What is the Difference Between a MLM/Direct Sales Distributor and Traditional Retailer?

Network Marketing and retail are two different ways to bring products to the market place. But in the end they are very similar, except one thing, residual income.

In both cases we are talking about a product or a service that needs to be sold or provided to a customer. In normal retail, retailers buy from wholesalers or directly from the manufacturer and have a shop or an online outlet. In MLM or Direct sales the distributor or agents buys from the company/manufacturer, or from one of their affiliated franchise country offices. Distributors have most of the time a small shop at home, as they work from the kitchen table, office or even small outlet.

Retail Business Model

Normal retailers market their products through means of advertising, print, flyers, radio ads, word of mouth and the internet. And so do Multi Level Marketeers. A retailer buys and sells and makes profit. And so does the MLM/Direct Sales distributor.

The real difference lies in the residual income the MLM/Direct Sales marketeer can make.

The retailer has one income, he buys and sells, and anything in between he can call profit, of course he has to reduce his profit with his overhead costs, and that results in net profit.

The MLM Business Model

The MLM/Direct Sales distributor or agent also buys and sells and can also call anything in between profit. As he probably works from home (creates tax advantages) and saves lots of time in travelling between work and home, his overhead costs can be pretty marginal. The result between his buy and sale minus his overheads is also his net profit.

So what than is the real difference between MLM/Direct Sales distributor and retail. It's the residual income.

The distributor/agent can offer others to become distributor/agent too, and when they go to work, he will be paid a bonus or royalty income on the volume sold by his partners. These extra bonuses and royalties are called residual income. The more partners introduced, the more residual income can be made. The better trained partners are the more active they will become, the more bonuses can be made. In MLM/Direct Sales, partners can also introduce partners, and also on these people residual income will be earned. Depending on the company joined, bonuses can vary per pay-out level. The more total partners created the more business will flourish. The bigger the team, the bigger the check.

Direct Sales / MLM vs Retail

In retail the retailer only can produce income when his shop is open. When he closes for one day, there is no income. When he closes his shop for a holiday there is no income. A MLM/Direct Sales distributor can go on holiday, he or she is not doing any sales, but his team of distributors will continue to produce income 24 hours / 7 days a week. This how MLM/Direct Sales distributor make income even when they sleep.

Quote: J.P. Getty

"I rather earn 1% of 100 people than 100% of one person"

CREDITS:

Author - Frank Amptmeijer

AC - http://www.associatedcontent.com/user/410502/frank_amptmeijer.html

EMAIL - frank.amptmeijer@hotmail.com

RESEARCH:

Franklin-Paul Blake