MLM VS Network Marketing: Is There Even a Difference?

By John Cruz

MLM and network marketing are two terms used interchangeably, but they are not the same thing.

MLM stands for multi-level marketing, whereas network marketing is a broader term that covers different types of marketing strategies.

MLM is a type of network marketing, but not all network marketing is MLM.

MLM is a business model in which individuals earn money by recruiting others to join their team and sell products.

They earn a commission on the sales made by their recruits, as well as on their own sales.

MLM companies often have a pyramid-like structure, with those at the top earning more money than those at the bottom.

This has led to some criticism of the MLM industry, with some calling it a pyramid scheme.

Network marketing, on the other hand, can refer to any type of marketing strategy that involves building a network of contacts to promote and sell products or services.

It can include MLM, but it can also include other types of marketing, such as affiliate marketing or referral marketing.

Understanding MLM


MLM, or multi-level marketing, is a business model that involves recruiting others to join a company and sell its products or services.

These recruits are known as a “downline” and are compensated for their sales as well as for the sales of those they recruit.

In MLM, there are typically multiple levels of compensation, with those at the top earning the most money.

This has led some to criticize MLM as a pyramid scheme where only those at the top can truly profit.

However, MLM companies argue that their compensation plans are legal and ethical and that they provide opportunities for individuals to start their own businesses with low start-up costs.

One key aspect of MLM is the emphasis on recruiting new members.

This can sometimes lead to a focus on recruitment over actual sales, which can be a red flag for potential participants.

Overall, MLM can be a controversial business model, with both supporters and critics.

It is important for individuals to carefully research any MLM opportunity before joining to ensure that it aligns with their personal values and goals.

Understanding Network Marketing

Network marketing is a type of business model where individuals or companies promote and sell their products or services directly to consumers through a network of distributors.

It is also known as direct selling, referral marketing, or multi-level marketing (MLM).

In network marketing, distributors earn money through commissions on the products or services they sell, as well as on the sales made by the distributors they recruit into the network.

This creates a hierarchy of distributors, with those at the top earning more money than those at the bottom.

One of the key benefits of network marketing is that it allows individuals to start a business with low start-up costs and no inventory requirements.

This makes it an attractive option for people who want to be their own boss and work from home.

To be successful in network marketing, you need to be able to build and maintain relationships with your customers and your team of distributors.

This requires strong communication and leadership skills, as well as a willingness to learn and adapt to new situations.

Overall, network marketing can be a lucrative and rewarding business opportunity for those who are willing to put in the time and effort to build a successful network of distributors and customers.

MLM VS Network Marketing – What’s the Difference?


I know it sounds very different or the complete same, depending on who is explaining it to you.

For those involved, they’ll typically say they are the same thing, depending on how the company’s compensation plan works.

For those on the outside looking in, they will likely consider them very different.

To help give the best explanation, here is a breakdown between MLM and network marketing.

MLM VS Network Marketing – Operational Differences


MLM and network marketing are two different business models that share some similarities.

As stated earlier, MLM, or multi-level marketing, involves recruiting people to sell products and services to their friends and family and then recruiting more people to do the same.

Network marketing, on the other hand, is a broader term that encompasses a variety of business models that involve building a network of people to sell products and services.

One of the main differences between MLM and network marketing is the way that they compensate their distributors.

MLM companies typically pay their distributors based on a multi-level commission structure, while network marketing companies may use a variety of compensation models, such as direct sales, affiliate marketing, or referral marketing.

Another key difference between MLM and network marketing is the level of control that distributors have over their business.

MLM companies often require their distributors to follow strict rules and guidelines, such as purchasing a certain amount of product each month (usually referred to as points volume) or attending regular training sessions.

Network marketing companies may be more flexible, allowing their distributors to set their own schedules and work at their own pace.

MLM VS Network Marketing – Income Potential


Both MLM and network marketing offer the potential for significant income, but the level of income that can be earned varies depending on a number of factors.

MLM companies often promote the idea of “unlimited earning potential,” but the reality is that most distributors earn only a small amount of money, with a few top performers earning the majority of the commissions.

Network marketing companies may offer more realistic income potential, with many distributors earning a full-time income or more.

However, the level of income that can be earned depends on the products or services being sold, the size of the network, and the effort and skill of the individual distributor.

MLM VS Network Marketing – Training and Support


Both MLM and network marketing companies offer training and support to their distributors, but the quality and effectiveness of this training can vary widely.

MLM companies often provide extensive training and support, including regular meetings, webinars, and conferences.

Network marketing companies may offer less formal training and support but may provide access to online resources, mentorship programs, and other tools to help distributors succeed.

Ultimately, the choice between MLM and network marketing depends on various factors, including personal preferences, the products or services being sold, and the level of income potential and support each company offers.

By carefully considering these factors and doing their research, individuals can choose the business model that is right for them.

Pros and Cons of MLM


MLM already comes with a bunch of questions, which is typical with any money-making opportunity.

However, it all depends on how or who is dealing with MLM that determines what MLM really is.

Here are some of the good and bad things about MLM.

Pros of MLM

Although MLM might sound like the more negative business model between the two, there’s actually some good that it has.

  • Flexibility: MLM often allows individuals to work on their own time and at their own pace, making it a good option for those who need a flexible schedule.
  • Low start-up costs: Many MLM companies require only a small investment to get started, making it accessible to individuals who may not have a lot of capital to invest.
  • Opportunity for passive income: MLM can provide the opportunity for individuals to earn passive income by building a team of salespeople who also sell products.

Cons of MLM

While MLM can offer potential benefits, there are also some potential drawbacks to consider:

  • High turnover rate: Many individuals who join MLM companies do not stay for long, leading to a high turnover rate and difficulty in building a stable team.
  • Emphasis on recruitment: Some MLM companies may place more emphasis on recruiting new salespeople than on selling products, which can lead to a focus on building a large team rather than on product quality.
  • Negative reputation: MLM has gained a negative reputation in some circles due to the high turnover rate and emphasis on recruitment, leading some individuals to view it as a pyramid scheme.

Overall, MLM can be something to consider if you are willing to put in the time and effort to build a successful team, but it is important to carefully consider the potential pros and cons before getting involved.

Pros and Cons of Network Marketing


Pros of Network Marketing

Like MLM, network marketing has its benefits and reasons for joining.

  • Flexibility: Network marketing allows you to work from anywhere and at any time, making it a great option if you want to work from home or have a flexible schedule.
  • Low start-up costs: Compared to other businesses, network marketing has low start-up costs, making it attainable for those not looking to invest a lot of money.
  • No inventory required: Most network marketing companies do not require their distributors to purchase and store inventory, which minimizes the risk of financial loss.
  • Personal development: Network marketing allows you to develop your personal and professional skills, such as communication, leadership, and salesmanship.

Cons of Network Marketing

While network marketing has its advantages, there are also some potential drawbacks to consider.

  • High failure rate: According to some studies, the failure rate for network marketing businesses is high, with many distributors failing to make a profit or even losing money.
  • Stigma: Network marketing has a negative reputation in some circles, with many people viewing it as a pyramid scheme or scam.
  • Pressure to recruit: Many network marketing companies place a heavy emphasis on recruiting new distributors, which can lead to pressure and strain on personal relationships.
  • Limited income potential: While some network marketers earn a significant income, the vast majority earn very little, with the average distributor earning less than $5,000 per year.

Overall, network marketing can be a good business opportunity for those who are willing to put in the time and effort required to succeed.

However, it is important to carefully consider the pros and cons before deciding whether network marketing is right for you.

Choosing Between MLM and Network Marketing


When deciding between MLM and network marketing, it is important to understand the differences between the two.

When deciding, these are some factors to consider:

  • Compensation Plan: MLMs typically offer more complex compensation plans than network marketing companies. It is important to understand the compensation plan and how commissions are earned before joining any business.
  • Products or Services: Both MLM and network marketing companies offer a variety of products and services. It is important to choose a company with products or services that align with your interests and values.
  • Company Reputation: Research the company’s reputation before joining. Look for reviews and testimonials from current and former distributors.
  • Start-up Costs: MLMs often require higher start-up costs than network marketing companies. Make sure to consider the financial commitment before joining any business.

Ultimately, the decision between MLM and network marketing comes down to personal preference and individual goals.

At the same time, the product or service will make or break your decision.

Find a company with solid products, and you’ll have an easier time selling them to others.

Conclusion – Go With What Works

In conclusion, MLM and network marketing have similarities and differences that make them unique in their own ways.

As a trying MLMer/network marketer, I know how complicated things can be.

It’s not easy to talk to friends and family about your latest lotions and potions, and it’s not easy just to be involved in the space.

However, if you understand how the business works and are looking for a way out of the 9-5 grind, this is one way it can be done.

Besides that, I hope you can see the difference between MLM and network marketing and decide whether or not you should get involved.

I’ve done it a few times, but the digital lifestyle and making money online work better for me.

MLM and network marketing are not for everyone, so it’s either you’re in or you’re out.

Either way, great job in trying to think outside the box.

About John

Dad, human, and digital entrepreneur who lives the digital lifestyle to the fullest. You'll mostly find him at coffee shops trying to get work done or at the mall with his kids.

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