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MLM business model

Understanding Multilevel Marketing (MLM)

Multilevel marketing is a legitimate business strategy commonly used by businesses that rely heavily on sales to generate revenue.


Unlike traditional sales channels,

multilevel marketing programs use of networks

for sales and to recruit new participants.

As such,

they're often referred to as network marketing.

Here's how it works:

Individuals are brought into the business

as contractors, independent business owners,

distributors,

or direct salespeople.

These people are then tasked with selling the company's products and/or services

to others,

including family and friends.

Sales can be done in person

or online.

They are given a commission

for every sale they make.

Disadvantages of MLM:

The Pitfalls of Pyramid Schemes

However, MLM is not without its drawbacks.

The most significant concern

is the association of MLM with pyramid schemes,

where the primary focus is on recruiting

rather than selling products

or services.

Pyramid schemes

are illegal in many countries

and can lead to financial loss

for participants.

Furthermore, MLM

often requires a significant investment

in products

or starter kits,

which can be

a barrier to entry for some individuals.

Moreover, the reliance

on recruitment

can create an unsustainable business model,

as the market

may become saturated

with distributors.