Today, I want to take some time to educate you about the difference between network marketing and direct selling.
For some strange reason many people in our industry interchange these two words as if they mean the same thing.
Sadly, most people have never been taught the difference between these two business models.
My goal today is to fix that.
Direct selling and network marketing are very different.
Direct selling is when someone sells something directly to a consumer and makes a retail profit for doing so.
Companies such as Avon and Tupperware are commonly known as direct selling companies (because of the focus on retailing), even though they have a MLM Component.
Simply put, any time you sell something directly to someone it’s direct selling.
If you remember nothing else about direct selling remember that direct selling is focused on personal selling.
The major benefit of direct selling is that your income is normally tied to your own performance.
If you know how to find prospects and make sales, you can make a lot of money quickly.
The sky is the limit.
The people who typically do best in direct selling are the folks with a strong sales background and solid product knowledge.
The major disadvantage of direct selling is that you do not have any leverage.
You have to keep selling items yourself to keep making money.
If you want to take time off, or can no longer work, your income stops.
Therefore, I consider direct selling a temporary income.
On the other hand, network marketing is a team sport.
Network marketing is about a lot of people each doing a little bit, not one person doing a lot.
Network marketing is about building a team of people who consume the products, make a few sales each, and sponsor a few people each.
The major advantage of network marketing is leverage.
You earn a small commission from each person on your team.
As your team grows, so does your income.
You can multiply your organization (and income) and eventually have a business that pays you whether you put in the work or not.
The major disadvantage of network marketing is that most of your income is tied to other people’s performance.
Even if you are good at recruiting and sales, to make the big bucks you need to find other people who will put in some work.
If you can’t find people who will go to work and produce, your income is severely limited.
It’s also important to note, for legal purposes, that even the MLM Business model should have an emphasis on direct selling, in addition to team building.
Every distributor should have five to ten customers, minimum.
This legitimizes their business and gives them an immediate retail profit.
As you can see, neither business model is perfect.
They both have advantages and disadvantages.
What works for one person might not work for someone else.
Ultimately, you have to decide what business model is best for you and your family, based upon your goals, talents and needs.
To be quite honest with you, I am good at recruiting and selling.
However, I’ve always struggled to find quality people who were also good at doing that.
While I have considered the direct selling industry from time-to-time, I lean more toward the network marketing model because of the leverage.
I know that I could never build something I could walk away from if I just did direct selling.
Other Posts You Might Enjoy
- Myths About MLM
- How to Build Your MLM Business Online
- Direct Sales Association
- The Skinny On Direct Sales Book Review
- Scrap booking Direct Sales
The bottom line is that direct selling and network marketing are not the same thing.
Yes, they have some similarities, but each has different advantages and disadvantages.
If you enjoy selling and want quick money, I would focus on direct selling.
However, if you want leverage and want to build a long-term income I would really consider network marketing.
What do you think?
What business model do you recommend and why?
Leave a comment below to share your thoughts.
I look forward to hearing from you.