A network marketing business is a company that deals in multi-level or MLM marketing, promoting products that it does not produce. This marketing structure is designed in such a way that a distributing hierarchy is created, with every distributor having other subordinated distributors, making sales for the same parent company. A network marketing business depends on a direct approach of customers most of the time. Since the success of Amway network in the United States, other companies converted and implemented network marketing business models but many have faced a legitimacy issue.
Experts advise any individual network marketing business to be wary of organizations that offer very high incentives for recruitment of other distributors particularly if the sums are larger than the sales as such. You should also know that pyramidal systems in which commissions are earned for member recruitment have been declared illegitimate in many states. The best course of action for a network marketing business is to base all the management decisions on solid verifiable information.
Misleading, deceptive or unethical behaviors and practices have too often been associated with various network marketing business organizations. It is for instance condemnable to exploit personal relationships to make money profit, just as it is unacceptable to promote products or services through evangelical discourse. Therefore, the reputation of many such businesses in this marketing branch has grown out of the aggressive recruitment practices rather than from real money making opportunities.
There is a perfectly logical explanation why a network marketing business may not succeed on the long run: by constantly recruiting new members, people are generating other competitors in distribution, reaching a market saturation that kills their business. Lots of people have discovered that after subtracting all the purchases they made from the mother company, as well as the expenses related to the activity, they could hardly claim any profit from sales. Most distributors have discovered financial loss in such cases.
If functioning according to optimal parameters without any over-saturation of the market, a network marketing business ought to bring you enough profit to make a decent living. The mother company should pay you a commission for the sales you make. In legitimate terms, such a business would develop by creating an active customer list without having to recruit downlines as part of the collaboration. Another possibility is to purchase products at wholesale prices that one will afterwards sell in the retail regime.