Direct Sales vs. Network Marketing

If you’re just starting out in the home based business industry there’s a good chance that you’re considering either direct sales or network marketing (also referred to as multi-level marketing). There are many legitimate and successful companies in both categories and they each have their pros and cons, so you can use the following descriptions to decide which one is best for you.

A network marketing company typically sells a reasonably priced, valuable product that will need to be replenished at one point or another. When you join a company you will usually be expected to purchase a certain amount of the product to keep as stock to sell. You will sell the product to customers for a commission, but you will also recruit new distributors, who will also recruit new distributors and so on; you will make a commission from all the sales of everyone under you. The commission rate is quite low compared to direct sales, but you have more than yourself bringing it in – assuming that you’re able to maintain a good quality down line. The main objective of MLM companies is to eventually not have to do much work at all and let your distributors generate an income for you.

Direct sales are very different because it doesn’t involve recruiting new members at all. The sales are just between you and the customer and completely up to you, but you receive a much higher commission. Many good wholesale companies will give you the entire difference between cost and retail, which you receive instantly. The products are generally more high-end and expensive compared to MLM products, but that also means you have to sell less to make more and you can make money faster. With the proper application of technology you can also produce a passive income like you can with network marketing, but it’s not likely that it will become entirely passive.

In the past you would have had to do a lot of cold calling and one-on-one presentations for both methods, but with the advances of the internet, marketing and selling has become a lot easier and less time consuming. Lead generation is not nearly as difficult with the use of social networking sites, blogs, auto responders and community forums. You can get involved with either one and generate a significant income from the comfort of your own home.