Direct sales or multi-level marketing (MLM) is not a new business model. But it is a business model with new life and potential. Often equated with Mary Kay’s pink Cadillacs and house parties, MLM is seeing a new place in e-commerce and the global economy. As a result, those connected to the direct selling business are experiencing a huge increase in popularity and success. This is due, in part, to higher unemployment and declining economic stability in recent times. However, the real driver of the increase in direct sales business income potential is much more than the house parties of middle-class women above. Consumer behavior is driving demand for direct sales, and it’s a business shift that will stick.
While word of mouth and recruiting team members (usually called a downline) is still an important aspect of MLM, the way sales are made, teams are built, and the ceiling on profit potential has changed. drastically. This is mainly due to changes in consumer behavior and expectations, coupled with a growing global economy. Technological advances that provide quick access and a wealth of tools and applications have made e-commerce simple and near real-time. This has created a new direct selling business model and an opportunity that may very well dominate for decades to come.
Gone are the days of calling everyone on “your list” to network, attract business partners, and generate sales. While still an important part of any successful business, MLM’s emphasis is now more on blogging, social media, internet marketing, and lead generation. Word of mouth is still prevalent, however new independent distributors are using social media on the web to promote their products and business opportunities. And new direct selling companies aren’t pricing themselves out of the market. While team building remains a core function, the emphasis is on selling the product. To be competitive and profitable, direct selling companies know that their products must be fairly priced and of high quality.
Successful direct sales companies that provide a legitimate business and income opportunity have the following key business elements:
- Training and corporate tools
- Active consulting network
- High quality products
- internet centric
- Minimum inventory requirements
- Corporate media exposure and advertising
The business model has real potential for long-term success with the right mix of attributes. Not all current MLM companies have made the necessary changes to their business. However, the prediction is that they will soon make significant adjustments and follow the model of the leaders in the business.