How Network Marketing Opportunities Work

Network marketing… some people get excited about it and some people fear it, but what is it really all about? Whether you think it’s a scam or the holy grail, network marketing is nothing more than a distribution channel – but what does this mean?

The traditional distribution channel is made up of a manufacturer, agents, wholesalers, retailers and customers. Network marketing simply does away with the middle-men. Let’s see how that works by looking at tradition distribution in more detail:

Manufacturers produce finished the products in bulk and, usually, they deal only with agents or wholesalers directly. Customers can’t buy their products directly from the manufacturer, they have to approach a wholesaler or an agent to do so.

If agents are involved at all (sometimes manufactures deal directly with wholesalers), their role is to negotiate contracts between the suppliers and the distributors. Sometimes the agents are a kind of ‘gatekeeper’, keeping the business of importing and exporting goods within the confines of the law.

The wholesaler’s function is to store the stock and distribute it directly to retailers. The wholesaler will have negotiated their price with the manufacturers and/or agents, and it is their job to keep the retailer well supplied with products.

The retailer is then able to supply the goods to the customer. This is the only point in the traditional distribution process that the product becomes available to the customer, and the retailer is the only party to have direct access to the customer.

So, eventually the customer may purchase the product they require. This product will have passed through the process above and at every point in the process each party will have taken their profit. The price will have been marked up many times, and the real cost of the product will be far lower than that which the customer ultimately pays.

Network marketing does away with the all the middle-men and the process of marking up many times. Network marketers provide a direct connection between the manufacturer (the network marketing company) and the customer.

The other, unique benefit of being in network marketing is that the customer can go on to become a distributor, and vice versa. Often the customer is so excited by the product, and by the price that is possible because there are no middle-men, that they wish to distribute it themselves. And it is more common than not that the distributors will also be customers by using their own product – this is often how they got involved themselves.

The benefits of network marketing as a system of distribution are:

More competitive prices due to cutting out the middle-men.

A more personal approach.

Everybody involved has the opportunity to make money from selling the products.

Distributors can sponsor their customers to also distribute the products (downlines).

All of this makes network marketing distribution a far more most cost effective form of distribution than the traditional model.

Summary: What network marketing is all about. How network marketing is more cost effective than the traditional distribution channel.

Jaz Lai is an home business network marketing expert. Download your free white paper and audio on how to use the internet to Double or Triple your organization within the next 30 days. Available for the next 24 hours only, click below for instant access :

By Jaz Lai Published: 6/19/2008