.
• The company enters into an agreement with each agent, drawn up in accordance with the law.
• The cash contribution is a payment for a starter package of products, and not an investment for participation in the project.

What is network marketing on the Internet

Adapting to modern methods of promoting goods to the market, network marketing companies very quickly mastered the Internet space, which is primarily used as a way to find new distributors and buyers of products, as well as as a means of remote network management. The following channels are used for this:

• Social media. Here, activities such as actively sending out offers about the opportunity to earn money in the MLM business, selling goods, publishing advertisements in thematic and popular groups, interacting and working on motivation with already attracted distributors can be implemented.
• Landing pages. This type of site allows you to both sell network marketing products and register for presentation meetings for future distributors, seminars and sales training.
• Portals for registered distributors (online stores). Provide the ability to remotely place an order and track the availability of products in the main warehouse.

Thus, the essence of MLM on the Internet remains the same as in offline business, but there is a significant plus - the target audience is significantly expanded and the scheme of interaction with it is simplified.

How much can you earn in network marketing?

The policy of MLM companies is based on accepting into the structure all applicants who have expressed interest, regardless of age, status, education and experience. However, when choosing network marketing to make money, few actually understand what it is, and therefore a very large number of disappointed participants who do not have the proper qualities and do not want to learn, believe that it is impossible to make money in this area.

When signing an agreement with a network marketing company, when asked about earnings, they will undoubtedly answer that the level of income depends only on you. This calculation is quite abstract, because your time and energy are limited resources. Starting a career as a networker is very difficult and your sponsor (higher distributor) is unlikely to tell you that according to statistics, only 5% of newcomers who come to the network achieve a stable income of $200 per month, only 1% reaches the level of $500 and only 0.5% has a chance receive $1000 after several years of hard work.

There is an opinion that you can get an acceptable income only in young MLM companies, since the chance of being at the top is greater. But the truth is that the founders of the company earn the most, as well as the very first distributors, who are mostly engaged not in sales, but in forming a network, building a corporate culture, conducting trainings and seminars. The rest of the participants in this business are constantly updated. Thus, every five years in large MLM structures up to 90% of distributors can change.

This means that if you are not a manufacturer who is ready to build your business on the network marketing model and among your friends there is no such entrepreneur who is ready to take you on as an assistant, there is no difference for you when to start working as a networker. If your goal is not millions, but several thousand dollars of stable income, the chances of achieving what you want are quite real.

Network Marketing and Legislation

Since network marketing is a fertile area for the development of fraud, in many countries around the world the activities of such companies are regulated by law. Thus, in the USA, in the MLM business it is prohibited to set sales plans for agents and name specific figures for possible earnings. Also, if you want to go out of business, the distributor has the right to return unsold goods, receiving at least 90% of its original cost.

Unlike Western countries, domestic network marketing is not only not controlled by the state, but also does not even have an appropriate definition in law. This huge disadvantage complicates the work of both distributors and manufacturers who want to sell through an MLM scheme. In the Russian Federation, the following format for legalizing activities is most often used:

• The manufacturer is registered as an ordinary enterprise (LLC, JSC, CJSC). At the same time, since the network can grow unlimitedly, registration of individual entrepreneurs is not allowed.
• Distributors are registered as agents (with payment of taxes by the manufacturer) or as separate individual entrepreneurs (with independent payment of taxes).

When considering the question of what network marketing is and how it works, we can note both positive and negative aspects. It is not an ideal mechanism for promoting goods for a manufacturer, but at the same time it demonstrates fairly high performance and really protects unique products from counterfeiting. As in any business, it requires significant efforts and entrepreneurial savvy from participants in the system to stand out among competing distributors and partners.

Probably, most of our readers have had to look for additional income, or even a place of main work, at least once in their lives. Moreover, this happens not only to young specialists who have just graduated from an educational institution. Everyone is now looking for work or part-time work, from schoolchildren to retirees. The reasons are different - some do not have enough money to meet basic daily needs, others want to save up for an expensive car or apartment, young people living with their parents strive to gain at least minimal financial independence.

The search for options usually begins with studying the media and sites that post job advertisements. Experience shows that there are almost no valuable offers there. And we simply don’t pay attention to some, believing that they are not worth it. Network marketing advertisements often fall into this category. The attitude towards this activity in our society is very ambiguous and predominantly negative. Epithets like “scam” and “scam” are not the harshest in relation to MLM (an abbreviation of the English term MultiLevel Marketing, which “in our opinion” means “multi-level marketing”). But is everything really so sad?

We are all adults and we understand that we can draw any conclusions only after studying the issue. And at the same time, many of us sin with unfounded assessments of this or that phenomenon, inspired by other people’s impressions or other people’s experiences (no matter, negative or positive, but alien). It seems that network marketing has fallen victim to precisely this assessment, although many do not even really understand its essence.

In a nutshell, this is simply one of the ways to promote and sell a product, which, like any other, has its own advantages and disadvantages, which we will look into today. This whole scheme is carried out with the help of a large number of people forming a network. Information about a product is distributed from person to person; there are no intermediaries who buy goods in bulk and resell them at an inflated price, and there is no expensive advertising. The significance of these factors will be explained with an example.

You all know “Orbit” chewing gum and have at least an approximate idea of ​​how much it costs in our stores. So compare - the cost of producing one package (10 pads) is a maximum of 50 kopecks, and we buy it hundreds of times more expensive. And all because, before it hits the counter, it passes through the hands of several wholesalers, each of whom makes their own markup (the manufacturer, naturally, also puts in his own). Add here considerable funds for advertising in print media, on the streets, television advertising, and you get the figure from the store price tag.

MLM, on the other hand, is a direct sales system, devoid of all these clutter, so goods in such networks are often cheaper than in retail outlets. And not because they are fakes or low-quality goods, as some people think.

The earnings of network members consist of a percentage of the cost of goods sold and rewards for attracting new people. That is, it is beneficial to involve newcomers in the network, but the process is not simple. Here you need to be a bit of a psychologist and be able to unobtrusively convince, conveying to the person the meaning of this sales technology and its inherent advantages.

By the way, many people compare MLM networks with such an unpopular phenomenon as financial pyramids. All this stems from a misunderstanding of the sales mechanism. But the mere fact that network marketing does not require large investments and does not promise fabulous profits in return for anything should suggest that this is not a “scam”.

Here, in order to achieve something, you need to work hard to create your own clientele. And profit does not always come immediately; for some time you may have to work in vain. But in any case, your efforts will bear fruit, and after a certain period of time you will begin to receive income. If you connect to a large network, then you shouldn’t count on a huge income, but you can definitely earn an additional 20-30 thousand rubles a month.

True, in order not to get burned, you need to be able to distinguish a real network company from a pyramid that disguises itself as one. Therefore, we advise you to consider a number of points before becoming a participant in such an enterprise and attracting friends and acquaintances to it:

1. Firstly, a real MLM company will offer you to sell a certain product (product or service) from the manufacturer’s catalog. You will not be forced to buy goods for future use; you will only work with products already ordered by your customers and pay for them on the day they are received from the warehouse.
2. Secondly, you should be wary of the requirement to pay membership fees or buy some “securities” that actually have no value outside this structure. You will also not be paid for the volume of products sold. You will be rewarded solely for the number of attracted members who have already paid the same membership fees. If everything is as we described, then you have ended up in a financial pyramid and you shouldn’t stay there.
3. And finally, thirdly. There are companies that offer to sell some equipment or software, but require you to first pay a certain amount for a certain package of services, without which you will not be able to work, and also to attract a couple of new participants. The mini-network that the participant creates in this way becomes the source of his income. To be honest, such schemes look doubtful, although, in fairness, it should be noted that such companies still have a product for sale. But it’s almost impossible to climb the career ladder here, even with the skills of a psychologist, leadership qualities and oratorical talent.

That is, the conclusion from everything stated above is obvious - you can engage in network marketing and achieve success in this business only if the terms of cooperation are clear and transparent, and there are no points that raise doubts.

1. Let's start with the fact that the MLM system makes the cost of goods (services) significantly lower for the buyer, since the price does not include advertising costs and intermediary markups.
2. The goods are delivered to the consumer in a short time due to the fact that logistics are well thought out and the company has networks of warehouses in different regions (cities, countries).
3. Counterfeits and product substitutions are excluded, which is possible during numerous resales. Network companies directly reach the end consumer and here falsification is almost excluded.
4. Employees involved in multi-level marketing have strong motivation, both from the point of view of the possibility of high earnings and from the point of view of building their own business.

Sellers' income consists of a percentage of sales, but not only that. They can also attract new people to work and receive rewards for their contribution to expanding the network (hence the name of marketing - network). Each network participant can, over time, having created a fairly wide client base, establish their own small network business. The MLM system is beneficial to all parties - the manufacturer, the consumer, and sellers (distributors).

For the manufacturer, this is a real opportunity to save on advertising without compromising the popularity of the product. The consumer is satisfied with fast delivery, guaranteed quality, relatively low prices, availability of samples and catalogs, as well as the opportunity to sometimes purchase goods that are not on store shelves.

As for distributors, they have the opportunity to build their own business without a large start-up capital, in an already prepared market (after all, the main network companies are widely known to the population) with a built-in sales system. In addition, they have the opportunity to obtain the necessary knowledge for free, since MLM companies pay a lot of attention to training and mentoring.

So, it would seem, everything is simple. But then why do many people who tried themselves in this business fail and consider it nothing more than a scam? Most likely, they either did not show the necessary persistence, or they simply lack the qualities without which there is nothing to do in network marketing.

We must admit that doing online business is not for everyone. And not because someone is bad, but someone is good. It’s just that this job, like any other, requires a certain set of qualities, without which it will be very difficult, if not impossible, to achieve success.

As a rule, people who do not accept the rigid framework of work “from call to call”, who are creative, sociable, persistent and who strive to build their financial independence with their own hands and according to their own understanding can advance to the highest levels here. If you want your life and your income depended solely on you, if you know how to set goals and persistently strive to achieve them, know how to communicate freely with people, have the gift of persuasion and the makings of a psychologist, and also strive to constantly improve the level of your education, then MLM is exactly what you need.

And I would like to say separately about patience and perseverance. The fact is that most of those who did not achieve results in this field gave up at the initial stage of work. This is not a job where, no matter what your success, you will still be paid your due salary. You need to be ready to work for some time for future results (even without making a profit), create a client base, and master the intricacies of the profession. But over time, your perseverance and your patience will definitely bear fruit, which will definitely please you.

Of course, you should start with choosing a network company. There are different options here - you can connect to a company with a name that is well known to people, where there is already an established, developed distribution network. The product of such a manufacturer is easier to sell, because people know it and trust its quality. But there is also a downside to this. It lies in the fact that in such a network you will find yourself very far from the top, it will be difficult to advance, and your income will not be very high.

Another option is to join a newly created company. Difficulties in this case will lie in wait for you from the very beginning, because you will have to convince people to buy an unfamiliar product from a little-known manufacturer, and buyers, as a rule, are reluctant to take such a step. But over time, when the company creates a name for itself, you will find yourself on the upper steps of the pyramid and will have a corresponding profit.

However, no matter which option you choose, first of all pay attention to the payment system and bonus program. The scheme for making a profit should be clear and transparent, there should be no penalties, and the employer’s requirements for sales volumes should be realistically feasible.

Having decided on the choice of company, think about the way to generate income. This could be direct sales, or it could be receiving passive income from attracting new members to the network.

Most often, beginners start by selling goods and this, in principle, is justified. By engaging in sales, they get the opportunity to get comfortable in a new niche, study the market and create a customer base.

But professionals advise to simultaneously engage in direct sales and attract new people to the network. After all, it’s not at all difficult, when telling a client about a product, to also tell about the prospects that your work opens up. Most likely, some people will also want to try their hand at this business in order to receive additional funds and the opportunity to purchase products at the purchase price.

When a certain time has passed and you have worked hard on creating your chain of distributors, you can give up selling altogether or do much less of it. After all, you will receive the main profit from the work of your subordinates.

Any activity has its pros and cons, and network marketing is no exception:

1. From a positive point of view, it is worth noting the opportunity to buy high-quality products for yourself cheaper by a third, or even more, of their “sales” cost, that is, the price that you announce to your clients.
2. The second advantage is that there is no need to invest your own money into the business as an initial contribution (membership fees), of course, if it is a legal network company and not a disguised pyramid.
3. We cannot fail to mention the possibility of free training. As a rule, companies, caring about increasing sales and expanding their network, spare no time and money to familiarize distributors with their products, effective sales techniques and rules, ways to build their own business to receive passive income, etc.
4. And finally, with the advent of the opportunity to conduct such business through online services, distributors no longer need to stop people on the streets, come to their homes, offices, etc. in search of clients. Now you can work remotely.

Among the disadvantages, perhaps, it is worth noting the fact that expanding the network leads to a decrease in income, and new partners receive much less than those who came earlier.

There is a lot more that can be said about network marketing, but we set ourselves the task of explaining the essence of this phenomenon as simply as possible and giving you the opportunity to orient yourself in how such work corresponds to your needs and the characteristics of your character.

I would like to hope that now you will be able to make a decision about participation (or non-participation) in MLM based on your own conclusions, and not guided by the reviews of former unsuccessful distributors. Good luck.

Traditionally, on the first Sunday of December in Russia, Networker Day is celebrated - a holiday for everyone involved in network marketing and direct sales. On this occasion, we decided to recall the most famous MLM companies and understand whether multi-level marketing is a serious competitor to retail.

Not a weak link

Multilevel marketing (MLM) is one of the direct sales methods. With it, the sale of goods is carried out through a network of independent agents, each of whom can not only sell the company’s products, but also attract partners for this. In this case, his income will consist of his own revenue and a percentage of the revenue of the people he hires. Another name for the system is Network Marketing, which translates as “network marketing”.

Profits from direct sales for distributors are quite low. They give most of the proceeds to the company and the distributors above them. The main profit comes from sales of sponsored distributors.

MLM companies are often confused with “financial pyramids” such as MMM or Khoper Invest. Indeed, “pyramids” took the principle of network marketing as a basis.
Participants who stand at their origins receive money from the contributions of “newcomers”. But, unlike network companies, “pyramids” do not offer specific goods, but essentially trade in air. The life cycle of “financial pyramids”, as a rule, is no more than several years - they exist only as long as new investors appear. While large MLM companies have been successfully operating for decades, they bring small but stable incomes to the lower levels, and billions to those who are at the origins.

Explorer Carl Rehnborg

The history of the creation of MLM companies is associated with the name of entrepreneur Karl Rehnborg. In 1927, he opened a small company selling food additives of his own production. At first, Rehnborg sold the products to acquaintances, and they, in turn, shared rave reviews with their friends.

And there were those willing. In 1934, Carl Rehnborg founded California Vitamins, which was later renamed Nutrilite Products. Very quickly the company achieved a turnover of several million dollars without spending a single cent on advertising - only through direct sales.

To this day, the most popular products sold through MLM marketing remain nutritional supplements and cosmetics.

AMWAY

Amway (American Way of Life) was founded in 1959 by Nutrilite Products employees Richard DeVos and Jay Van Endel. They decided to slightly change the operating principles that Nutrilite used. Firstly, Amway began to sell different groups of products. In addition to dietary supplements, the assortment now includes many household chemicals and cosmetics. The company now offers over 3,000 items. Secondly, DeVos and Van Endel introduced a multi-level marketing plan for employees and began to pay remuneration not only from personally recruited distributors, but also for sales volumes of agents at all levels. This led to Amway's rapid growth.

Now the company's turnover is over $8 billion, and it ranks 25th among the largest private companies in the United States according to Forbes. True, the history of Amway is not cloudless. More than once she became a participant in scandals. Thus, one of the company’s former top distributors, Eric Scheibeler, who was personally acquainted with the founders of Amway, in his book “Merchants of Deception” accused the corporation of fraud and called it a totalitarian sect. This is not the first time Amway members have been accused of sectarianism. The company's training methods have been criticized more than once.

AVON PRODUCTS

The “long-liver” among MLM companies dates back to 1886 with a small company called California Perfume. It was created by American David McConnell. Initially, the company's assortment included only 5 types of simple perfumes with floral aromas. Now AVON offers hundreds of items of cosmetics, perfumes, jewelry and accessories. The company's turnover is about 10 billion dollars a year, and the number of distributors around the world amounts to millions of people.

Why McConnell is not considered a pioneer in the creation of MLM enterprises - history is silent. Perhaps the fact is that although the company used the principle of direct sales from the beginning of its existence, it did not immediately come to a multi-level scheme. But AVON has gone down in history by being the first of the cosmetic giants to abandon testing of products on animals.

MARY KAY

Another American corporation. Created in 1963 by Mary Kay Ash and named after the founder. Offers hygiene products, cosmetics and perfumes in the mid-price segment. In 6th place in the world among companies engaged in direct sales according to 2012 data.

The trick of Mary Kay is that its consultants do not just sell products, but act as “beauty consultants.” That is, they undergo basic training in skin care. The second feature is that territories are not assigned to a specific consultant: they can hire their agents anywhere in the world.

Like Avon, Mary Kay stopped testing its products on animals in the early 90s, but resumed testing in 2010. For which she was severely criticized by the “greens”.

ORIFLAME

The Swedish cosmetics company Oriflame was founded in 1967 by brothers Jonas and Robert af Jochnick. In the early years, only one line of products was sold, but now the range includes about 1,000 items of cosmetics and perfumes. The annual turnover is about 2 billion dollars, the number of consultants in the world is over 3 million people.

Oriflame positions itself as an environmentally friendly company and even prints its catalogs on paper made from artificially planted forests. Therefore, Greenpeace does not attack the company much. But she came to the attention of the tax authorities. In August of this year, the Russian representative office of Oriflame failed to pay taxes for several million rubles.

FABERLIC

The first Russian MLM company was created in 1997 by entrepreneurs Alexander Davankov and Alexey Nechaev. The original name was “Russian Line”, the Faberlic brand was registered in 2001. The company currently operates in 20 countries, including Poland, Germany, Romania and Hungary.

The company considers its know-how to be “oxygen cosmetics” - face and body care products based on perfluorocarbons. Faberlic's turnover is now over 250 million dollars a year.

KIRBY

The company producing and selling vacuum cleaners is celebrating its 100th anniversary this year. It was founded in 1914 and is named after the developer of the first vacuum cleaner models, Jim Kirby. The company’s “trick” is that at a certain period it sells only one model of vacuum cleaners. Once a model becomes obsolete, it is discontinued and a new one is sold.

Kirby is the most scandalous representative of the MLM diaspora. Every year, US consumer protection agencies receive dozens of complaints about improper actions of the company's distributors. Allegedly, they use harsh psychological pressure to force the client to pay money for expensive equipment (for reference, the price of a Kirby vacuum cleaner starts from 100 thousand rubles). Russian forums are also full of messages: “Kirby vacuum cleaners are a deception, a scam, a scam!” However, the company continues to operate in Russia and in 70 other countries.

HERBALIFE

Founded in 1980 in the USA, it offers products for weight loss, healthy eating and skin care. The international division of Herbalife is now led by former Disney CEO Michael O. Johnson, and scientific developments in the field of skin care are led by Paolo Giacomoni, who previously worked at Estee Lauder and L’Oreal.

Herbalife is the first American MLM company to open a representative office in Russia. This happened in the early 90s and coincided with the emergence of a huge number of financial pyramids in Russia. Therefore, many still mistakenly classify HERBALIFE among them.

The debate about whether MLM business is good or bad continues to this day. Some praise multi-level structures, seeing in them opportunities for quick money, others condemn the very principle of building pyramids. Business analysts also disagree. Some predict that direct sales will soon supplant traditional retail, while others believe that retail and e-commerce will eventually kill MLM. However, network marketing has been around for decades and is not about to go down yet.

Alena Yarkova almost got caught online
Illustrations by Dmitry Shevchuk

04.04.2018 | Alexey Nesterov| No comments yet

What do networkers do?

There are a lot of rumors about what networkers do. Some people think that they walk around with catalogs all day long, others think that they do nothing at all. And I want, as a networker, to tell you about this in my short article.

But before that, I have a counter question for you - “What do all other people do all day long, besides work?” And yet everyone says that there is never enough time for anything...

Still, it’s very simple: you know how your every day goes. More precisely, you don’t know - you were told that your day should go this way. You have to wake up at this time, come to work at this time, and leave at this time.

Well, in the evening (let’s remove the time you spend on the way home and stopping at the store to buy groceries), you have about three hours left for your personal life, of which you spend an hour preparing food and cleaning up after the children.

I'm right? Well, if this is not exactly how your day goes, then I think I have described each of your Groundhog Days as closely as possible.

And do you really think that in this case life belongs to you? I used to do punk music. And punks are people who protest against the system, work, etc. And it just amuses me when a “punk” sells himself and his freedom for 80 rubles during the day. for an hour, and then in the evening he shouts that he is a free man)))

The same applies to people who everywhere say that they are a free people!!! I’ll tell you my opinion - NO!)

Well, now I’ll tell you:

Who are networkers and what do they do?

Well, network marketing entrepreneurs are independent entrepreneurs who create their own business in partnership with a company.

Of course, I agree that the first few years you need to work hard to create your business, hold a bunch of meetings, make sales, and build a howling network of partners and consumers!

But why is this all being done?

Your morning

You woke up when you wanted or when your body woke up!

You took your phone and opened your personal account in order to find out how much your check had grown while you were sleeping.

You got up and slowly went, made yourself some delicious aromatic coffee, and took a shower.

You spend your morning with your family and you don’t have to rush somewhere because someone told you to do something.

Working day

Your working day starts when you want it and you spend about five hours a day on it, because that’s enough for your business to grow!

You call your partners who have questions and need support.

You have two meetings scheduled for the evening and entrepreneurs come to you to ask you about business opportunities.

Evening

You are returning home. The next day you don’t have any appointments and you decide to go with your family to a water park or any other place to spend your whole day.

And no one can stop you from doing this, because you are now the master of your life!!!

Would you like to live like this?

Would you like to not depend on anyone?

Who is stopping you from creating all this within two or three years?

And only you yourself can change it!

Look at it in just two short years.

And if we managed to do this with absolutely no experience, then you can do it too!!!

The main thing is that you yourself want to change your life!

And if you want to join our winning team, then I am waiting for your messages on my social networks.