Multilevel Marketing

Search Dictionary

Definition of 'Multilevel Marketing'

Multilevel marketing (MLM), also known as network marketing, is a business model that recruits members via a non-salaried, commission-based system of selling products or services. The members are referred to as distributors or independent contractors, and are required to recruit other members in order to generate revenue.

MLM companies typically sell a variety of products, including health and beauty products, household goods, and nutritional supplements. However, the focus of MLM companies is not on the products themselves, but on the recruitment of new members.

MLM companies use a variety of methods to recruit new members, including social media, word-of-mouth, and direct mail. Once a member is recruited, they are required to purchase a starter kit, which typically includes products and marketing materials. The member is then encouraged to recruit their own team of distributors, and to earn commissions on the sales of their products and the sales of their recruits.

MLM companies often claim to offer a great opportunity for people to make money, but the reality is that most people who participate in MLM schemes lose money. In fact, a study by the Federal Trade Commission found that 99% of MLM participants lose money.

There are a number of reasons why MLM schemes are so often unsuccessful. First, the products sold by MLM companies are often overpriced and of poor quality. Second, the recruitment process is very time-consuming and difficult. Third, the vast majority of people who join MLM schemes do not have the skills or experience necessary to be successful.

If you are considering joining an MLM scheme, it is important to do your research first. Be sure to understand the company's business model and the products they sell. You should also be aware of the risks involved, and be prepared to lose money.

Multilevel marketing is a controversial business model, and there are a number of critics who argue that it is a form of pyramid scheme. Pyramid schemes are illegal in most countries, and they are characterized by the fact that the majority of participants lose money.

MLM companies claim that they are not pyramid schemes, because they sell real products and services. However, critics argue that the focus on recruitment is what makes MLM schemes so similar to pyramid schemes.

The bottom line is that MLM is a risky business model, and it is important to be aware of the risks before you decide to participate.

Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 150 bonus reputation points for each definition that is accepted.

Is this definition wrong? Let us know by posting to the forum and we will correct it.