What is Network Selling? Definition and Examples

Do you sell directly to the public, rather than through traditional retail channels? Do you also recruit other people to join the business and sell too? If so, you are involved in Network Selling, Network Marketing, or Multilevel Marketing – you are a Network Seller.

Network selling is a business model that relies on person-to-person sales by independent representatives.

You probably started off by tapping into your network of family, friends, and acquaintances to promote and sell your products. Then, you expanded your customer base and recruited people to join the business. We refer to these recruits as your “downline.”

Whenever one of your recruits makes a sale, they earn a commission and so do you. As your network of recruits grows, your downline will have several layers. You will earn commission on all your downline sales.

Looks Like a Pyramid

As you recruit more people, and they recruit too, your whole downline starts looking like a pyramid. However, despite the appearance, this is not a pyramid scheme. Network selling is legal.

Read the explanation below by The Economic Times, which refers to the sales model as Network Marketing:

“Network marketing is a legal and trusted form of marketing. However, people often misconnect it with a pyramid scheme, which is illegal. In a pyramid scheme, the actual members of the company make money by recruiting new members instead of selling their services and products.”

Image showing a network of salespeople - Network Selling Structure.
Image created by Market Business News.

Brief History

Network selling has been around since the early twentieth century. One of the earliest examples is the California Vitamin Company, which later became Nutrilite, founded in 1934.

Network selling began gaining significant traction in the 1950s and 1960s, especially with the founding of Amway in 1959.

By the 1980s and 1990s, it had become a well-established sales strategy, with many companies adopting this model, particularly in health, wellness, and cosmetics. Today, approximately 7.3 million people in the United States are involved in network selling or direct selling.

Network Selling and Direct Selling

The terms Direct Selling and Network Selling are similar, but not exactly the same.

  • Network Selling

This type involves selling products directly to consumers through a network of independent representatives. These representatives not only sell products but also recruit others to join the business.

  • Direct Selling

Direct Selling refers to the sale of products or services directly to consumers, bypassing traditional retail channels like supermarkets and stores. However, direct selling is a broader term that includes one-to-one demonstrations, home parties, and other sales techniques. Some direct selling methods involve recruiting or building a network of sellers, while others do not.

Put simply, network selling is a type of direct selling. If we use the analogy of oranges and fruit, network selling is the orange, and direct selling is the fruit.

Network Selling – Flexibility

One of the key aspects of network selling is the flexibility it offers. You can start your business with relatively low upfront costs, and you can work part-time or full-time, depending on your personal goals.

For many, network selling provides an opportunity to generate additional income without the need for a traditional job.

It is also a way to build entrepreneurial skills, as you’ll be responsible for your own marketing, sales, and recruitment efforts.

However, success in network selling requires effort, persistence, and strong interpersonal skills.

It is not just about selling a product; it’s about building relationships and trust with your customers and team members.

Your ability to communicate effectively and motivate your downline will play a significant role in your success.

Choosing the Right Company

You should choose a network selling company that aligns with your values and offers products you genuinely believe in.

If you’re passionate about what you’re selling, that enthusiasm will naturally come through when you talk to potential customers and recruits.

Additionally, take the time to research the company’s track record, compensation plan, and the quality of its products before you commit.

Challenges

Network selling has many advantages, but like any job or business, it also comes with its challenges.

The competition can be intense, and not everyone you approach will be interested in buying or joining your network.

Don’t let rejection get you down. Stay positive. If someone turns you down rudely or aggressively, remind yourself that you are now one step closer to finding a potential paying customer or recruit.

It might be a while before you make a decent income. It is crucial to set realistic expectations and approach network selling as a long-term commitment rather than a get-rich-quick scheme.

Top Ten Network Selling Companies

Here’s a list of the top ten network selling companies along with their headquarters, founding dates, annual revenue, and the types of products they sell:

  • Amway

Revenue: $8.1 billion (2022)
Headquarters: Ada, Michigan, USA
Founded: 1959
Products: Health, beauty, and home care products

  • Herbalife

Revenue: $5.2 billion (2022)
Headquarters: Los Angeles, California, USA
Founded: 1980
Products: Nutrition, weight management, and personal care products

  • Avon

Revenue: $4.76 billion (2022)
Headquarters: London, England, UK
Founded: 1886
Products: Beauty, household, and personal care products

  • Mary Kay

Revenue: $2.3 billion (2022)
Headquarters: Addison, Texas, USA
Founded: 1963
Products: Skincare, cosmetics, and fragrances

  • Natura & Co

Revenue: $6.91 billion (2022)
Headquarters: São Paulo, Brazil
Founded: 1969
Products: Personal care, beauty, and cosmetics

  • Tupperware

Revenue: $1.8 billion (2022)
Headquarters: Orlando, Florida, USA
Founded: 1946
Products: Kitchen and household products, primarily food storage solutions

  • Oriflame

Revenue: $1.47 billion (2022)
Headquarters: Schaffhausen, Switzerland
Founded: 1967
Products: Skincare, cosmetics, and wellness products

  • Vorwerk

Revenue: $4.23 billion (2022)
Headquarters: Wuppertal, Germany
Founded: 1883
Products: Household appliances, particularly the Thermomix kitchen appliance, as well as cosmetics and other household products

  • Nu Skin

Revenue: $2.4 billion (2022)
Headquarters: Provo, Utah, USA
Founded: 1984
Products: Personal care products, dietary supplements, and anti-aging solutions

  • USANA Health Sciences

Revenue: $999 million (2022)
Headquarters: Salt Lake City, Utah, USA
Founded: 1992
Products: Nutritional supplements and personal care products

Final Thoughts

Network selling offers a unique opportunity for you to earn income by leveraging personal relationships and building a team.

By focusing on providing value to your customers and supporting your downline, you can create a successful and rewarding business.

However, it’s essential to do your homework and approach this business model with both enthusiasm and caution.

May your network grow and your sales flourish!