MoneyMagpie

Aug 17

Pros and cons of network marketing

Also known as multi-level marketing, pyramid selling and referral marketing, network marketing is a strategy where not only do you make money when you make a sale of a good or service, but you also make money when someone you have recruited (commonly known as downline) makes a sale.

Network marketing is also characterised by its direct selling nature.

Examples of well-known network marketing businesses include Avon, Tupperware and Herbalife.

This area has seen a meteoric rise in recent years, with people across all walks of life drawn to network marketing’s relatively flexible nature in allowing people to seemingly either supplement their income or even leave their jobs and build their own businesses.

It has not been without controversy however, with many accusing network marketing of merely being an exploitative pyramid scheme.

At moneymagpie we like to look at both sides of the argument, so here are the pros and cons of network marketing.

Pros

Cons

All in all

Pros

work for yourselfYou can work for yourself

One characteristic of network marketing is that you get the chance to work for yourself – that is, you can decide what hours you work, at what intensity etc.

And the best thing is you have no-one to answer to!

 

 

The costs incurred in starting your own network marketing business are relatively small

Bar purchasing the goods or services you need to sell (more on that later), the costs incurred in starting your own network marketing business are relatively small in comparison to starting your own business alone.

Whereas you’d usually have to rent offices, hire staff etc, with network marketing you can work from the comfort of your own home.

learningA learning experience

If anything, network marketing is definitely a learning experience for those who have decided to take the plunge, exposing you to things such as selling, how to deal with rejection and how to build a business almost from scratch.

 

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Cons

rich and poorAll is not as it seems

It’s common for those being offered the opportunity to get involved with network marketing to be told it’s a ‘get rich quick’ scheme and that you can get the chance to break away from the confines of a 9-5 regime.

The reality is often very different.

If you were hoping for a way to get rich fast then network marketing is probably not the way to go.

Results can be very slow, especially at the start, and require strenuous effort to make any sort of return. You’ll have to work very hard to keep making a profit!

This may resort to you concentrating your efforts on recruiting rather than actually selling your own products/services.

 

 

The costs of actually getting involved within network marketing can be too much to bear

While the cost of starting your own network marketing business can be relatively small, the cost of actually getting involved within network marketing can be eye-opening and prohibitive.

From charging you a mammoth sum to join to making you buy product after product even if a customer hasn’t ordered, it’s little wonder why so many fall away at the first hurdle.

 

All in all

Network marketing can be a successful way of making money, however it’s also fraught with difficulties and there’s no guarantee you’ll turn a profit.

If you’re thinking about giving it a go, enter with care, research the company you’re going to be working with as much as you can and find out what other people have to say.

 

Are you interested in giving network marketing a go? Have you had any experience with it before? Let us know in the comments section below.

 

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