In India, the direct selling industry is estimated to be around worth of Rs.2,400 crores. With the entry of reputed players like Hindustan Lever Network (a HLL co.), the seriousness in the industry is getting more & more.
Multi Level Marketing also known as Network marketing or Matrix Marketing is business form in which company sells product directly to customers through reference. In this references and direct marketing is used to sell product. Its business model is like this that company uses independent salespeople (distributor) to sell the product by forming a distributor chain in down-line, which also helps in expanding customer base.
MLM Model
Various compensation plans like unilevel plans, binary plans are used by firms now a days for MLM. There are many firms which uses MLM to sell there product. Some of them are Amway, Modicare, Agel etc. Most networking firms deals in physical goods initially but due to its advantages it is now also used by Insurance firms, websites services, educational courses etc. Max New York Life is one such firm which is using MLM model in Insurance sector. Amway which has made MLM famous atleast in India is also now entering into Insurance sector by using MLM model.
MLM is also used by websites particularly job sites. Reffster.com is a reference based recruitment firm which offers cash for candidates successful recommendation.
MLM is particularly useful for small firms as it provides a cheaper and effective way to promote and sell product. MLM also offers an easy way to sell product for distributors, as it is easy to sell to whom one knows rather than selling to unknown. MLM due to its huge potential is now commonly in used
However image of MLM has been tarnished by similar schemes such as pyramid scheme which is iilegial. MLM is also often as ‘get rich overnight’ opportunity , which is not so as it requires a lot of hard work. Also there is always a risk associated with MLM that it may destroy personal relationship.
Still the future of MLM is very good as MLM firms are growing and expanding in rural areas also. The Internet has made MLM almost an International operation and with constant growing MLM firms, future of MLM is good.
