Network Marketing, AKA Multi-Level Marketing, is a scheme that shells out compensation to direct selling companies' promoters, not just for the product sales generate by them, but also for the other sales introduced by them to the company. The company and products are usually marketed directly to potential business partners and consumers through word-of-mouth marketing and referrals. Network Marketing operates in all 50 states of the United States, and in a 100 other countries. New businesses may use terms like "affiliate marketing", or "home-based business franchising". In the most lawful Network Marketing companies, the commission are earned only on sales of the company's products or services. Recruiting alone ("sign-up fees") does not generate money, though the money earned through the sales of recruited members is a major attraction of Network Marketing.
To put it simply, in Network Marketing, goods or services sold are by distributors to people outside the organization. What does this mean? A net cash flow from outside to inside. And this in turn means that nobody in a well-run Network Marketing organization need lose out. The incoming cash is split between people in the organization, based on retail sales, and group-building success. The majority of companies sell products of some sort, usually health products or cleaning products, of course there are various other possibilities. If you're going into this industry, always examine the quality of the products, and not take for granted the claims of the person who is introducing you to the business.
Network Marketing has faced its share of criticism, however. In 1979, the Federal Trade Commission (FTC), issued a decision, In re Amway Corp, that Network Marketing was not illegal per se in the United States, however, Amway was accused and found guilty of price fixing, (by requiring "independent" distributors to sell at the low price), and making exaggerated income claims. The FTC feels that Network Marketing organizations with greater incentives for recruitment than product sales should be taken with a pinch of salt, and viewed with a little skepticism. The practice of getting commissions from recruiting new members is outlawed in most states, and is called "pyramiding".
However, the fact remain that Network Marketing is legal, and is governed by strict regulations in most countries. Some companies do masquerade as Network Marketing companies, though, whilst failing to maintain the required regulations. In most countries around the world, the Direct Selling Association regulates the Network Marketing industry.
You can make a decent amount of money from this industry, and usually, 8-10 hours of business effort should be put in by a networker every week. There's every chance of success if you work hard. It's a valuable skill - learning to become an effective networker, and making it big in this industry is a matter of luck. Networking Marketing, however, is not one of those get-rich-quick schemes, it requires effort, and takes dedicated endeavors before one can start earning a substantial income. It's an ideal bit of work to do on the side, however, for some extra income.
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