One of the most pressing questions in network marketing or MLM is: Should I focus on retailing or building a network?

Here’s a breakdown of the two paths:

Building a Network means creating a group of registered users who consume products regularly. Your income is earned through bonuses, commissions, or royalties rather than relying solely on retail profits.

Retailing involves selling products directly to customers at market price, allowing you to earn the profit margin between the market price (MRP) and distributor price (DP).

Most companies combine both approaches, though some rely on one more than the other. Your decision depends on your goals and the connections you currently have. Here are three ways to assess which path might be right for you.

DEMAND VS SUPPLY

It is a challenge for us to create demand for a product.

Creating demand is the first hurdle. Once the demand for a product is established, supply will follow—even if you’re no longer the source. Retail empowers distributors to drive that demand, but there’s a cost.

• The Power of Retail: By retailing, you maintain control over sales and earn direct profits from each transaction.
• The Risk: Once customers become familiar with the product, they may seek membership or alternate ways to obtain benefits, often turning to other distributors or even competing sources.

Retail sales provide immediate profit, but you need to anticipate that satisfied customers may eventually want to move from being retail buyers to receiving membership benefits, especially if they see advantages you haven’t shared.

THE DIGITAL CONSUMER

Since COVID-19, consumers have adapted rapidly to digital systems. The direct selling and MLM industries are also pivoting, with many companies rolling out digital tools to compete with e-commerce channels.

• Why Retail is Crucial in the Digital Age: Retailing can penetrate the top of the funnel faster in a digital context. It helps new distributors establish initial revenue and allows consumers to explore products without a membership commitment.
• Creating Loyalty: Online retailing can build brand loyalty quickly. With a good follow-up system, retail customers can be converted into loyal members, who may eventually grow into a downline.

However, building a stable network still requires time, trust, and nurturing, which digital convenience alone cannot expedite. Online retailing helps create affinity but isn’t an instant path to a passive income.

PASSIVE NETWORK INCOME

Retail has a ceiling when it comes to income potential. If you’re seeking substantial, passive income, network-building is key.

There are generally 3 kinds of direct sales:

1. D2C (Direct to Consumer) involves sales straight to end customers without an intermediary (think brands like boAt and Bombay Shaving).
2. SLM (Single-Level Marketing) pays distributors for personal sales without incentives for creating downlines.
3. MLM (Multi-Level Marketing) offers residual income across levels, incentivizing you to build and grow a team.

While retail is rewarding immediately, network-building offers the potential for larger, residual income in the future.

Retail income lacks scalability, as your profit remains tied to your personal sales efforts.

A network, however, can grow exponentially, providing future security through income streams generated by others in your downline.

So, Which One Works Better?

Retailing is a great way to kickstart your MLM journey, especially if you’re working with limited resources or just starting out. It provides a manageable income flow, keeps your cash reserves steady, and helps you build rapport with customers.

But for long-term passive income, retail should remain at the top of the funnel and shouldn’t become the core of your business strategy. The goal is to:

1. Use retail to attract customers.
2. Convert them into members once they see value.
3. Cultivate these members into business partners.

In short, a distributor who starts with retail to get the cash flow going and then pivots into network-building for exponential growth, is positioning themselves for both immediate stability and future security.

The network fuels long-term, scalable income potential, while retail keeps the sales engine humming at the front end.