MLM vs. Network Marketing vs. Direct Selling

The title consists of three terms that actually mean the same thing in the MLM universe. That may seem to hard to believe for a person not involved in MLM. However, each time that an MLM term gained a negative connotation because company after company collapsed, a new, more ambiguous term arose from the ashes.

Let's take all three terms in turn:

  • MLM - First there was MLM - multi-level marketing. This was very straight-forward. It describes a system of marketing a product and getting paid on various levels or tiers.
  • Network Marketing - Networking Marketing is a more ambiguous term as it can apply to the standard MLM definition above, but it could also apply to many other companies. For example, an agent for a movie star builds a network of contacts and markets his/her clients to those contacts. This could also be called network marketing, but in this case the focus on various levels or tiers is hidden. A network one-level deep is still a network, but it is not necessary MLM.
  • Direct Selling - Like network marketing, this term further obfuscates the levels and tiers, but also the networking aspect. If I buy an orange at a grocery store that is direct selling of that grocery. If I sell a Pez dispenser on Ebay that is a direct sale. If a little girl sells a glass of lemonade from the lemonade stand, that is direct selling. None of these examples describe any kind of MLM structure.
  • Update: Incentivized Referral Plan - One24 has started playing even more word games. They say that they aren't an MLM, but have an Incentivized Referral Plan. However, if you watch how their green ticket system works, it's clearly an MLM.
  • Update: Community Commerce - Not to be outdone by One24, after more than 5 years of being in the MLM business, MonaVie has started calling their MLM, "Community Commerce."

Shakespeare in Romeo and Juliet wrote that "a rose by any other name would smell as sweet" with the meaning that the names of things do not matter, only what things are. This is wise advice in this case. These companies are constantly changing how they categorize themselves, because as millions of people lose money in them, the news spreads that they should be avoided. For example, most consumers know to avoid MLM, but they might still be tricked into getting involved in "Community Commerce." It sounds as if it might even spruce up your neighborhood, doesn't it?

Bottom Line: When someone uses the term network marketing or direct selling to refer to something that is MLM, it may be because they are trying to group an MLM in a very recognizable legitimate form for business. One question to ask yourself, "If they are trying to disguise what the business really is, what else do they have to hide?"

This post involves:

MLM Mind Games

... and focuses on:

, ,


One Response to “MLM vs. Network Marketing vs. Direct Selling”
  1. Chris Lindsay Says:

    MLM involves direct selling because you do sell product to people who consume it. However, when you sell product, someone else who took no financial risk receives a commission on that sale. This makes MLM an illegitimate form of business. MLM should be banned by the federal government. It is a form of legalized theft.

    I wrote a short essay (600 words) called “The Moral and Ethical Argument Against Multi-Level Marketing.” If you would like to read it, I am open to any feedback: https://christopherjohnlindsay.wordpress.com/2015/09/06/mlm/

 

Previous: MLM Myth: This MLM is Legal so This Other One Must Be Legal
Next: MLM Scam: The Industry is a X Billion Dollar Industry