MLM Distribution
What is MLM distribution? And how does it work? Let me answer those two questions for you and give you some pointers to help improve your network marketing business. Let’s get started. Multi-level marketing is a unique distribution model with many advantages. But before I dive into that too much, let me explain the normal distribution model for a product.The Distribution Process All products are made by a manufacturer. Once they are manufactured, they are sold to a wholesale or distributor. The wholesaler or distributor sells the product to a store or retailer. The store or retailer than sells the product to the consumer. Each “middleman” marks up the cost of the product, in order to make a profit. Additionally, there are advertising, delivery and storage fees added on to the price of a product. By the time the product gets to the consumer, it is marked up 50 to 100% (or more) of the original cost. How Network Marketing Distribution Works Multi-level marketing works differently. It eliminates the middlemen, which means that the manufacturer has an independent sales force that sells directly to the consumer. This eliminates all the extra “markups” for the product. In return, the independent sales force gets paid the profits that would traditionally go to a distributor, a store, or advertising costs. Does that make sense to you? Network marketing has been around for nearly 70 years. Since then, the MLM distribution process itself has changed significantly. In the early days, distributors would order their products directly from the company, keep an inventory, and then sell their products to their customers and downline. As they sold their products, they would re-stock their inventory and repeat the process the following month. If the MLM Company had limitations about which distributors could order directly from the company, the distributor would order the products from his or her successful upline distributor instead. They would either “pick-up” the products from their upline’s house, or have their upline ship them the products. Although this wasn’t the most efficient means possible, it worked. Let me give you an example by talking about Amway. Amway Case Study From the 1950s to sometime around the mid 1990s Amway only let their Platinum level and above distributors order directly from them. They required these Platinum level distributors to service their “non-Platinum level” downline distributors directly. In the real early days, Amway actually made their Platinum’s come and pick-up the products from their manufacturing facility in Michigan. However, as time went by, Amway evolved and started shipping products to their Platinum level distributors via Freight, UPS, etc. Even when this happened, Amway still only allowed the Platinum’s to order directly from the company. I’m not sure when their policy officially changed, but now Amway lets everyone order directly from the company. No one is required to keep an inventory. Even customers can order directly from the company. How Things Have Changed Just about every other network marketing company I know of follows a similar approach. They don’t require their distributors to inventory anything at all (although they can). They even allow retail customers to order directly from the company. All the distributors need to do is focus on is finding new customers, share the products with others and sponsor new distributors. This simplifies life for the average distributor. In today’s world, there’s little need for a distributor to stock-pile inventory. Now, all he has to do is find customers and have them order directly from the company’s website or by calling the toll-free number. Once they do this, the company processes the payment, takes the order, ships the product, handles customer support issues, and tracks the commission for the distributor. It’s really that simple. All the distributor has to do is provide great customer support and follow-up with the customer to make sure she is happy with the products. Some Folks Still Use the Old Distribution Model On the other hand, some distributors still use the old-school MLM distribution model. Although I prefer the new MLM distribution model, I still see many benefits of using the old-school MLM distribution model. Many distributors still keep a small inventory of their best-selling products and personally deliver the products to their customers each month. Although it might cost them more out-of-pocket money up-front, it still pays huge dividends in the long-run. The major benefit of doing this is that your customers get world-class service. After all, you are delivering the products to them. How many companies do that, nowadays? This makes it very personal. How many sales people go above and beyond like that? Not many. I believe it is more advantageous than having the company ship the products via UPS or FEDEX. What you do is ultimately up to you. Just remember, this business is all about relationships. You need to go above and beyond what most business people do. If you don’t provide world-class service to your customers, someone else will. Don’t ever forget that. Final Thoughts In conclusion, the MLM distribution process has changed through the years, but one thing still remains the same. You need happy, satisfied customers. If your customers are happy placing the orders via the company’s website or toll-free number, that’s great. But if they’re looking for something more personal, you need to do whatever it takes to fulfill their expectations. If necessary, you need to help them place their order directly through you. And you need to deliver the products to them. By doing so, you will get larger orders and get many more re-peat orders, all which add to your bottom line. Good luck! On a side note, I want to hear what you think about the MLM distribution process. If you've been involved in network marketing for a while and have done your business both ways, please share your experiences. What did you like about the old-school distribution process? What didn't you like? And what about the new process? Is it better? More effective? Please type in your 150+ word testimonial in the web-form below. Share your opinions with the rest of our online community. Thanks.
Have A Great Story About This Topic?Do you have a great story about this? Share it! Just type in your 150+ word testimonial. Make sure you spell-check first. Thanks. What Other Visitors Have SaidClick below to see contributions from other visitors to this page...
MLM Cleaning Products Businesses
Not rated yet
How to Get More MLM Retail Customers
Not rated yet New! CommentsHave your say about what you just read! Leave me a comment in the box below. Copyright 2010-12 MLM Resource Center / All Rights Reserved. All trademarks and copyrights are held by their respective owners FTC Disclaimer: I do earn commissions from some of the products I recommend This site is for informational purposes only and should not be considered as business, legal or financial advice |
