If you are often short with money at the end of the month, joining a business that needs you to sell a product is one good choice. You earn commission from the sales you make, and the more products sold the larger income you will get. But the problem with this business marketing is, unlike in a multilevel marketing business, earning large amounts of money is not possible for most dealers, especially those who are in the lower levels.
As products pass through several distributors that when commissions are to be paid, there are many who need to share the income sales. In business methods like this, the products that come from the manufacturer have to go to the warehouse distributor and then to the area distributors.
They would eventually go to the sub distributors who will pass them to the dealers and finally to the retailers. The retailers buy the products from the higher level, which in return, buys their stock from their upper-level, and so on.
In this business, the emphasis is always put on selling. Each level has to fill an order and restock an inventory by buying the products from the next upper-level. If the sub-distributors of the distributor did not sell enough products, the distributor still has to buy stocks from their higher level to keep their distributor’s status – otherwise, they would lose it. So, even if there are still products in inventory, the distributor needs to use money from their own pocket to buy stocks for their future sales.
The MultiLevel Marketing Experience
The multilevel marketing business idea was taken from the above marketing method. However, the emphasis was not on selling products but more on recruiting sales people. It was more than 50 years ago when the first multilevel marketing strategy was launched where the products used were nutritional supplements.
Contrary to the other method of selling products, the companies that used multilevel marketing concept do not need many distributors and retailers to distribute them. Instead, they only need their members to take the products which were bought from the manufacturers and let them deliver directly to the market.
The main goal of this business model is to have more and more people to join and each of them make their purchase. Why is this so? Each member to sign up with the company needs to buy the product. Logically, if 100 members would sign up, there are 100 sales. If 10,000 members were recruited, 10,000 sales would be achieved; thus, more income for the MLM business team.
The Commission
Whether the member sells anything or not, they still have income from a commission earned from every member recruited. To make the sales, all recruited members are required to buy some of product. Usually, the product is already included in the sign-up fee. Each month, the members need to buy the product to qualify for the commission from their recruited dealers.
There are levels in which the newly recruited members have the choice to choose from. The higher level they buy or sign up with, the higher commission fees they would get. They also have the choice to earn the commissions without buying enough amount of product by recruiting enough number of dealers of members each month.
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