MLM Meaning and
Definition
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MLM is an acronym that stands for Multi-Level Marketing. It is a business model in which a company sells its products or services through a network of independent distributors or representatives. In MLM, distributors earn commissions not only for their own product sales but also for recruiting new distributors into their downline, creating multiple levels of compensation.
In this business structure, distributors typically purchase products at a wholesale price and then sell them to customers at a retail price, earning a profit from the difference. Additionally, they can earn bonuses and commissions based on their sales volume and the volume generated by their downline. The downline refers to the recruits or salespeople who have been brought into the business by a particular distributor.
MLM companies often rely on a direct selling approach, where distributors personally reach out to potential customers and recruit new distributors through word-of-mouth marketing. The success of MLM is often associated with the expansion and growth of the entire network, as distributors earn a percentage of the sales made by their downline.
Critics argue that MLM resembles a pyramid scheme, as the emphasis on recruitment and building a downline can sometimes outweigh the focus on selling actual products or services. However, proponents of MLM believe it offers individuals an opportunity to start their own business with relatively low startup costs and the potential for substantial income through determination and effective team building.
Common Misspellings for MLM
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