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Carolyne mwende

Netpreneur, blogger and web designer

Network marketing

ByCarolyne Mwende

Nov 2, 2023

Network marketing, also known as multi-level marketing (MLM), has a history dating back to the early 20th century. Here’s a brief overview of its evolution:

 

1. Early Roots (1900s): The concept of direct selling and commission-based sales has been around for over a century. Companies like Avon and Tupperware used door-to-door sales to distribute their products.

 

2. Amway (1959): Amway, founded in 1959, is often considered one of the pioneers of modern network marketing. They introduced a multi-level compensation plan where distributors earned commissions not only on their sales but also on the sales of their recruits.

 

3. Legal Challenges (1970s): In the 1970s, Amway faced legal challenges, leading to the establishment of legal guidelines for MLM companies. The Amway Safeguard Rules and the “70% Rule” are some of the key regulations that emerged from this period.

 

4. Growth and Diversification (1980s-1990s): The 1980s and 1990s saw the rapid growth of network marketing companies across various industries, including health and wellness, cosmetics, and household products. Companies like Herbalife, Mary Kay, and Nu Skin gained prominence.

 

5. Criticism and Controversies: MLM companies have faced criticism and legal scrutiny due to concerns about their business practices. Allegations of pyramid schemes, high dropout rates, and deceptive marketing have been recurring issues.

 

6. Regulation and Legitimacy (2000s-Present): Various countries have enacted regulations to distinguish legitimate network marketing companies from pyramid schemes. The Direct Selling Association (DSA) in the United States and similar organizations worldwide promote ethical practices within the industry.

 

7. Online Network Marketing: With the rise of the internet and social media, network marketing has adapted to digital platforms. Distributors use online tools to recruit and sell products.

 

8. Modern Network Marketing: Today, network marketing is a global industry with a diverse range of products and companies. It continues to be a viable business model for those who succeed in building and leading large distributor networks.

 

Network marketing remains a controversial business model, with proponents touting its potential for entrepreneurial success and critics highlighting the risks and challenges associated with it. It’s important for individuals considering participation in network marketing to research and evaluate opportunities carefully before getting involved.

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