(MLM) The History of Network Marketing and Where it is Today

Network marketing (also known as multi level marketing) today is a 170 Billion dollar industry. With over 90 Million people involved and tens of thousands more getting involved each year this type of business is quickly becoming the place to work.

So what exactly is network marketing and how long has it been around for?

Whats the difference between direct selling and network marketing?

Is this also different from pyramid selling and pyramid schemes?

It can be a little confusing when first learning about this lucrative industry. In this post I am going to show you exactly what this business model is and how it originally got started. You will also learn the difference between the different types of terminology that you may have heard of.

The History of Network Marketing

Up to the 1840’s

July 24, 2016

Peddlers used door-to-door sales as an important distribution channel.

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1840’s to 1900

July 25, 2016

The arrival of the railroad provided the opportunity for store owners to order their goods from manufacturers and have them delivered directly to stores – this saw the beginning of the retail sales model.

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1900 to 1920

July 25, 2016

The sales team approach emerged as salespersons were recruited to work for a “home office”. These sales people would order products via mail from the host company and sell them in whatever way they could – no training was provided by the host company.

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1915

July 25, 2016

The Fuller brush company reorganized as a “branch office” company. They opened branch offices that recruited, trained and supervised regional sales teams.

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By the end of the 1920’s

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direct selling companies such as Avon, Electrolux, W.T. Raleigh and West Bend Company were formed.

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1930’s

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saw the number of direct selling companies expand – e.g. Stanley Home Products & Encyclopedia Britannica.

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1940’s

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saw three key developments within the direct sales industry – Firstly direct sales adopted the concept of “independent contractors”, secondly the “Party Plan” model was introduced, and thirdly the creation of a multilevel distribution channel entered the equation. This began a new era in direct selling.

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1930’s – 1940’s

July 25, 2016

founded in 1932, “Watcher’s Organic Sea Products Corporation” adopted a multi-level compensation plan some time during the 1930’s to 1940’s. While the date that the first network marketing company started is not totally clear it is commonly believed that Watcher’s is the oldest, continually operating, privately held network marketing company in the world.

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1930’s and 1940’s

July 25, 2016

Direct selling companies like Stanley Home Products and W.T. Raleigh adopted network marketing programs.

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1941

July 25, 2016

Since 1934 vitamin company Nutrilite had been selling its products direct to customers. From 1941 Nutrilite began to sell its products using a network marketing program. History has documented that Nutrilite played a crucial role in the way network marketing evolved and indeed the model of network marketing today .

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1950’s

July 25, 2016

Rich DeVos and Jay Van Andel who had previously worked with the company Nutrilite formed their own manufacturing company called the American Way (the parent of Amway). Amway went on to become the largest network marketing company in the world with sales of over $5 billion in 1998.

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1950’s – 1970’s

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the network marketing industry continued to rapidly expand to include companies like Shaklee (1956), Amway (1959), Mary Kay (1962), and National Safety Associates (1970).

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1970’s and beyond

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new companies continue to join the industry. By the 1990’s network marketing was accepted as a legitimate industry with a bright future and rapid expansion around the globe which continues to this day……

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1925

July 25, 2016

The National Association of Direct Selling Companies became the trade association for the direct selling industry – this organization is called the Direct Selling Association or DSA today.

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In 1943, California Vitamins changed their name to Nutralite Corporation which implemented the first true Multi Level Marketing compensation plan. Everyone involved in the company got paid on multiple levels of sales made.

In 1949, Jay Van Andle and Richard Marvin DeVoss joined Nutralite Corporation as Members and for the next ten years the company grew and prospered. They regarded conventional sales jobs as unfair – being paid only once for the work that they did even when the company continued to make a profit from their labours for many years afterwards. They believed that they should be paid relative to the benefit the company continued to get from their original work. In 1959 Jay and Richard decided to go in a different direction and start their own Multi Level Company called Amway.

In 1975, US consumer protection agency Federal Trade Commission decided to take Amway to court because they thought that Amway was involved in a Pyramid Scheme. A pyramid scheme is when you sell a system without a product. A number of different pyramid schemes sprang up with the advent of MLM.

Because Amway was the biggest MLM distribution company at the time, the Federal Trade Commission decided to make an example of them to prove that Amway was involved in an illegal business. For four years Amway fought in the courts to prove that MLM was a legitimate business finally winning the case in1979. This paved the way for many more MLM companies to enter the industry.

In the early Eighties the Multi Level Marketing term was replaced by Network Marketing.  Right now Network Marketing is poised to become a giant that will out grow any other form of conventional business. Currently it is the fastest growing method of distribution in the world and now you have a ground floor opportunity to grow your business and prosper in the years ahead.