Multi Level Marketing (MLM) Explained

We have all heard of the multi level marketing business model. It has been around for years. Over a hundred years. Today MLM businesses operate in over a hundred countries and the industry is valued at over $167 billion. Its salesforce consists of well over a hundred million people worldwide. Of which 74% are women.

But what exactly is multi level marketing? How does it work? Which are the leading MLM companies in the world? How does multi level marketing differ from pyramid schemes? What are its pros and cons? Is MLM legal? Let’s have a look at the answers to all these questions and more. Here is everything you need to know about the multi level marketing business model.

What is Multi Level Marketing (MLM) ?

Multi Level Marketing is a business model where existing distributors are encouraged to recruit new distributors in addition to selling products and are paid a percentage of their recruits’ sales. Distributors earn income from their product sales as well as from product sales of their recruits. The origins of multi level marketing can be traced back to the USA in 1886 with the origin of Avon products, one of the world’s largest companies following the multi level marketing business model today.

The minimal risk associated with it, the potential of immense income, negligible operating costs, and the possibilities of attaining passive income and financial freedom make MLM an attractive proposition for those who want to work on their terms.

How does Multi Level Marketing Work?

The regular Multi Level Marketing business model works through recruitment. You are welcomed to become a seller through another seller of the company’s products or sometimes through an advertised conference.

If you elect to become a seller with an MLM company, you’ll earn money both through the sales of the company’s products and through drafting other sellers, receiving a portion of the income these sellers make.

And when those sellers enlist sellers of their own, you’ll earn a share of the income they make too.

The sellers that you sign up with your Multi Level Marketing plan and the ones they sign up for are called your downline. The seller that originally recruited you and those above them in succession is your upline. Often the seller who recruits you will help you get started with training and support.

List of Top Multi level marketing companies

There are numerous active MLM businesses in the world today. Let’s have a look at some of the most popular companies deploying the Multi Level Marketing business model.

#1. Amway

Amway is one of the world’s largest multi level marketing companies. It was established in 1959 in Michigan USA. Amway has over 140 health, nourishment, beauty, and house care products. They own brands such as Nutrilite, Artistry, eSpring, Atmosphere, iCook, Satinique, and XS. Nutrilite is one of the world’s top-selling fitness supplement labels.

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#2. Herbalife

Herbalife is a US-based multi level marketing company founded in 1980, it has nearly 2.3 million sellers in over 95 countries. Herbalife manufactures protein bars, teas, vitamins supplements, and sports beverages, energy drinks, etc… Supporting weight control, digestive well-being, cardiovascular fitness, children’s wellness, women’s well-being, and immunity.

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#3. Oriflame

Oriflame is a Swedish multi level marketing company founded in 1967 known for its beauty and personal care products.

Oriflame differs from other companies following the multi level marketing business model because customers can directly buy Oriflame products from the website and not only from direct sellers. Their merchandise covers skincare, makeup, fragrance, body care, hair care, and wellness goods.

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#4. Tupperware

Tupperware is an American multinational MLM company founded in 1946 in Massachusetts, United States. It is one of the most successful network marketing companies in the world with about 3 million agents in over 80 nations around the world.

Tupperware has a broad array of kitchen commodities including lunch boxes, bottles, dry storage, fridge and freezer storage, cookware, utensils, bakeware, steel cookware, and KMO sets.

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#5. Avon Products

Avon Products Inc. is the second-largest multi level marketing company in the world after Amway. Founded 135 years ago in 1886, they are known to be the first company to implement the multi level marketing business model.

Avon owns labels such as Anew, Avon naturals, Solutions, feelin fresh, foot works, and Imari in areas like makeup, perfumes, bath and body, skincare, haircare, and fashion.

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#6. 4Life

4Life is another US-based multi level marketing company. This company from Salt Lake City was launched in 1998.

4Life’s merchandise is mainly wellness supplements. They are most noted for their transfer factor products. Transfer factor products support the immune system by boosting NK Cells in them by up to 2–4 times. 4Life products are available in over 50 nations.

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#7. Forever Living

Forever Living is an American multi level marketing company based in Scottsdale, Arizona. It was founded in 1978 and functions in over 150 nations.

Forever Living is distinguished for its aloe vera and honey merchandise. Their products include beverages, nourishment, weight control, skincare, household, and personal care, and literature. They also produce dietary supplements, using a combination of aloe vera and vitamins

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#8. Modicare

Modicare is one of the most dynamic expanding Indian multi level marketing companies. It was founded back in 1996. They have been Amway’s significant rival in India for more than two decades.

Modicare offers a broad array of products in wellness, skincare, personal care, home care, food and drinks, watches, technology, ornaments, and others.

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#9. Mary Kay

Mary Kay is an American company that implements the multi level marketing business model. It was founded in 1963 in Dallas, Texas. Mary Kay was the sixth largest multi level marketing company in the world in 2018.

Mary Kay provides a wide variety of skincare, makeup, body care, perfumes, and gifts for both men and women.

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#10. Vestige

Vestige is a multi level marketing company formed in 2004. They offer world-class health and personal care products. Vestige’s motto is “spreading wealth through wellness” all around the world.

They offer a broad array of merchandise in the healthcare, personal care, home, diet, oral, and skincare areas. Their most popular products are Vestige Noni capsule, Flax oil capsule, and Vestige spirulina.

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Read more on List of Top 100 MLM Companies 2021

Multi level marketing vs Pyramid Scheme

While multi level marketing is a tried and tested business model, pyramid schemes are scams. They can look exceptionally like genuine MLM businesses, but if you become a seller for a pyramid scheme, it can cost you and your recruits an ample amount of time and capital.

The advocates of pyramid schemes may try to draft you in with outrageous claims about how much money you will make. They may say you can become wealthy by marketing the company’s merchandise. But that won’t be the case. Your potential income would be mostly based on how many people you convince to join the scheme, not how many goods you sell. Pyramid schemes are set up to promote recruitment to keep a steady stream of new sellers and their capital flowing into the scheme.

In a pyramid scheme, you’ll be obligated to buy a specific quantity of goods at frequent intervals, even if you already have more products in stock than you need.

You may also be required to purchase a certain quantity of goods before you’re eligible to be reimbursed or get rewards. You will also have to purchase mandatory training sessions or expensive marketing materials.

Ultimately, most sellers find that no matter how much they strive, they can’t distribute enough products or enlist enough distributors to make enough money. They also can’t keep up with the demanded payments or the stock purchases needed to pass for bonuses, and they can’t gather sufficient funds to meet their expenses. Eventually, most people run out of funds, have to discontinue and squander everything they invested.

Read more on MLM vs Pyramid Scheme

Pros & Cons of Multi Level Marketing

Now we know what MLM is, how it works, top companies using the multi level marketing business model, and how MLM differs from pyramid schemes. Now let’s have a look at the pros and cons of multi level marketing.

Pros of Multi Level Marketing

  1. Minimal risk
  2. Minimal operating costs
  3. Passive income
  4. Financial freedom
  5. Work from anywhere, anytime

Cons of Multi Level Marketing

  1. Lack of control over salesforce
  2. Scams posing as MLM

Is Multi Level Marketing Legal?

The multi level marketing business model is legal when implemented properly, under proper regulations. However, there exist many illegal and scam MLM firms that operate a pyramid or Ponzi scheme to attract more customers to buy their products and hustle them for their money. Such schemes are illegal in most countries. Investors should practice discretion with such schemes. It is not easy to differentiate a legal MLM from a scam. MLM’s are outright banned in countries like Bangladesh, China, and Saudi Arabia.

It’s best not to become entangled in schemes where your income is based fundamentally based on the number of sellers you draft in and your sales to them, rather than on your sales to customers outside the plan who are interested in the products.

Conclusion

The multi level marketing business model remains universally flourishing and attractive. Today, they are constrained to notably more laws and inspection than ever. MLM businesses are much more genuine and straightforward today. One cannot overlook the accomplishments of organizations like Herbalife and Amway, and their comprehensive global network of millions of sellers. Similar to every other business, an MLM business requires constant hard work, commitment, and perseverance. Rewards are certain if people are willing to commit to the cause.

A professional with over 26 years of experience working within the advertising and marketing communications industry.

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