Multilevel marketing is experiencing a rebirth

Multilevel marketing is experiencing a rebirth

Through a series of strategic alliances, multilevel marketing is experiencing a rebirth

As anyone involved in network marketing and direct selling already knows, it’s not just about getting your product out there and building a successful business. You often have to overcome the stigma associated with the multilevel-marketing (MLM) industry. But because of a series of strategic alliances between big-brand companies and network marketers, the industry is currently poised to reach a new level of credibility as it enters what some experts predict will be its “third wave.”

MLM’s first wave arrived with Amway’s rise to national prominence, which essentially put multilevel marketing on the map; then came the mass telecommunications and insurance alliances of the 1980s that introduced network-marketing ventures from the likes of MCI and the Travelers Group (Primerica). Now, in this third wave, multilevel marketing will bring such nationally recognized products and services as Barbie dolls, IBM computers, and America Online into more and more homes. “There’s definitely a trend,” says Neil Offen, president of the Direct Selling Association. “Heavy-hitting companies have realized they can tap into this massive distribution network.”

It’s massive, all right, with its 36 million global salespeople and 50,000 daily recruits, he says.

Although large companies are not strangers to the concept of network marketing, the relationship has until now been more like that of distant cousins. Marketing efforts were often concentrated overseas, or a product was sold under a name that had nothing to do with the brand behind it.

Today, all that is changing. Through strategic alliances, industry leaders are tapping into network marketing to increase sales in an economy rife with consuming. These alliances are also expected to generate interest in network marketing itself, counteracting the negative image often attached to it and lending it the credibility of a nationally or internationally known company.

REINVENTING NETWORK MARKETING

Paving the way to this new era, America Online, a $2 billion company and the world’s leader in interactive services, recently allied with the network-marketing firm formerly known as Monument Communications. Both the firm and the new entity will be called OnlineSelect.com. It will market America Online as well as IBM computers and DirecTV, a leading satellite-TV network.

Stressing the value that selling nationally known brand names has for this start-up, Rich Warren, the president and cofounder of OnlineSelect.com, claims, “We are setting out to create a new kind of network marketing.” Indeed, it would appear that he is – and not just through a big-brand alliance. The deal marries network marketing to the booming industry of e-commerce. “The product our networkers are marketing is also the product they’ll use to drive their business,” he notes. Each sales rep will have a personal, company-created Web site he can use to track sales, downline activity, and the corporate “family tree.”

OnlineSelect.com also plans to train and recruit over the Net, thereby cutting down on the so-called windshield time that networkers spend in driving to meetings.

Will this third-wave venture make it? OnlineSelect.com has behind it the reputation of a large company – namely, American Online, the leading commercial online service – that is committed to providing the money and resources necessary for growth. That bodes well for its chances, says Rod Cook, the publisher of MLM Insider magazine and a network-marketing consultant. “I give them an 80 percent chance, and that’s great. I usually go negative.”

And AOL is not the only company now buying into a strategic alliance. Avon (the direct-sales-cosmetics leader) recently inked a deal with several companies, including Mattel, Disney, and Tyco Toys, that enables Avon’s 2.6 million sales representatives to sell those firms’ products. “It’s a great venue for them to reach a broader base of customers,” says Avon spokesperson Kelley Wall. Even the industry stalwart Amway is getting in on the alliance action. You need only flip through an Amway catalog to spot companies like Rubbermaid and Waterford deriving strength from the network-marketing giant’s vast reserves.

Posted by on March 24, 1999

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