Network Marketing

“Network marketing” is another name for multilevel marketing, which is a type of sales structure where a bunch of independent agents arranged in tiers sell and market goods and services. Our friends that sell essential oils and sometimes-questionable diet products on their Facebook page are probably involved in a network marketing business.

Here’s how it works: Sheila buys a start-up kit from Fat-B-Gone Dietary Supplements and Tasteless Shakes, LLC (that’s FBG for short), and registers as an independent agent with the company. Not only does she now get a discount on her own fave FBG products, but she also earns a commission every time she sells one to someone else. Pretty simple, right? Now here’s where it gets good: if Sheila recruits her friends Ben and Jen to be independent agents (and purchase the startup kit) as well, then they can get in on the whole discount and commission thing, too. Plus, since Sheila signed them up, she earns an additional commission on their sales. Now let’s say Ben is a real go-getter and recruits four of his frat buddies to also become independent agents. They get the discounts and commissions, Ben earns an additional commission on their sales, and Sheila, who’s now making piles of money, earns a commission on their sales. See where we’re going with this?

The pros of the network business model is that people like Sheila and Ben can end up making quite a bit of money with a relatively small upfront investment. Plus, like other independent contractors, they don’t have to commute to an office every day in their business casual attire and put up with Smelly Steve in the cubicle next door just to earn a living. One of the major criticisms of these types of businesses, though, is that sometimes they’re a little on the shady pyramid-schemey side. So if we’re thinking of getting into the network marketing biz, we should definitely do our research on the company, the compensation structure, and the products we’ll be selling.