Direct Sales Vs Multi-Level Marketing
Direct Sales and MLM, also known as Multi-Level Marketing, are two distinct variations of home base business opportunities. The home business industry is exploding now during this economic downturn as more and more people look for alternative sources of income. With more people looking and the sheer number of opportunities there are two clear cut types of home business opportunities and it can get very confusing if you are trying to compare companies. You need to be fully educated on each type of company to make sure it's a good fit for you personally.
Direct Sales and MLM companies typically operate in what is called the home based business industry. Most of you have most likely been presented the opportunity to take part in one or both. Some examples of companies would be Monavie or Herbalife (MLM) and Liberty League or Wealth Masters (Direct Sales). As I mentioned earlier, they are very different so let's take a look at each and go over the features and beneifts of each before comparing them.
MLM, sometimes referred to as Network Marketing, is a business model where a person is allowed to not only be a customer, but also have the opportunity to resell the products. In addition to being able to resell the products and earn commission on those sales, a person is able to sign up other reps and earn an override on their sales. Now is where the "multi-level" come in to play because it does not stop there. The original associate can also earn commissions on the reps that his reps bring on the team and ever build a group of reps that he / she overrides.
This override can go down several levels or generations. Most plans pay on average, a 5% commission or override on these teams and reps are required to purchase a certain amount of product each month, called an autoship, in order to qualify to get paid. The payouts are small in real dollars, but they count on getting a small piece of hundreds or thousands of reps long term. These plans can get very complicated, but this is the general concept of how it works.
Direct Sales on the other hand is what its name represents, direct sales of the company product (s) to the customer. The associate will usually pocket the difference in the retail and wholesale cost of the product sold. Direct Sales compensation plans are easy to explain as they mimic what happens in typical retail transactions whereas MLM plans are generally complicated for the average person to assist if they have not been exposed to them.
Direct Sales companies are noted for typically having high end products with higher price tags, but also pay a higher commission. For example, Liberty League International has a product that retails for $ 1,495 dollars and the wholesale cost is $ 495, which will pay the associate an upfront commission of $ 1,000.
Most companies have some type of training sales attached to the new associate before he or she can make the commission on his own sales, much like in the financial industry with insurance agents and brokers. After a rep has completed his training sales for that particular product, he or she would then be eligible to receive all future contracts anytime that product is sold by them. These companies usually have 2 or 3 additional product at a higher price that an associate can upgrade to where additional awards are earned by the original associate.
Once again, these are simple examples, but in general you should see how the two work.
How do they compare? MLM is a lower barrier to entry and many see that as a plus, it also requires a lot more reps on your team to earn a significant income, sometimes up to 200 just to make $ 1,000. It will also take you time to build a team this size so the upfront income is minimal. The MLM leaders promote walk away income once your team is built, but that is simply a myth that does not really exist in the end.
Direct Sales companies require more startup expenses, but the costing can be lower after a period of time. They offer the potential of higher level incomes in a much shorter time, but except for one maybe two companies, do not provide the residual income potential a solid MLM company will. A couple of the top direct sales companies do provide a passive income stream for associates.
In the end, it is personal preference. While I feel one is the better option, that is another article alike. One should evaluate the company management, the products and the systems that they use to market in order to find the correct fit for them. Each has its advantages and disadvantages, but both are great options if they match up with you!
Best of luck!
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