By all means, not all network marketing opportunities (also called MLM) are legitimate. There are tons of scams out there, absolutely. But networking marketing as a business model in itself has gotten a very bad rap over the past few decades, although it is an extremely effective method of marketing and product distribution. And there are millions of people around the world who earn an excellent full or part time income in the network marketing business.
So what is Network Marketing? Herein we'll refer to Network Marketing as MLM which stands for Multi-level marketing. MLM is a system of product distribution in which the company pays its distributors ongoing monthly commissions to find and train other distributors of the product. Each distributor who comes on board is independent and their distributorship is considered their own business, with all the benefits of a home-business such as tax benefits, etc. The distributor essentially has a business without all the huge hassles and expense normally associated with starting one's own business, such as: product development, website development and marketing, all the legal stuff, etc. MLM is like a business in a box, and all you have to do is promote it and receive your commissions. All the tracking and administrative stuff is taken care of for you as well.
Most MLM's require the distributor to make a minimum monthly purchase of the product. This is how the product is sold, more through a consumption based formula. Distributors find other people who like the product and who want a legitimate home-based business opportunity, and they sign that person up as a distributor as well. When distributor makes their monthly purchase, distributor one gets paid. Distributor 1 will also get paid on the monthly consumption of all the distributors that the people they brought in finds, and so on. Upline distributors have a great financial incentive to help everyone in their group succeed, which is why this formula works so well. There will always be people who join up as distributors and quit, but with hard work and consistent effort, MLM offers distributors the potential to earn tens of thousands of dollars per month, by leveraging their efforts with those in their downline team.
Through the years people have compared MLM to illegal pyramid schemes because on paper they have some similarities and because both systems entail recruiting others and involve an initial outlay of money. But this is where the similarities stop. Pyramid schemes are illegal for several reasons. First there is no distribution of product. Secondly, only one person gets paid - the person on top. It has nothing to do with team work, leveraging, or building a business and it will ALWAYS fall apart and people will lose money. Pyramids are not legitimate home-based business opportunities.
For more info on network marketing or to learn how to build a network marketing business online, check out the link in my author box below. I hope this has cleared up some of the misconceptions you have had about the awesome world of Multi-level marketing.
