How does multilevel marketing work?
In multilevel marketing, a direct sales or a B2C (business-to-consumer) company sells products or services to individual sales representatives who often act as their own small business owners. In turn, these representatives focus on selling a product or service directly to consumers, normally without a storefront. The independent distributors within the MLM structure act as sales reps, brand ambassadors or micro-influencers.
Is multilevel marketing legal?
Multilevel marketing is legal in the U.S. and most countries. It is banned in a handful of countries, such as Bangladesh, China and Saudi Arabia. While legal in the United States, the MLM business practice is often considered controversial because it can use predatory recruiting techniques and unpaid labor of its sales representatives. Critics say the MLM business strategy has many similarities to a pyramid scheme, which is illegal in most countries.
Examples of businesses that use multilevel marketing
Even with controversies, several MLM companies have proved to be very profitable. One of the most profitable MLM companies is Amway, which was worth $8.4 billion in 2020.
Some other well-known companies that use multilevel marketing include:
- Avon
- Herbalife
- LuLaRoe
- Mary Kay
- Scentsy
- Tupperware
Stramasa – The Multi Level Marketing Company For You
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