What Is A Network Marketing Business? A Straightforward Response

What is meant by ‘network marketing business’?

Definition, concrete explanation, and resources for further understanding.

What is a network marketing business?

A network marketing business is a type of business model where independent distributors sell products or services directly to consumers, and earn commissions on their own sales as well as the sales made by the people they recruit into the business. This creates a network of distributors who work together to sell products and grow the business. Network marketing companies often have low start-up costs and offer flexible work opportunities, making it an attractive option for people looking for a side income or a full-time career.

More about network marketing business


Network marketing creates a network of people who sell products and earn money through commissions and team building.

Network marketing is a legal and legitimate business model that focuses on selling real products or services to customers and is not a pyramid scheme. However, it is important to do thorough research and evaluate opportunities before investing.

1. How does network marketing work?

In a network marketing business, distributors typically purchase products from the company at a discounted rate and then sell them at a higher price to customers. They may also recruit others to join the business and become distributors.

When these new distributors make sales, the original distributor earns a commission based on a percentage of their sales volume. This creates a network of people working together to sell products and earn money.

One of the unique aspects of network marketing is that it allows distributors to earn income not just from their own sales, but also from the sales made by the people they recruit into the business.

This is known as “downline” or “team” building and is a key component of the network marketing business model.

Distributors are incentivized to recruit new members and help them succeed because this will increase their own earning potential.

This structure can create a sense of community and support within the network, as well as healthy competition and motivation to succeed.

2. Is network marketing legal?

Network marketing is often criticized and misunderstood, and one common misconception is that it is a pyramid scheme.

However, there are significant differences between the two.

A pyramid scheme is an illegal business model that requires members to pay money to join, with the promise of earning money by recruiting others to do the same.

There is no legitimate product or service being sold, and the only way to make money is by recruiting more people into the scheme.

In contrast, network marketing is a legal and legitimate business model that focuses on selling real products or services to customers.

While recruitment is a key part of the business, it is not the only way to earn money, and distributors can be successful by focusing on product sales alone.

Furthermore, network marketing companies are regulated by the Federal Trade Commission (FTC) and must comply with strict guidelines to ensure they are not operating as pyramid schemes.

That being said, it is important to do your research and carefully evaluate any network marketing opportunity before investing time and money into it.

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External sources

  • Direct Selling Association (DSA) – The DSA is the national trade association for companies that market products and services directly to consumers through an independent sales force. Their website contains a wealth of information about the network marketing industry, including statistics, research, and industry news.
  • Federal Trade Commission (FTC) – The FTC is the government agency responsible for protecting consumers from unfair or deceptive business practices. They have a page on their website specifically dedicated to providing information and guidance about the network marketing industry. It includes information about what to look for in a legitimate opportunity and how to avoid scams.

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