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History of Multi Level Marketing

Brief History of Multi Level Marketing


Multilevel marketing or network marketing, as it is called worldwide, is a rapidly growing phenomenon. The fact that anyone, anywhere, can become a distributor and earn income by building the network without having to sacrifice any other occupation or additional investment in this business makes it very attractive to people from all walks of life. Try to join the network. It is estimated that only in the USA. UU. More than 70 percent of direct sales revenue comes from network marketing. Although there are no figures available to confirm revenue figures nationwide, it is estimated that more than 50 million people are dedicated to multilevel marketing worldwide.

Although there is no documented history of the origin of multilevel marketing, it is generally believed that this concept owes its origin to "Nurtralite" or previously known as the California Vitamin Company, which produces food supplement products. In the early 1940s, the Company used to participate in Direct Selling.

The concept of multi-level or network sales seems to have arisen accidentally when Distributors discovered that they were generating more sales for the Company by referring their friends and acquaintances to the commercial opportunity available with Nutralite.

At this time, there was no established system to recognize and reward distributors for their efforts in recruiting other Distributors for the company. With the completion of the Distributors and the Company, the system of paying a 2 percent bonus to the sponsoring Distributor in the sales achieved by the Distributor and the network they sponsored or built was introduced. This led to the birth of the modern "pyramid sale" system.

Nutralite achieved unprecedented growth and profits in the following decades thanks to the fast-growing network not only in the US. UU. But also in other continents. In the early 1960s, two men, Richard DeVos and Jay Van Andel, who were the Distributors of Nutralite, separated to build their own company, which became the largest in the MLM business world called " Amway. " Initially, this company ventured into household and cleaning products and then bought Nutralite Company and merged the food supplement products into its portfolio.

Another distributor named Dr. Forrest C Shaklee also separated from Nutralite in the same period that 'Amway' was born and discovered that the new Company called Shaklee was dealing with the products of nature.

Today there are several hundred companies that practice pyramid selling or multi-level sales and compensation methods to sell their products. Numerous brands such as Avon, Tupperware, Electrolux, Discovery Toys, Herbal life, Kleenez, Oriflame, Reliv, etc. They have had great success in growing their business worldwide using this sales concept.

Although there are many criticisms and charges imposed against this system and companies both by industry observers and by commerce and governments, the figures reveal that the concept has been successful in the growth of more companies in recent years. The US Direct Selling Association UU. He reported that approximately 25% of its members participated in the MLM sales channel in the 1990s, while by 2009, it was discovered that more than 94% of the members had been practicing this method, contributing to approximately 97% of total direct sales.

While the figures show progressive trends and companies often promote the success stories of people who have become millionaires in the business, it should be noted that there is a growing concern in commerce and the governments of several countries that have been asking questions About the authenticity of the pyramid compensation method, which they believe is an inherently defective model and that the generation of income or income does not occur due to product sales, but is due to the hiring of distributors. China has banned this form of Direct Selling since 1998. However, trade seems to be growing unprecedented throughout the rest of the world.
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