Multilevel marketing (MLM), also known as network marketing or pyramid selling, is a business model where salespersons earn income through direct sales of products or services and by recruiting new salespeople into the organization. MLM operates on a hierarchical structure where existing distributors, often referred to as “uplines,” recruit and mentor new distributors, known as “downlines.” Distributors earn commissions not only from their direct sales but also from the sales made by their recruited downline members.
Key characteristics of MLM include:
- Direct Selling: Distributors sell products or services directly to consumers.
- Recruitment: Distributors are incentivized to recruit and build a downline, earning commissions on their downline’s sales.
- Hierarchical Structure: The organization is structured in levels or tiers, with higher-level distributors earning commissions from the sales of those in lower levels.
- Commission Structure: Distributors typically earn commissions on both their own sales and the sales generated by their downline.
While MLM can offer income opportunities for its participants, it has been the subject of controversy and criticism. Some critics argue that the structure resembles a pyramid scheme, where the emphasis is on recruitment rather than the sale of actual products or services. It’s important for individuals considering involvement in MLM to carefully evaluate the legitimacy and sustainability of the business model.