HISTORY OF NETWORK MARKETING

Network Marketing or Multi-Level Marketing (MLM) as it is called world over happens to be a fast growing phenomenon. The fact that anyone, anywhere can become a distributor and earn income from building the network without having to sacrifice any other occupation or huge investment into this business makes it very attractive for people from all walks of life to attempt at joining the network. It is estimated that in US alone over 70 percent of the Direct Selling Revenues come from Network Marketing. Though no figures are available to confirm the revenue figures at national level, over 50 million people are estimated to be engaged in Network Marketing all over the world.

 

Though there is no documented history of Origin of Network Marketing, generally it is believed that this concept owes its origin to ‘Nurtralite’ or formerly known as California Vitamin Company which produces food supplement products. In the early part of 1940s, the Company used to engage in Direct Selling.

 

The concept of Network or Multi-Level Marketing seems to have emerged accidently when the Distributors discovered that they were generating more sales for the Company by referring their friends and known people to the business opportunity available with Nutralite. At this point of time, there was no system in place to recognize and reward the distributors for their efforts in recruiting other Distributors for the company. With the realization dawning on the Distributors and the Company, the system of paying 2 percent bonus to the sponsor Distributor on the sales that were achieved by the Distributor and the network that he sponsored or built was introduced. This then led to the birth of modern day system of ‘Network Marketing’, ‘Multi Level Marketing’ or ‘Referral Marketing’.

 

Nutralite achieved unprecedented growth and profits in the following decades thanks to the fast growing network not only in the US but across other continents as well. In early 1960s, two men Richard DeVos and Jay Van Andel,c who were the Distributors of Nutralite broke away to build their own company which grew to be the biggest in MLM business world over called ‘Amway’. This company initially made a foray into Household and cleaning products and went on to buy Nutralite Company and merge the food supplement products into its portfolio.

Yet another distributor named Dr. Forrest C Shaklee too broke away from Nutralite at the same period that ‘Amway’ took birth and found the new Company named Shaklee dealing with Nature’s sunshine products.

Today there are several hundreds of Companies that are practicing Network Marketing or Multi Level Marketing and compensation methods to sell their products. Numerous Companies/Brands such as Forever Living Products, GNLD, QNET, Tiensh, World Ventures, Organo Gold, Avon, Tupperware, Electrolux, Discovery Toys, Herbal life, Kleenez, Oriflame, Reliv etc have been highly successful in growing their business globally using this concept of sales.

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