- Started in 1941 in USA and has evolved into an industry world over.
- Network Marketing is well entrenched in over 80 countries.
- Many NM companies exhibit rapid growth in Annual Turnover [20% to 300%].
- Network Marketing is 80 bn. Dollar Industry Worldwide.
- 5000 Active Network Marketing companies in 1995.
- The number expected to touch 30000 in 2010.
What is Network Marketing . Network Marketing is only a method of distribution of goods or services from the manufacturer to the end user. Network Marketing is a method of direct selling. The other selling method in direct selling is single level marketing or SLM. In Network Marketing you have an opportunity to develop a marketing Network from which you will earn commission on the sales of multiple level of representatives. IN traditional form of distribution the manufacture gives it to the Super Stockiest, who in turn gives it to the distributor who passes it on the retailer. Each one on the way before it reaches your hand takes a commission; to this add the advertising budget. The total of all this is roughly 60% of the MRP and in some cases even more. What happens in NETWORK MARKETING is that since there is no Stockiest , distributor or retailer and since it is word of mouth marketing there is no advertising budget, that 60% budget gets distributed amongst the individual distributors or Networkers.
Over decades Network Marketing has proven to be a very powerful way to distribute goods and services in the US and Europe. In the 1940’s a company called Californian Vitamins first allowed its direct sales people to also recruit other sales people for a commission on their recruits sales. They created an NETWORK MARKETING direct sales company. Two of the top salesmen then created the Amway Corporation. Direct sales in the 70’s due to some unscrupulous companies were attacked in the courts. Amway, fought and won, in 1979, thereby proving that NETWORK MARKETING was a legally justifiable form of business.
“You (direct sales) strengthen our country and economy, by offering opportunity to others. I’ve followed your industry’s growth for years now. Your industry gives people a chance, after all, to make the most of their lives and, to me that is the heart of the American dream” Bill Clinton.
However, in India, Network Marketing is still at a nascent stage. But, it is expanding at a phenomenal growth rate. The concept, which took roots around 6 years back, India, due to its population and largest independent consumer market in the world, is the most attractive proposition for Network Marketing , provided that it is customized to suit Indian culture as well as requirement. To grab a bigger pie of this lucrative market reputed MNC companies have entered the Indian market since 1998. It is believed that more than 50 lakhs consumers are involved in the industry locally, and the number is getting multiplied at the rate of 5000 people a day. Industry observers, who are highly optimistic about the growth of this industry, estimate the size of the industry to cross US $ 1,000-billion mark by the year 2010.
For India, it will be a boon for the people in our country, which faces tremendous levels of unemployment and business opportunity for the middle class. It is the best and the safest method to create an additional income in the house without having to give up the present form of creating income.
However, at this point in India the Network Marketing industry is facing problems from unscrupulous operators who are giving genuine Network Marketing companies a bad name. It is only a matter of time that Govt of India will set norms for any one who intends to run a Network Marketing company in our Country. There are many companies who have masked money chains, which are illegal in our country, as a Network Marketing company.
To clear a few misconcepts of the Network Marketing Industry. A lot of people believe that it is only the people at the top who earn a lot of money or it’s the people who have joined early make the money. This is not so. In a genuine Network Marketing Company it does not matter who you join or when you join, you have the same opportunity as anyone above you or anyone who has joined way before you to make as much money or even more then them. It all depends on you effort, your ability to understand the dynamics of Network Marketing and your ability to create leaders below you. All this things can be learnt if you have the determination to succeed.
Another misconception amongst people about Network Marketing companies is that only new companies begin with Network Marketing as a method of distribution. This is far from the truth; take the example of HLL in our country a company that has over 10,000 crs in turnover to have decided to enter into Network Marketing. This should lay to rest all doubts in your mind about the power and legitimacy of this form of business. A large amount of Fortune 500 companies produce goods for Network Marketing companies, only proving that Network Marketing companies also focus on quality of their products.
To understand Network Marketing from the Indian perspective and its future we need to first understand Network Marketing from the world perspective. The total turnover in the Network Marketing industry worldwide was 80 billion dollars and over 50 million people were involved in the industry in the year 1999. This figure will touch over a 120 billion and 100 million people in the next 4 yrs. Chart I gives a graphical illustration at the industry across the globe.
CHART I
No | Country | Population | People | % of | No. of | Turnover |
Involved in Network Marketing | Total Population | Companies | ||||
01 | USA | 270 million | 10.3 million | 3.8 | 500 | $24.83 billion |
02 | UK | 56 million | 424,000 | 0.75 | 100 | 1.8 billion Euros |
03 | France | 58 million | 200,000 | 0.35 | 40 | 4.1 billion Euros |
04 | Germany | 83 million | 455,000 | 0.54 | 150 | 4.2 billion Euros |
05 | Italy | 58 million | 260,000 | 0.15 | 30 | 2.2 billion Euros |
06 | Australia | 18.8 million | 650,000 | 3.4 | 150 | $1.2 billion |
07 | Canada | 31 million | 1.3 million | 4.19 | 200 | $ 1.6 billion |
08 | Portugal | 9.9 million | 26,000 | 0.26 | 20 | 72 million Euros |
09 | Spain | 40 million | 114,000 | 0.285 | 30 | 1.15 billion Euros |
10 | Russia | 146 million | 529,000 | 0.36 | 100 | 156 million euros |
11 | S Korea | 45 million | 1.6 million | 3.55 | 100 | $2.08 billion |
12 | Japan | 125 million | 2.5 million | 2 | 200 | $30 billion |
13 | Indonesia | 216 million | 3.9 million | 1.8 | unknown | $250 million aprx |
14 | Malaysia | 22 million | 2 million | 9 | 600+ | $1.2 billion |
15 | Singapore | 3.5 million | 15000 | 11 | $54 million | |
16 | Hong Kong | 6.8 million | 77000 | 1.1 | 7 | $112 million |
17 | Philippines | 80 million | 1 million | 1.25 | unknown | $172 million |
18 | Taiwan | 22 million | 2.7 million | 12.2 | 100+ | $1.2 billion |
19 | Thailand | 60 million | 3 million | 5 | unknown | $400 million |
20 | India | 1000 million | 700,000 | 0.7 | 10 | $190 million |
By referring to the chart the number of people in the industry in various countries and the turnover generated you will observe that roughly 3% of the population of those countries are involved in NETWORK MARKETING . For India to reach 3% of its population it would mean 30 million people even if we take 3% of middle class which roughly 350 million peoples it means over 10 million people will be involved in NETWORK MARKETING which is 10 times the present amount of people involved in the industry. Which should also lead to a 10 times increase in the turnover which will be close to 3 billion dollars or roughly 14,000 crs. Over 50 % will be the payout, which means over 7000 crs, will be distributed amongst the networkers in our country.
Imagine the boon it will be for the people in our country, which faces tremendous levels of unemployment and business opportunity for the middle class?
It is the best and the safest method to create an additional income in the house without having to give up the present form of creating income.
Today we all are looking at various ways to create an addition source of income. Let us examine some of the ways we can achieve this. Firstly if one does have some money, which is rare, the few options one has are, fixed deposits in the bank. What does one get today on that 6 %, as much as the inflation rate.
So there is a notional rise but not in real value. Stock market, have not met anyone who has retired rich from the stock market, some are dead, Harsad Mehta, some in jail, the rest have lost more than gained. Traditional business or even better Franchising. Today franchising is quite a safe form of Business practice but that requires some capital investment to begin with.
