Everybody knows about marketing that it is an essential part of a business. It is essential to promote our product to others and increase sales. Many businesses have their own marketing team and also there are many agencies that provide marketing services. But, have you ever heard about network marketing companies?
If you are listening to this term for the very first time, then don’t worry. Today I will tell you what is network marketing, how does it work, and which are the best network marketing companies in India. So, keep reading this article and you will learn many new things today.
What’s in it for you-
- What is Network Marketing?
- Origin of Network Marketing Business
- Network Marketing Business Model
- Top 10 Network Marketing Companies in India
- Consumer Protection Rules 2021 for Direct Selling
- Future of MLM Business in India
- Top Selling Books on Network Marketing
What is Network Marketing?
First of all, let me tell you that network marketing companies are also popular with the name multilevel marketing companies or MLM business. Basically, this business works on direct selling. Now, you might be thinking what does that mean?
Direct selling is a process where you sell the products to the people in your network. These people can be your family, friends, relatives, neighbours, etc. and join them as your representative.
Generally, people associated with MLM business use the lead generation method to attract people and turn them into customers. Some of them work part-time and others choose it as a full-time career.
Network marketing has many different names such as direct selling, pyramid selling, relationship marketing, referral marketing, etc. But, all the names follow the same concepts and various types. Let us discuss now how many types of network marketing exist in the market.
You might have seen many influencers on various social media platforms that promote the products of various companies of their niche. Either the companies pay them a specific amount to advertise the product or they offer them a commission on each sale through their channel.
Usually, these are not network marketing companies, but the method of selling is a kind of referral marketing which we also see in many software, apps, games nowadays. Here you just promote the product or service directly to consumers and don’t need to further add any distributor.
Two Tier Marketing
In two-tier network marketing, you recruit somebody as a distributor. The person works under you. Basically, the process is the same as one-tier marketing.
But, you get the commission on your sales as well as the sales done by your distributor. This is the advantage of two-tier network marketing.
As the name suggests, this type of marketing involves the selling of products and associating more than two levels of distributors. Multilevel marketing companies are the most popular companies in the concept of network marketing. The reason behind their growth is the possibility of earning more money.
Origin of Network Marketing Business
Well, if I talk about the history of network marketing, it has its origin in the early 1930s. Basically, there was a company, California Vitamins that used to sell dietary supplement products. The company came up with a new idea of marketing their products where they paid incentives to the customers who helped to boost their sales by recommending the products to the people in their contact.
The concept of direct selling started here and then people took the appropriate benefit from it. In 1943, California Vitamins changed its name to Nutrilite Corporation. You might not know about California Vitamins, but you would have heard the name Nutrilite. Also, let me tell you that it was the first official multi level marketing company.
In 1949, Jay Van Andle and Richard Marvin DeVoss joined Nutrilite as independent distributors. They worked there for around 10 years. But due to some disputes with the company, Jay and Marvin left Nutrilite and established their own company in 1959. They started to sell household goods and the name of the company was “The American Way”.
Do you think that you have heard this name before? Of course, it’s Amway! And now many of you would say that “I am also using the products of Amway”. And it is quite obvious because Amway is one of the most recognized network marketing companies in India and all over the globe.
Network Marketing Business Model
It might be possible that you are not interested in MLM and not associated with any network marketing companies. But, you have heard that people earn millions of bucks in a month with this business. But, how could they achieve this amount? Don’t worry, today I will tell you about the network marketing business model and how companies operate.
The basic fundamental of network marketing companies is that they don’t spend much amount of money on brand endorsements with celebrities of Bollywood, sports, or any other industry. This saves a lot of money for the company. Now you might ask that how will they promote their product then? How could they generate sales and earn profit?
Well, it is very simple. Network marketing companies use the concept of direct selling. When you purchase the products of the company, you become its representative. Now you can promote the company products to other people such as family, friends, relatives, etc. The company gives you a specific commission on the sale of each product.
The new customers can also become the salespeople and join more people under them as a representative. This process goes on and people get commission on product sales. But, the most important thing to notice is that you earn commission on your sales as well as the representative that joined under you. Since you have joined earlier, you will be the upline for all your representatives and they will be on your downline.
The people who join under your representatives will become their downline and so on. Since this method has multiple levels of sales representatives, hence it has given the name multilevel marketing. Many people also call it a pyramid scheme where one person is the topline and all other people are his downline like a pyramid.
How Big is the Network Marketing Industry?
The network marketing industry is undoubtedly a rapidly growing industry. In 2016, the size of this industry was Rs. 12,620 crores. The Associated Chambers of Commerce and Industry of India (ASSOCHAM) said in its report that it will grow with a 4.8% CAGR. The report also indicated that it will reach Rs. 15, 930 crores by the year 2021.
It is a performance-based industry where you get a reward for the efforts you put in. Many people claim that they are earning a six-figure amount in a month. It is possible if you join a legit company. Be aware of the fraud companies or you will waste your time and efforts, but won’t get enough returns.
Top 10 Network Marketing Companies in India
Network marketing or direct selling is a globally rising business. There are over 450 registered network marketing companies in India. MLM business has a great potential for earning money. Let’s discuss the top 10 network marketing companies in India.
Amway is the short name of the “American Way”. It is a multilevel marketing company that sells personal care products for health and beauty. Also, there are many household products in the portfolio of the company.
You might know Amway or even using its products. But, you don’t know that it is one of the oldest network marketing companies. The company started in 1959 and expanded to Australia, Europe, Asia, Japan, Latin America and many other countries.
In 2018, Forbes ranked Amway as the 42nd largest privately held company in the United States. The company refers to its distributors as IBO (Independent Business Owners) and also offers them its products at a discounted price. Today, Amway is one of the most profitable direct selling companies.
2. Avon Products
Avon is a direct selling company that offers a wide range of personal care products such as cosmetics, skincare, perfumes, and more. It is one of the largest beauty products companies.
If we talk about its history, David H. McConnell founded “California Perfume Company” to sell perfumes. It was later incorporated as Avon Products Inc. in 1939. Before starting this company, David was a salesman. He did door to door selling o books and today Avon Products markets globally.
It has a presence in more than 100 countries. Avon is the second-largest direct selling company after Amway. It is also very popular in India.
Herbalife Nutrition is a multilevel marketing company that sells dietary supplements. The company operates at a global level and offers a wide variety of health care products.
Mark Hughes started the company in 1980. It is headquartered in Los Angeles, California and employs around 9000 people today. Moreover, Herbalife has more than 4.5 million independent distributors in over 95 countries.
The company offers a 25% discount on its products to all the associates. Also, if a customer is not satisfied with the products of Herbalife, the company gives a 30 days moneyback guarantee. In this case, the associates have to offer full credit towards other Herbalife Nutrition products or a full refund of the purchased amount.
Oriflame is a Swedish multilevel marketing company that sells beauty and personal care products. The company was started in 1967 by two Swedish brothers Jonas and Robert af Jochnick with their friend Bengt Hellsten.
The initial product line of the company was skin creams, lipstick and mascara made up of herbs and plant extracts. Today the company operates in over 60 countries and has more than 1000 products.
The interesting thing is that Oriflame that you don’t need a dealer or associate to purchase any product. The company offers its products on the website and you can directly purchase from there.
You can register as a VIP customer to get attractive discounts every month or become a brand partner to promote their products and earn money on each sale through your invite. Oriflame offers you the opportunity to become an independent beauty consultant. It says that you can earn money with them from day one.
Vestige Marketing Private Limited is a popular network marketing company in India. The company is in the business of direct selling since 2004 and leading in the network marketing Industry.
The founder of the company is Mr. Gautam Bali. who played key roles of an advisor and CEO in various direct selling companies. The headquarter of the company is in Delhi.
The company mainly sells health care and personal care products. Also, there is a vast range of other products related to Ayurveda, agriculture, men’s grooming, women hygiene, etc.
Vestige is a top MLM company in India and has been recognised among India’s Great Mid-size Workplaces 2019. It has been also ranked 36 in the Global list of top 100 network marketing companies in the world by Direct Selling News.
6. Safe Shop
Safe Shop is India’s leading network marketing company in India which started in December 2000. The full name of the company is Safe and Secure Online Marketing Private Limited. It offers various products in the field of education, health & beauty, fashion, technology, home care, and garments.
Safe Shop was registered under the company act, 1956 with the Ministry of Corporate Affairs (MCA) on 22 January 2001. Also, it is the first direct selling company with ISO 9001-2015 certification. The main office of the company is located in New Delhi and the website servers are based in the USA.
The company has a CLEAR program (Customer Loyalty Earning And Remuneration) through which you can earn a decent amount of money. In this remuneration program, you can become a direct selling agent to refer and promote new purchases by other people. This program has no registration fees.
7. Forever Living
Forever Living Products is an American multi-level marketing company and also known as FLP. Rex Maughan is the founder of FLP. The company was started in 1978. It sells aloe vera-based drinks, bee-derived cosmetics, dietary supplements and personal care products.
In 1990, it acquired The Aloe Vera of America and it became Arizona’s second-largest private company in 1993. FLP has various subsidiaries which are Forever Resorts, Aloe Vera of America, Forever Aloe Plantations, and Forever Nutraceutical. It has 5000 acres of aloe plantation farms and facilities to process 6000 gallons of raw aloe per day.
Its Indian headquarter is located in Bandra, West Mumbai. The company has over 3 million representatives in North and South America, Europe, Africa, Asia, and Australia also.
Naswiz Retails Private Limited is a private MLM company in India. It was incorporated in November 2016. The directors of the company are Santosh Kumar Chandrakar and Manish Nanda.
The headquarter of NASWIZ is in North Delhi. Also, it has another office in Deccan Pune. It has its retail stores in Aurangabad, Chapra, Korba, Bihar, and more cities.
It is a leading direct selling company in India 2021 that sells a wide range of consumer products for males as well as females. Also, the company sells electronics, personal care products, alkaline water ionizer, etc.
You can become a direct seller of the company through any existing representative of the company. The process is easy and the company provides attractive discounts to the representatives for each purchase. Also. you get high incentives to promote the products to other people and joining them as distributor of the company.
Unicity International is a private network marketing company that was formed by merging two companies. Enrich International was a multilevel marketing selling health food, vitamin, and mineral supplements. In 2001, Royal Numico merged it with Rexall Showcase to form Unicity Network.
In 2003, it became Unicity International Inc. It is a renowned name in the field of nutritional supplements and personal health care. The company has its headquarter in Orem, Utah. The primary products of the company are green tea and other fat loss items.
Unicity distributorship is open for people from any background and an opportunity to earn money by their referral programs. You can start to work part-time with its lucrative and rewarding compensation plans without any inventory management.
Modicare Limited is one of the top network marketing companies in India. It was founded by Samir Modi. It is the legacy of Rai Bahadur Gujarmal Modi. Modicare is India’s first direct selling company and a major player in the MLM industry.
The company is registered in Delhi Registrar Office and sells home care and personal care products. Also, it offers a wide range of wellness products. Men’s and women’s range, jewellery, etc.
It provides 20% off on the purchase of all the products if you join and become a business consultant. You can get a power seller bonus of 5-20% based on the level of your performance. Modicare has become one of the fastest-growing direct selling companies in India.
Consumer Protection Rules 2021 for Direct Selling
The Ministry of Consumer Affairs issued a draft on 30th June 2021. The draft had a set of guidelines to regulate direct selling activities. Also, the ministry invited suggestions from public till 21st July 2021 on Consumer Protection Rules 2021 for Direct Selling.
According to the new guidelines, following are the duties of a direct selling entity-
- Every direct selling company should be incorporated under Companies Act 2013/1956, a Partnership Firm or an LLP.
- It should have at least one registered office in India and a senior designated person who is a citizen of India.
- Any company operating or intend to operate in the network of direct selling shall register itself with Department for Promotion of Industry and Internal Trade (DPIIT) for allotment of registration number.
- It should have a license or trademark for their own products. It cannot give any commissions, or incentives on sale of products/service of other brands.
- Every direct selling entity shall establish a mechanism for filing of complaints by the consumers and grievance redressal. Also, a nodal contact person shall be appointed for 24×7 coordination with law enforcement agencies.
- The company website should be updated with contact information, its management, products with their description and prices, etc.
- The terms of the offer on any product and its representation should not be misleading. Also, the credit conditions, terms of payment, return rights, after-sales service, cooling-off periods should be mentioned clearly.
- If a company operates in direct selling industry, it shall store the personal information of the consumers in the jurisdiction of India to protect their privacy.
- The direct sellers cannot charge any entry fee or subscription fee from the consumers. Also, they can’t refuse to take back the spurious goods or deficient services and refund the appropriate amount paid for it.
- None of the direct selling entities will be allowed to promote Pyramid scheme or Money Circulation Scheme through any means.
The Department of Consumer Affairs introduced some rules for the direct selling industry in 2016 but they were advisory in nature. Now, this draft says that all the direct selling entities operating in India have to comply with the proposed norms within 90 days to avoid penalties.
This will make the direct selling companies accountable and India will also become the country that has regulations for direct selling industry.
These rules also proposed that the direct seller joining a network marketing company will have a cooling off period. It means if he/she leaves the company any time, it won’t result in the breach of contract.
Future of MLM Business in India
Network marketing industry is constantly growing from many years. The growth of network marketing companies will be rapid in developing countries as compared to the developed nations.
In 2016, Ministry of Consumer Affairs (MCA) issued guidelines for direct selling for the protection of consumer rights and preventing frauds. MLM business took an exponential growth in the next year in India.
In FY 2018-19, there were 5.7 million direct sellers. As per the estimate of experts, the Direct Selling industry in India will finally grow with a CAGR of 4.8% and will give employment to above 18.1 million people by 2025.
In 2020, wellness products held the largest market share in the global MLM market with 34% of the total market revenue. The global MLM software market is expected to grow with a CAGR of 8.3% from 2021 to 2029.
Top Selling Books on Network Marketing
Network marketing is a rising business in India that very people were aware of. As the awareness spread and the ministry of consumer affairs passed new rules, many direct selling companies that are involved in fraudulent activities will shut down.
This will bring a positive growth in the direct selling industry. If you also want to start network marketing as a secondary source of income or primary career option, you should first know this industry properly.
Many great people have written effective books on network marketing to spread the awareness and knowledge. You can choose any of them to read and boost your confidence to enter into this field.
The most popular books on network marketing are following-
1. Why India Is Best For Network Marketing
|Dr. Ujjwal Patni
|1 January 2015
|4.3 out of 5 Star
2. Be a Network Marketing Millionaire
|10 April 2019
|4.4 out of 5 Star
3. Your First Year in Network Marketing
|Mark Yarnell and Rene Reid Yarnell
|7 January 1998
|4.6 out of 5 Star
4. How to Follow Up With Your Network Marketing Prospects
|Keith Schreiter, Tom “Big Al” Schreiter
|18 July 2017
|4.6 out of 5 Star
5. Pre-Closing for Network Marketing
|Keith Schreiter, Tom “Big AL” Schreiter
|1 November 2017
|4.8 out of 5 Star
So, I am sure that you have got an idea about what is network marketing and how it works. To summarize, the network marketing business has potential to let you earn a lot of money if you can boost the sales of the company. But, the experts say that very few percent of people reach that level in this industry.
You might have heard so many times from different people that MLM companies are just a scam and nothing else. It is just because people saw profit in this business model and launched their own company. The products of the company were not up to the mark. They just focused on the pyramid scheme.
So, beware of these types of fraud people and companies. You will lose your money by joining such a companies. Moreover, network marketing or direct selling is a legal business in India.
Also you can read our blog on What Is Affiliate Marketing and How Does It Work.
- How do network marketing companies make money?
Network marketing companies follow the concept of direct selling which makes company sell its products successfully with high profit margins. In direct selling, the company offers individuals to become a distributor and promote its products. They get incentives or commission on the sale of each product.
MLM companies have distributor network and no brand ambassadors. It saves the margin in marketing and supply of the products. The company shares this margin with its independent distributors. So, it is a win win situation for the consumers as well as the company.
- How many network marketing companies are there in India?
There are more than 450 network marketing companies registered with the government of India as of 2021. Some of them are Indian companies and many of them are the companies who developed their network in India and other countries.
- Is network marketing worth it?
Network marketing is a great business opportunity to work part time and earn some extra amount of money that can be helpful for you in many aspects. But if you want to choose it as a full-time career, you should be very hard working and have the ability to accept rejections.
It happens with every beginner in the network marketing industry. But, patience and consistency will teach you everything and you can become successful in this business.
- What are the top 10 network marketing companies in India?
These are the top 10 network marketing companies in India-
2. Avon Products
3. Herbalife Nutrition
5. Vestige Marketing Pvt. Ltd.
6. Safe Shop
7. Forever Living Products (FLP)
8. NASWIZ Retails Pvt. Ltd.
9. Unicity International
- How much does it cost to start a network marketing company?
It depends on the sector of products and also mode and level of operations. Many MLM companies have started with various share capital based on their own vision and requirements. But, you might need around Rs. 4-5 lakh to setup your MLM company. The capital may vary if you also want to establish a manufacturing unit.