Multi-level marketing (MLM) is a controversial marketing strategy in which companies recruit sellers to act as "distributors" or "consultants" to sell products and services directly to consumers.
In essence, multi-level marketing is similar to traditional direct selling in that companies sell products directly to consumers through independent contractors called distributors.
However, what differentiates MLM is that payments to consultants are not only for selling their products, but also for recruiting other people to become distributors.
Usually, to join an MLM scheme, one has to pay a fee and purchase a product. Companies typically offer products at wholesale prices to distributors, who are then allowed to sell them at retail prices.
Distributors can also earn additional income by selling products from other multi-level marketing businesses.
To be successful in MLM, one must be able to recruit new distributors and train them in selling products as well as recruiting other distributors. You don't have to be a product expert or celebrity to succeed in MLM. All you need is to buy the product, find potential buyers, and convince them to buy from you.
Multi-level Marketing Working System?
The real profit in MLM comes from recruiting other people. The more people you recruit, the bigger your hierarchy or downline will be. Your downline will continue to grow as your recruits recruit others, which in turn will advance you up the organizational hierarchy.
Although multi-level marketing is legal in most countries, this business structure remains a source of controversy. This is mainly due to advertisements that promise large incomes in a relatively short time, which often leads to the assumption that MLM is a get-rich-quick scheme.
However, not all MLMs are fraudulent schemes. Some MLMs are legitimate businesses and have even grown into large companies.
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Difference between Pyramid Scheme and Multi-level Marketing
Even though they look similar, pyramid schemes and MLM have significant differences. The main difference between the two is their intent and legality. MLM is a legal business, while pyramid schemes are not.
In multi-level marketing, participants make money from sales of their own products or services as well as sales from other people they recruit to join the program. On the other hand, pyramid schemes require participants to invest money up front for a product or service with little chance of getting their investment back.
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DISCLAIMER: This article is informational in nature and is not an offer or solicitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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