Do you remember those Tupperware and Pampered Chef parties your mom would host when you were younger?
You’d have to clean the house all day just to get confined to your room while your mom dealt with some high-quality kitchen gear and entertained the other moms in town. You weren’t entirely sure what was going on outside your bedroom door those nights.
Turns out, your mom was an entrepreneur, running her own home marketing business and participating in network marketing.
Network marketing is a business model where individuals earn income by selling products directly and recruiting others to do the same. It operates on a multi-level compensation structure, meaning earnings come from both direct sales and the sales made by one’s recruits, also known as downline members.
Some network marketing companies use multi-level marketing (MLM) software to assist with lead generation and deploy their strategy.
In this article, you will learn about the types of network marketing, its history, and things to consider before approaching network marketing.
Network marketing, although similar, is not to be confused with influencer marketing. Instead, it can be broken down into three essential categories.
These categories are similar in that they call upon individuals to use their personal networks to run their businesses. Through these networks, individuals make sales or recruit others to sell products.
Multi-level marketing (MLM) is a distribution-based marketing network that includes direct sales and a downline of distributors. These home businesses tend to get a lot of bad press for their similarity to pyramid schemes.
In reality, they have one key difference. Where pyramid schemes require people to invest in a false promise of wealth, MLM organizations sell real products or services that distributors believe in.
Source: LastWeekTonight
Many MLM companies provide a healthy infrastructure and great training, plus extra rewards for high performers. Notable examples include Amway, doTERRA, and PM-International.
How does direct marketing differ from MLM? This single-tier marketing system requires an individual to sign up for a program to sell a product or service. Individuals who sign up for these programs do not need to recruit other distributors and are paid only for the direct sales they make.
Direct marketing is the most immediate form of sales. Find a product you like and get your friends and family to buy it. A few top companies involved in this type of network marketing are Mary Kay Cosmetics, Avon Cosmetics, and Pampered Chef Kitchen Supplies.
Why is affiliate marketing booming online? A newer aspect of network marketing is using online affiliate marketing platforms. Website owners and bloggers integrate links to specific products on their platforms. When people click on those links and purchase products, the website owner is rewarded with a referral fee. This provides customers with access to a trusted site where they can immediately purchase the products being advertised.
It’s important for those using affiliate links to be transparent about that. A simple disclaimer at the bottom of a blog post fits this purpose and lets your audience know that you’re making money from these links. Amazon’s affiliate program is one of the most well-known, but Partnerize and Google’s Affiliate Network are also options.
There are thousands of affiliate programs out there that both brands and individuals can leverage. Researching the most lucrative opportunities before joining any program is crucial.
A great example is the growing market for clock in clock out apps, which often offer affiliate partnerships. Be sure to research the most high-paying affiliate programs out there before you join a program.
Are MLMs the same as pyramid schemes? Here’s a visual breakdown.
| Feature | MLM | Pyramid Scheme |
| Product/service | Genuine offerings with demonstrated consumer value | Often, none. Focus on recruitment only |
| Earnings source | Sales commission from the product and the downline | Recruitment fees |
| Distributor payout | Based on actual product sales | Based on recruiting new members |
| Regulatory status | Legal and regulated; disclosure and product focus required | Illegal in many jurisdictions; the FTC frowned favorably on recruiting |
| Risk level | Moderate; inventory risk, customer dependency | High; often unsustainable, frequent legal consequences |
This chart clarifies the fundamental distinctions between legitimate MLMs and illegal pyramid schemes, supporting informed decisions at a glance.
The roots of network marketing trace back to early 20th-century direct sales pioneers like the California Perfume Company (now Avon) and Nutrilite, which combined person-to-person selling with commission-based recruitment. In 1959, former Nutrilite distributors launched Amway, popularizing the multi-level marketing (MLM) structure, where earnings come from product sales and team-building commissions.
By the 1980s, network marketing gained momentum, particularly among women seeking flexible income opportunities during a time of economic growth and shifting gender roles in the workforce. MLMs offered home-based business models with built-in mentorship and community support.
Source: Amway Center
The 1990s and 2000s marked a digital turning point. Email, e-commerce, and business texting apps enabled distributors to connect, sell, and scale without leaving home. Forward-thinking companies also began integrating network marketing into broader omnichannel marketing strategies, blending direct sales with digital, retail, and influencer touchpoints.
Today, network marketing continues to evolve with the rise of social selling, influencer marketing, and affiliate platforms. While the model remains centered on relationship-driven sales, modern network marketers also rely on automation tools, social content, and digital trust. Across all formats, transparency, compliance, and mentorship remain essential to long-term success.
However, there are some other things you should take into consideration if you think network marketing is for you.
If you’re ready to start your own home business as a network marketer, there are some things you should consider and research first. These organizations want access to your network of friends and family.
You value the people in your life, so protect them and only market what you personally find valuable.
Like in any career, you need to make sure you are securing yourself and your customers. A large number of scams exist, claiming to be network marketing opportunities. Use the simple checklist above to begin research into network marketing organizations.
Remember that this is a business. You are your own boss and your own employee. If you want to call the shots, you need to be okay with facing failure and trying again. Keep in mind that not everyone in your network may be supportive.
Additionally, have a clear understanding of how this affects your taxes and finances. If you’re not versed in accounting, consider hiring an accountant. There are many people who specialize in dealing with home-based businesses.
Checklist for beginners: What to look for before you commit:
If you joined a network marketing organization, chances are you were recruited by someone you know. This person has likely been around longer than you and should function as your mentor until you get off your feet.
It’s in the best interest of your mentor to help you succeed, so be willing to listen to them and learn the system.
Equally as important, it’s vital for you to be a good mentor when the time comes. When you recruit someone into your organization, support them and teach them how to be a successful network marketer.
Long-term relationship building is how you’ll find success in network marketing.
Whether you're just starting or becoming a mentor yourself, here's why mentorship matters:
What’s the difference between these three popular strategies?
| Criteria | Affiliate marketing | Direct marketing | MLM |
| Earning structure | Referral commissions | Direct sales commissions | Direct and downline sales commissions |
| Recruitment required? | No | No | Yes |
| Inventory needs | No (digital links) | Yes, usually at-home product stock | Yes, it may require starter kits |
| Training provided | Limited | Basic product and sales training | Comprehensive mentorship and business training |
| Legal concerns | Low regulatory risks | Low to moderate; product liability matters | Moderate; must comply with MLM and FTC laws |
This comparison helps clarify where each model fits in the network marketing spectrum.
Before you join, know the rules. Staying on the right side of regulators is critical. Keep these in mind:
Protect yourself and your network. Always do the due diligence.
Have more questions? Find the answers here.
Network marketing is a direct sales strategy in which participants sell products and recruit others into the system. It works by offering commissions from personal and team sales, forming a multi-level structure. Income increases as team size and sales volume grow.
The three main types of network marketing are single-tier, two-tier, and multi-level marketing. Single-tier pays commissions for direct sales only. Two-tier adds commissions from sales by direct recruits. Multi-level includes earnings from multiple layers of recruits.
Evaluate a network marketing company by reviewing its product quality, compensation plan, legal compliance, leadership, and training systems. Look for transparency, realistic income claims, and a strong support structure before joining.
The risks of network marketing include financial loss, recruitment pressure, market saturation, and legal issues. Many participants fail to earn a substantial income due to high competition and unrealistic expectations.
Mentorship plays a critical role in network marketing success by providing guidance, motivation, and proven strategies. New participants benefit from experienced mentors who help them build skills and avoid common pitfalls.
Network marketing and multi-level marketing (MLM) are often used interchangeably, but MLM specifically refers to the structure where participants earn from direct sales and the sales of their recruits. All MLMs are network marketing, but not all network marketing models involve multiple levels.
Start a network marketing business by choosing a reputable company, registering as a distributor, learning the products, and building a customer base. Success requires consistent selling, recruiting, and following a proven system.
We’ve covered almost everything there is to know about network marketing, including what it is, the different types, its history, how to choose an organization, and the importance of mentorships.
As you go forward and employ your network to sell a product or service, keep in mind that before they are your customers, they are your friends and family. Building a great relationship first and selling a product second is the way to be an effective and successful network marketer.
Another way to generate leads is by maintaining a good brand reputation. Promote a positive brand experience by tracking customer reviews through online reputation management software.
This article was originally published in 2023. It has been updated with new information.
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