In today’s post, I would like to discuss the evolution and history of network marketing.
The concept of direct selling has been around for hundreds of years. Companies like Avon and J.R. Watkins have been in business well over 100 years. However, these companies did not utilize the MLM Business Model until much later on.
It All Began with Nutrilite and Amway
The concept of MLM dates back to the mid 1940s. From what I found online, the first true multi-level marketing company was the California Vitamin Company, which eventually became Nutrilite, which eventually became Amway.
This company (Nutrilite) started in the 1930s, but invented the concept of multi-level marketing in 1945, right around the end of WW2.
What made the company unique was that it offered direct selling, like many other companies, but once you had 25 personal customers, you could recruit other distributors into your team and earn a 3% commission from their sales, in addition to what you were already making. Hence, the concept of MLM was born.
Although this was a fairly new concept at the time, it wasn’t completely unique. Other industries such as realtors and insurance agents followed similar practices by recruiting others to join their sales team. Like MLM, realtors and insurance brokers could earn overrides and commissions from the people they recruited.
Within a few short years of opening for business, the California Vitamin Company became Nutrilite (1939). Many years later, two successful distributors bought Nutrilite and formed the American Way Company, aka Amway. The year was 1959. After Amway launched, Nutrilite products were sold through Amway exclusively.
How it Evolved
Since then, thousands of MLM Companies have sprung into existence. I’m not sure exactly how many companies have come and gone over the years, but it could easily be close to 10,000 different companies.
Of all the companies doing business in the MLM Industry today, and in the past, only about 10-20 have ever hit the billion dollar mark in annual sales. Some of these industry leaders include Nu Skin, Herbalife, Forever Living Products, Herbalife, Mary Kay and Avon.
Through the years, the industry has received plenty of criticism from skeptics. In addition, the industry has evolved from door-to-door selling, to home parties, to catalog sharing, to hotel meetings, and now to the internet. Who knows what is next?
The Future
I’m not sure what the future holds in store for the MLM Industry. Whether you personally like the industry or not, you must admit that it is a huge industry with more than 50 million distributors doing more than $100 billion in annual sales worldwide. Our industry is bigger than the NFL and the movie industry.
Regardless of what new technology is presented to us, this will ALWAYS be a person-to-person or face-to-face business built on trust, respect, and personal relationships.
If the next 50 years is anything like the past 50 years, then the history of the MLM Industry will continue to evolve and grow. I could see it eventually becoming a trillion dollar industry with 500 million distributors worldwide. That won’t happen any time soon, but it is quite possible.
I can definitely see the industry transition from face-to-face to a social media and technology based industry where people grow their networks exclusively through their Smart Phones and social media, rather than hotel meetings, one on ones and home parties. We’re not at that point yet, but it’s coming.
Final Thoughts
In conclusion, the history of MLM is very exciting. You can really credit Nutrilite and Amway as pioneers in the industry. Because of them, the industry launched and grew rapidly.
Through the years, thousands of other MLM Companies have tried to duplicate Amway’s success, mostly with dismal results. Furthermore, this industry has produced thousands of six and seven figure earners who earn a large residual income. It’s also helped hundreds of thousands of people supplement their income.
The industry is far from perfect, but it’s here to stay and the future looks bright!
What do you think about the history and evolution of network marketing? What do you think it will be like in 50 years from now? Leave a comment below to share your thoughts. I look forward to hearing from you. Have a great day.
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I appreciate this post because I love to get the background information regarding anything I am invested in. I never would have guessed this went back to the 1940’s. That is pretty incredible that the concept has been sustained so long and has evolved into what it is today. I guess when a concept is as sturdy and smart as this is, it’s bound to stick around.
Yes, this concept has been around a long time and I don’t see it going away any time soon.
Very interesting Chuck. It made great sense because by using the MLM scale, a business cuts a lot of advertising costs. They are able to take those funds and put them into the business to help their direct sellers make money. In a traditional business, very few people win, but in MLM, it everyone can win if they follow the plan.
Spot on Greg. This is a great industry and is positioned for long term growth.