What Is Network Marketing?

Written by Coursera Staff • Updated on

Discover whether network marketing is a viable career option by looking at the earning potential, how many people are successful at multilevel marketing (MLM), and the pros and cons of the business model.

[Featured Image] A makeup consultant for a network marketing company is letting women try her products.

It’s estimated that 7.3 million Americans are involved in network marketing [1]. In this article, we'll examine network marketing, its earning potential, and the pros and cons of being a network marketer.

What is network marketing?

Network marketing, or multilevel marketing (MLM), is a business model that requires distributors to sign up and sell a company's products. As a distributor, you're paid a commission for your products and a percentage of the sales of other distributors you've recruited to join your team. 

The network marketing industry is vast, with many companies to join, selling anything from candles to makeup to CBD oil. 

Is network marketing a pyramid scheme?

Network marketing has received bad press over the years—some brand it a pyramid scheme. A pyramid scheme shares some characteristics in that members are awarded for recruiting. However, unlike a network marketing model, there are no products to sell, and you make money simply by members paying to join. Recruiters get a percentage of the new member fees, which is done throughout the chain, so those initial investors keep being paid by the lower levels. As recruits stop coming in, the lower levels don’t see a benefit, but those at the top will have potentially large sums of money rewards. Pyramid schemes are illegal in many countries, including the US.

Network marketing is not a pyramid scheme. While multilevels exist, you make commissions through sales. Members receive bonuses for enrolling new team members, but this is just a part of the process, and participants earn the majority of money through personal sales. You make a commission percentage from your ‘downline’ sales, but the sellers are also paid. 

Is it possible to make a career out of network marketing?

With thousands of network marketing companies to choose from, making billions in profits and enrolling hundreds of thousands of members, it’s possible to make a career from it. 

However, it’s worth noting that, for many, network marketing is a side hustle that compliments their income and tends not to be a long-term career choice. Of the 7.3 million people in the US in network marketing, only 500,000 of them work in the business full-time [1]. In a study by Jon M. Taylor, Founder of the Consumer Awareness Institute, of 400 multilevel marketing companies, half of the distributors left within a year, and 90 percent left after five years [2]. This is supported by reports that most distributors do not earn enough. 

How much can you earn through network marketing?

That said, success stories are possible. Some people do well with network marketing and enjoy living salaries and bonuses, such as free trips and products. Those who see big successes may eventually take senior positions within the companies or work as consultants, supporting others in growing their network marketing businesses.

However, not all of those stories provide full context. Other studies indicate that the average person participating in a multi-level marketing scheme does not make anything like these success stories. Numerous studies show that the majority of people lose money after expenses. According to a 2024 report from the Federal Trade Commission (FTC), multi-level marketers earn an average of less than $84 per month, or less than $1,000 per year [3].

The study also finds that most income disclosure statements from MLM companies fail to disclose the limited income potential and additional expenses. The report found that at least 75 percent of MLM income disclosure statements did not include all participants who had earned limited income or had failed to collect any income at all [3].

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Which network marketing companies are most reputable?

If you want to try network marketing, research companies, their reputation, commission structures, and how much distributors earn. You’ll likely have more success if you can also find a product you align with. 

The following companies represent network marketing companies that have been in business for at least two decades, are accredited by the Better Business Bureau (BBB), and have a BBB rating of A- or higher:

MLM CompanyProductsYear EstablishedBetter Business Bureau Rating
The Avon CompanyCosmetics, perfume1886A+ [4]
Shaklee CorporationNutrition, vitamins and supplements1956A+ [5]
AmwayHealth, cosmetics, water purification, cleaning, vitamins and supplements1959A+ [6]
Forever Living ProductsHealth, vitamins and supplements1978A+ [7]
Nu Skin Enterprises, Inc.Skin care, body care, vitamins and supplements1984A+ [8]
Melaleuca, IncHealth, cleaning1985A+ [9]
Market America SHOP.COMOnline shopping1992A+ [10]
USANA Health Sciences, Inc.Health and wellness, vitamins and supplements, skin care1992A+ [11]
ACNTelecommunications, energy, merchant services, health care, other services1993A+ [12]
HerbalifeHealth, nutrition1980A+ [13]
4Life Research USA, LLCHealth and wellness, vitamins and supplements1998A+ [14]

Pros and cons of network marketing

We’ve looked at the salary implications of joining a network marketing company, but other factors must be considered. Consider some more of the pros and cons of working in the MLM industry:

Pros

  • Flexibility: Working in network marketing lets you choose your hours since it’s essentially your business.

  • Choice: There are many different network marketing companies to choose from, and you may be able to pick something you enjoy, believe in, and feel comfortable selling. 

  • Training: The top MLM companies offer training on everything from sales pitches to social media marketing. If you have a good upline, you’ll receive training from them, too. This can be very beneficial in helping you progress in the industry and build your team. 

Cons 

  • Time to establish your business: As you build your business, it takes time to establish yourself, gain a customer base, and find recruits. Because earnings are solely commission-based, wages from month to month will vary and may be slow to start while you establish yourself.

  • Upfront costs: Network marketing usually involves buying products upfront to be eligible for a commission, including ordering a set number of products each month. You must cover the order cost to claim commission if customers don't buy enough. 

  • Lack of control: You’re working for yourself while representing a company. Therefore, you’re responsible for your own earnings and marketing, but you have to stay within the confines of what the company offers and how it promotes itself.

Get started

Network marketing is popular, and a few people make much money from it. For most people, however, it is not a full-time career but a way to supplement other earnings. 

If you think network marketing is for you, begin with credible, well-established companies and find one that aligns with your interests, values, and career goals. You can also take courses to help you understand business principles that may help you grow your network marketing business. Try Introduction to Social Media Marketing by Meta or Entrepreneurship Specialization by the University of Pennsylvania on Coursera.

Article sources

1

Direct Selling Association. “Research overview, https://www.dsa.org/statistics-insights.” Accessed February 3, 2025.

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