Network Marketing is also known as Multi-Level Marketing. it is a method that offers compensation to direct selling companies’ promoters, for not just the product sales they generate, but also for the sales of others they introduced to the company. Network Marketing operates in 100 countries, and in all 50 states of the United States. “Affiliate marketing”, or “home-based business franchising” are some of the terms new businesses may use. Through referrals and word-of-mouth marketing, the company and products are usually marketed directly to potential business partners and consumers. In the most lawful of Network Marketing companies, the commissions are earned only on sales of the company’s products or services. Recruiting alone (“sign-up fees”) does not generate money, though a major attraction of Network Marketing is the money earned through the sales of recruited members.

In a nutshell, goods or services are sold by distributors to people outside the organization in Network Marketing. This results in a net cash flow to inside from outside, and the implication is that nobody in a well-run Network Marketing organization need lose out. The incoming revenue is split between people in the organization, based on retail sales, and group-building success. The majority of companies usually sell products related to health or cleaning, of course there are various other possibilities. Anyone going into this industry should examine the quality of the products, and not believe the claims of the person who is introducing them to the business.

Network Marketing has faced its share of criticism, however. In 1979, the Federal Trade Commission (FTC), issued a decision, In re Amway Corp, that Network Marketing was not illegal per se in the United States, however, Amway was accused and found guilty of price fixing, (by requiring “independent” distributors to sell at the low price), and making exaggerated income claims. The FTC feels that Network Marketing organizations with greater incentives for recruitment than product sales should be taken with a pinch of salt, and viewed with a little skepticism. The practice of getting commissions from recruiting new members is outlawed in most states, and is called “pyramiding”.

At the end of the day, Network Marketing is legal, and is governed by strict regulations in most countries. However, there have been cases of some companies pretending to be Network Marketing companies, whilst failing to maintain the required regulations. The Direct Selling Association regulates the Network Marketing industry, in most countries around the world.

Anyone can make a decent amount of money from this industry. It is suggested that a networker put in at least 8-10 hours of business every week. Learning to become an effective networker is a valuable skill, and if you can make it big in this industry, count yourself lucky. If you work hard, there is every chance of success. Networking Marketing is not one of those get-rich-quick schemes, it requires effort, and takes dedicated endeavors before one can start earning a substantial income. However, it’s a good thing to do on the side, for some extra income.