MLM and Network Marketing – What’s the Difference?

mlm and network marketingWhen you hear the words ” MLM and network marketing ” do you know the difference? Many people do not know the actual difference between multilevel marketing, or MLM and network marketing. While they are similar in many ways, there are a few fundamental differences…

Both MLM and network marketing were designed to allow ordinary people with little or no resources to start their own businesses. Both have very low costs of entry in comparison to conventional business models, and both can be done on a part time basis for as long as you wish to do so.

MLM, or multilevel marketing, is mostly a concept associated with physical products. Think of companies like Amway, GNLD, Forever Living,  Herbalife, etc. In most cases, there is a startup kit that needs to be purchased, and in some cases there is a monthly minimum purchase as well. The requirement of having to purchase the start-up kit, however, is not just about making money for the company and your sponsor – it is also to prove your commitment to the business…

Once you have committed yourself financially – even if it is with a relatively low amount of money – chances are that you will be committed to making it work so as not to waste the money you paid. It does, however, usually pay out a good start-up commission to your sponsor as an incentive for putting a lot of time and effort into getting you to committing yourself to the programme.

With MLM you are usually able to buy your way into higher levels, and make more commission per sale. In some cases you will need to qualify before being able to do so – by meeting specific recruitment targets. With MLM, your commission levels are often determined more by the level you are operating on than your actual sales figures.

Network marketing, on the other hand, is mostly associated with non-tangible products – such as memberships, online tools, and even everyday commodities like insurance.

Network marketing usually has a simpler payment structure, with a set commission percentage or amount per member per purchase (regardless of whether it be monthly or once off). The amount of commission earned per purchase depends on how many levels down the transaction happens.

There are, however, usually performance bonuses for reaching specific targets, and your commission may increase upon reaching specific targets. This, however, is linked directly to the number of sales in your downline, and does not require any additional costs on your end.

So – the difference between MLM and network marketing – in short: MLM is mostly about physical products, and, just like with any physical business, you can usually buy your way into a better position. As such, it is possible to buy yourself into a better position than your sponsor.

With network marketing, however, you have a set cost (although different membership levels may be available), and from there on the amount on your commission cheque depends on your own efforts (and that of your team). Simply put – in network marketing, everyone is equal. 
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