One of the burning questions in network marketing or MLM…
Should I go for Retailing or build a network?
Retailing means selling products at MRP to customers and you earning retail profits between MRP and DP. Building a network means building a network of subscribed users (via membership/registration/KyC) who consume the products on a daily/monthly basis against which they get profits on MRP. Your income is not necessarily based on Retail Profits.
Every company has a mix of doing both – with some business models more reliant on one than the other.
Well, the answer depends on your objectives and current connections.
Here are my 3 ways to look at it …
DEMAND VS SUPPLY
It is a challenge for us to create demand for a product.
But once it’s created it will find its supply, with or without us.
Retail puts the power in the palms of the distributor…. but at a price!
You get all or most of the benefits from the company while the customer enjoys the product.
That’s the power!
A customer prefers buying one product rather than a membership for the first time.
They might like the convenience of you bringing the product to them.
But once they start liking your product; they will search for benefits.
In their search, if they find from another source that there are benefits you have not informed them of, they are likely to search for another source for the products.
That’s the price!
THE DIGITAL CONSUMER
Post Covid, the consumer is quickly adapting to the digital system.
Once people get the convenience of all the products with benefits delivered to their doorsteps, they will not go off the habit.
Direct Selling and MLM companies are noticing this trend and quickly pivoting to digital. Competing with E-Comm channels, they will be rolling out tools to help the distributors.
In this scenario, retailing will penetrate faster and reinforce itself at the top of the funnel.
A stable network does not develop overnight.
Digital will not change this fundamental truth.
But online retailing, if done correctly, will create brand affinity at scale, building loyalty faster.
A follow-up system can convert these free-flowing online customers into loyal members which further can be nurtured into a downline.
PASSIVE NETWORK INCOME
Retail starts showing limitations once you start building a network.
It’s good for today, but if you are here for a big passive income that grows with or without you; network is the answer.
There are generally 3 kinds of direct sales:
- D2C or Direct to Consumer (popular brands like boAt, Bombay Shaving, CaratLane etc.)
- SLM or Single Level Marketing (sales associates are paid only for their own personal sales activity)
- MLM or Multi Level Marketing
The big money is in MLM where you get paid for building a network and you get paid across generations.
And while it is not as rewarding today, it is incredibly rewarding tomorrow.
Opposite to Retail, where you get paid today but there is no fixed guarantee on it getting scaled up tomorrow.
So to conclude, Retail is a very good method to get you started in the MLM business.
It will help you sustain yourself on a low cash reserve and times when you have lower capital margins.
But if you are looking at a 5-year roadmap after which you see a solid passive income source, you need to keep retail at the top of the funnel and not make it bread and better.
What does it mean?
Use retail to nurture leads into memberships, and hopefully later refine them into business partners.
For a big income that scales on its own, you need to build a network!
Very nice