Network business or MLM has Western roots and is pronounced as “Multi-Level-Marketing” (literal translation – “multi-level marketing”). In addition to this type of business, it has such titles as network marketing, business of the 21st century, business relationships or “network marketing”.
A network business, like a good business, has a product sale in its own base, but with one twist – not through stores or dealers, but through the recommendations of people. In other words, you tell your friend about the company’s products, he takes it. This is the business scheme.
In fact, a network business is a scheme of services and the sale of goods through a network of partners, or, as they are also called a network of partners (first line), which, for their part, recruit their own network and without ad infinitum. And from each of your own networks, you get your own percentage.
In other words, in the network business, the tenant does not rent premises, does not hire employees, he recruits a team of volunteers who will sell his product, along with this acquisition of his own percentage of the transaction. And those – are recruiting their own team, and the owner acquires profit from the turnover of the entire network as a whole.
It goes without saying that this type of entrepreneurship came to us from America, where entrepreneurs decided to change the vector of their own marketing activities and began to promote their own products through advice, since they were taken much less than advertising.
And it worked great at first. The goods were cheaper, so they did not require additional markups for rent, employee salaries or advertising, advice led to customer confidence, the level of product quality was high. On this basis, network companies soon gained huge market shares. Also, this type of business has become widespread among the population, since it started its own business with products and a ready-made system. All that was needed was to register, make a list of friends and acquaintances, and recommend products.