What Is Network Marketing?

Mary Gormandy White
Network marketing concept

BusinessDictionary defines network marketing as "direct selling method in which independent-agents serve as distributors of goods and services, and are encouraged to build and manage their own sales force by recruiting and training other independent agents." These businesses provide flexible earning opportunities that often appeal to people looking for a supplemental source of income.

How Network Marketing Works

These types of companies are sometimes referred to as multi-level marketing enterprises. With these types of businesses, you can earn money from selling products but the highest earning potential is actually associated with recruiting others to join your team in the business. When you recruit others, they will become part of your down-line. You will earn a commission on everything they sell as well as have an opportunity to achieve status and additional earnings based on the number of people you recruit to your team.

Becoming part of a network marketing business typically requires signing on as an independent consultant. There is a fee involved, with costs varying widely from one type of business to another. You will generally receive a starter kit in exchange for the initial fee you pay. These kits typically include product samples, full-size products you can sell, materials you can use to display and sell your products, and information on how to expand your network by recruiting other consultants to join.

Networking Marketing Business Examples

Networking marketing businesses exist in a variety of different industries.

Skincare

Direct sales skincare companies like Mary Kay are examples of networking marketing businesses. With Mary Kay, you will need to invest $100 in a starter kit and pay $30 per year if you also want a custom website. You can sell products through home parties, individual makeovers, or online sales. Building customer relationships is a key to success as earning commission from re-orders is a great way to boost your income. Additionally, loyal customers may be tempted to join the company. Depending on your recruiting success, you can earn significant commissions and incentives, including a car.

Mary Kay is not the only skincare line with this kind of business model. There are a number of other skincare businesses that work this way, including Avon and Rodan + Fields.

Home Goods

There are also a number of network marketing home party sales businesses offering a wide variety of consumer products. Tupperware is one of the most widely-known network marketing organizations. You can join Tupperware with the purchase of a $99 starter kit that includes over $350 of retail value products. You can sell them or use them for demonstrations at home parties or other special events, such as booths at festivals, flea markets, or shopping events. As with other network marketing companies, you'll earn commission on the items you sell as well as make more money based on how many people you recruit to join the company and how well they do.

Pampered Chef is another example of a kitchenware network marketing brand. Candle party companies like Scentsy also represent examples of these types of businesses in the home goods space.

Fashion

There are also network marketing opportunities in the fashion market sector. For example, the popular LuLaRoe brand of causal wear is sold through "Independent Fashion Retailers" who often throw home parties or pop-up sales. Getting started with LuLaRoe is more expensive than many of the other companies as MompreneurAdvice.com indicates that the approximate cost of a starter kit ranges from $5,000 to $6,000. This includes about $4,900 in inventory, which has a retail value of around $12,500.

Clothing is not the only network marketing option in the fashion space. You might want to consider selling accessories through jewelry party enterprises like Park Lane and Premier Designs.

Nutritional Supplements

There are also a few nutritional supplement network marketing brands. Plexus has an ambassador program that allows you to earn discounts on your own products and commission on products purchased or sold by other ambassadors that you recruit. To be an ambassador, you must pay an initial and annual membership fee. Your earnings are based on purchase and sales volume as well as the number of ambassadors you recruit and how successful they are.

Plexus is not the only supplement company that works this way. AdvoCare also has a distributor-based model that is similarly structured.

Make an Informed Decision

The decision to get involved with a network marketing business is a personal one that only you can decide. While it is possible to be successful with this type of enterprise, the opposite can also occur. As with any business opportunity, these types of opportunities have potential for risks and rewards. Make sure you clearly understand what is involved and be prepared to put in effort selling products, recruiting down-line prospects, and helping them succeed. These things are all required to do well in this type of business.

What Is Network Marketing?