Multi-Level Marketing, Direct Selling, and Pyramid Scheme are confusing terms for most of the people. Though Direct Selling and MLM have some similarities, the Pyramid Scheme is different from them.
How Pyramid Scheme is different from the other two?
If you purchase a product from a company then, it is not a pyramid scheme. Pyramid Schemes never give you a product in exchange for your money. The products you purchase from direct selling companies or MLM companies are sometimes overpriced but, you can’t call them a pyramid scheme.
Pyramid schemes ask you to invest money and recruit others who can also invest money. The only way to earn money through pyramid schemes is by recruiting others and earning commission on their sales. There is no product or service involved in the scheme.
Direct sales: As the name suggests, direct selling is the most direct way of business. You must sell products on commission in the direct sales business. Sales occur in the non-retail environment in direct selling business.
Multi-Level Marketing: MLM also works like direct selling initially but, you have to recruit your downline and you can make money by their profit as well. MLM is a more promising business if you want to make more profit.
What is the similarity and difference between Direct Selling and MLM companies?
In both types of companies (direct selling and MLM), you earn profit by selling products. In MLM you can earn profit from your sales as well as from the sales of your downline while in direct sales you can earn only by your sales.
Direct selling and MLM in today’s context
Nowadays, most of the companies are using the MLM model instead of the direct selling model. Most of the direct selling companies are using MLM as well as a direct selling model at the same time. Anyone can register to a direct selling company and can enter the MLM model by recruiting his downline.
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