MLM, or multi-level marketing, operates on a business model that sells its products or services through referral marketing, network marketing, and direct selling.
It is one of the oldest and traditional methods of selling products at multi-levels. It requires you to form a large network of people that will help you promote your products. The more people join, the stronger it becomes.
The network marketing industry is enormous, and it is globally accepted as the best revenue-driven business model. And why not? According to the ASSOCHAM report, direct selling has almost doubled since 2011 in India alone. It reached INR12,620 crores in 2016 and is only expected to grow at a compounded annual growth rate (CAGR) of about 4.8% to reach INR15,930 crores in 2021.
The multi-level business marketing model is not on a slowdown. Instead, the future looks promising. This article will throw some light on the MLM statistics that projects the growth of the MLM business in 2020.
Before we delve into statistics, let’s briefly look into the evolution of MLM so that it gives us a clear picture of what networking marketing holds for us.
Evolution of Multi-Level Marketing Business Model
The origin of MLM business is disputed, however, the most accepted theory is that it first started with the establishment of Avon in the USA during the year 1886.
By 1990, there were 25% of the Direct Selling Association (DSA) members using the MLM business model. It grew to 77.3% in 1999, and by 2009, 94.2% of DSA members were using MLM. (Source)
The top MLM-based companies, such as Electrolux, Tupperware, Kirby, and Avon, were all originally single-level marketing companies. Later, they introduced the multi-level marketing business model and became MLM.
Currently, over 1,000 firms are using multi-level marketing in the United States alone.
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Growth of MLM Business in 2020 — MLM Statistics to Look at
1. MLM industry is operable in more than 100+ countries, and it is one of the best industries to stay profitable. Currently, the MLM industry is valued at around 167 billion USD, which is estimated to reach around INR 645 billion by 2025.
MLM Business Sales Statistics (Source)
2. The top MLM markets globally are — USA, China, and Korea. With the USA recording the highest sale of 20%, China 19%, and Korea 9%.
3. In the year 2015-2016, India’s position in the MLM industry increased from 22nd to 20th rank.
4. During the year 2015-2016, the direct selling industry attained a new record of more than $183 billion in retail sales globally. This huge number made 80% of the countries across the globe to enter the MLM industry.
5. The global average sales of each participant are about $1,700 per participant per year or about INR10,000 per month, whereas, in India, it is said to be about $300 per year, that is, INR20,000. This is because the networking business is less accepted in India.
However, things are changing. Stats show that MLM business has positively affected 50,000 people in India. The credit goes to the different government schemes that have attributed to the growth of referral marketing in India. Some of those schemes are Make in India, Skill India, Digital India, and more.
Top-Selling Industries in MLM Business (Source)
6. Wellness and Cosmetics/Personal Care are the top-selling categories. Cosmetics/Personal Care has historically high sales of 31.2%, and Wellness has seen an increase in sales by 3.4 percentage points since 2014. Its sales record is 33.2%.
Household Goods & Durables (12.8%) is in the third position.
People in Direct Selling
7. Global sales were generated by 118.4 million independent representatives, which is an increase of 1.6% from 2017. This shows that the salesforce has increased at a three-year compound annual growth rate of 4.2% from 2015-2018.
Of this total workforce,
- 10.5 million are full-time, who devote more than 30 hours weekly
- 42.9 million are part-time, who devote up to 30 hours weekly
- 64.9 million others have joined recently, or want to purchase the product at a discount, or have joined but were never active
8. Out of all participants, 74% of them are women, and the remaining 26% are men.
9. The number of both men and women joining network marketing has increased over the year. It has empowered countless female entrepreneurs around the world.
Advanced vs. Emerging Economy
10. Across continents, advanced markets hold a 57.3% share of global direct selling, while today’s emerging markets exhibit a steadily growing 42.7% — a whopping 10.8 percentage points from nine years ago.
11. Sales in emerging markets are up nearly 10% (9.7%) to USD 82.3 billion in 2018 year-over-year. The three-year compound annual growth rate is 9.6% for the period 2015-2018.
Other than that, MLM business has also caused quite a stir in the economic and social environment. Here’s how,
- For starters, it provides great opportunities to small- and- medium-sized enterprises (SMEs). Whenever MLM companies create a new product, the role of SMEs is to develop its features. Thus, companies invest in SMEs, and SMEs get the opportunities to promote the MLM business.
- Secondly, network marketing allows customers to earn some passive income. Did you know that the MLM industry has employed about 5 million distributors? That’s a great number. Besides, it promotes micro-entrepreneurship by engaging small business owners in the MLM business.
- Thirdly, it also promotes direct employment generation. It involves various vendors for different operational tasks, such as supply and transportation, packaging, and distribution. MLM business benefits a large section of people, which includes both men and women.
- Fourthly, MLM business is an excellent source of income for the government. In the year 2013, the Indian government collected around 10 billion as tax from the MLM industry alone. It is further invested in improving the infrastructure of the economy.
- And lastly, many large MLM companies are seen creating social awareness on various issues. For example, the Tata Group has initiated the community improvement and poverty alleviation programs as part of their corporate social responsibility (CSR) projects.
Technology Advancement in MLM Business
MLM statistics clearly show that the multi-level marketing business model is growing fast. In fact, the industry is making massive progress in terms of technology too.
There has been a development of multi-level marketing (MLM) software. It is designed to simplify and streamline the whole process of sales and marketing for direct selling companies.
This online MLM software is specially intended for MLM or network marketing businesses. It offers an array of features like inventory management, lead generation, distribution, customer management, and marketing.
Furthermore, online MLM software includes a commission tracking tool, supports the referral process, and provides features that support MLM strategies. Thus, it streamlines and simplifies the whole process of conducting MLM businesses.
Always choose the best online MLM software to make your networking business more profitable.
It is evident that the MLM industry is going to see huge success in the coming years and all you need to do is utilize your multi-channel marketing in your business efficiently. And not just globally, but in India too. After all, the estimation shows that the networking business is going to reach around $159.3 billion in 2021.
To conclude on a serious note, the growth of the networking business is prominent.