Network marketing in India is on the rise and many people are not aware of what network marketing really is?
In this article, I will provide a detailed analysis of the working model of network marketing and various schemes and companies that provide this scheme.
People in India call Network marketing with various names like a pyramid scheme, Multi-level Marketing, and referral marketing in some cases.
So, let us understand
The trend of Network marketing in India is way too high when compared to other countries.
What is Network Marketing in India?
Network marketing can be a little confusing and this is the reason why it is important to understand what Network marketing really is.
I have seen people getting confused with Affiliate marketing and network marketing. However, these two are quite different with some similarities.
In simple words, Network marketing is a strategy by which one can earn a percentage of revenue by selling a product or service of a respective company. Although, this way of marketing looks like a pyramid-shaped system.
The major difference between Affiliate marketing and Network marketing is that In affiliate marketing you are allowed to sell a product without paying a penny or any sort of joining fees.
Another difference between affiliate marketing and network marketing is that in Affiliate marketing doesn’t involve a pyramid scheme.
Most Affiliate companies allow you to sell their product without you having to use it or purchase it.
If the company works involving a chain system, then this might not be the company you should be joining.
I have seen network marketing companies that claim to get rich quickly. However, there are very least people that are successful in this business.
You will have to put a lot of effort in order to get successful in growing in this method.
Network marketing in India is also called a Multi-level marketing or chain system/pyramid system. Network marketing in India is a great way to make money.
Here is how Multi-level marketing works
Companies usually make two parts of revenue share. The first revenue share is paid directly from the commissions of sale that is made by participants directly to their client or acquiring a customer.
And the second revenue share is from commissions based on wholesale purchases made by other distributors below the participant who recruited those other participants into the MLM; these participants are known as one’s downline distributors in the MLM organizational ladder.
Although, Multi-level marketing salespeople are expected to sell their products directly to end-user retail consumers through mouth interaction or through social media platforms.
The main motto behind these schemes is to make money by selling a digital product or a service in a pyramid scheme. Network marketing can be profitable because there aren’t any third-party retailers or distributors involved.
These companies usually make money by recruiting new people in their scheme and further those recruited people are trained to recruit new people in their network.
Although, network marketing is not a reliable way of revenue generation as this requires a lot of effort to generate leads. Network marketing in India is growing day by day and many people are making passive income using this method.
There are lots of companies that call Network marketing Affiliate marketing and confuse people. In short, Affiliate marketing doesn’t involve any pyramid scheme or doesn’t charge a single penny to join or promote their products.
And this is the major difference between Network Marketing and Affiliate marketing. Most of the Affiliate vendors allow you to promote their products without any investments.
There are few other companies that ask you to pay by offering few courses such as personality development, Social media marketing, and many other courses.
In my opinion, all these types of courses are freely available on YouTube for free of cost. There are lots of YouTuber’s that teach these without any fees. Internet is quite very big and you can learn most of it for free.
Most people on YouTube teach Affiliate marketing without you having to pay.
It is important for you to differentiate if the company is legit, its working model, and its revenue sharing in order to differentiate between a fraud and a legit company. Network marketing in India is a great way to generate some passive money.
Next, let us understand about Pyramid scheme and its working model.
Pyramid schemes can also be referred to as Multi-level marketing in some cases. Although, It is important to differentiate between a legit Multi-level marketing company and a company that works like a pyramid scheme.
Most of the pyramid schemes often fail and the success rate among these is quite very less. However, multi-level marketing companies may survive for a while.
I don’t really recommend anyone to join companies that have a working model similar to pyramid schemes. These companies are usually not legal in most countries.
Reserve bank of India cautioned the public to not fall against Multi-level marketing activities so that investors should not fall for such schemes and lose their entities.
Multi-level marketing can also be a pyramid scheme and this is the reason why you should be careful with these companies.
What are Pyramid schemes?
A pyramid scheme is a fraudulent system that works based on recruiting new investors in the chain network. Initially, the company promoters recruit new investors, who in turn will be recruiting the next set of investors to grow their business.
This working model is referred to pyramid because this is similar to that of a pyramid. At each level in this business, the number of investors usually grows more and this is the reason why it is referred to as a pyramid scheme.
Pyramid schemes are illegal in most states in the US. In reality, the main motto in these companies is not usually selling products but recruiting new investors in their company. They try to do this in order to show the legitimacy of their companies towards their front-end customers.
They follow this trend trying to comply with the government guidelines in order to prevent their companies from getting banned. There are companies that even sell Digital products and services without the involvement of a physical product.
Digital products are easy to create and these digital products are usually preferred to reduce all the costs that might occur in a physical product. These are some of the top network marketing companies in India.
For example, If you create a course about Drawing sketches, you can sell these courses to people who are passionate about drawing and sketching.
This goes very feasible because you don’t have to create a new course for every person. However, you can sell the same course to each and everyone who is interested in drawing.
And this is how most pyramid schemes work. They create a course and use the course as a product to show their legitimacy and prove their legality. Network marketing in India is a great way to generate some money.
However, pyramid schemes involve a chain network that is illegal and is not allowed in most countries including India.
The Reserve bank of India said that Pyramid schemes/Multi-level marketing/Money circulation is completely illegal in India and a cognizable offense under the Prize chit and Money circulation Act 1978.
You can check out the press release by RBI on its website by clicking here
If you come across such schemes, you can lodge a complaint with your state police for investigation.
So, now you are aware of pyramid schemes, and its working. In the next section, I will discuss Multi-level marketing in detail.
What is Multi-level marketing?
In simple words, Multi-level marketing is a method of selling products directly to their customers without the involvement of an intermediate supplier, distributor, or broker. However, direct selling is legal only when there is no chain system involved.
The involvement of a chain system or Network is similar to a pyramid scheme and is illegal. In multi-level marketing, products are sold via distributors or with a group of salespeople.
Let me explain How Multi-level marketing works, First, you will be pitched by a salesperson who tries to sell you a product. In maximum cases, the selling product will be a digital product or a course.
The salesperson will ask you to purchase their product. They will try to pitch you with easy money-making schemes. Their products usually contain courses that teach some skills. I have personally seen these courses and these are not worth the money you spend.
You will be asked and trained to sell the same products to others.
I have even seen companies that claim to teach Affiliate marketing and to make money with it by joining their program. In my opinion, the companies that are claiming these are not worth your money and you should think of investing in something better.
They charge you money for the course, but you can learn these courses from YouTube for free of cost. There are lots of YouTubers that teach these courses free of cost.
I learn most of the skills from the Internet without spending a single penny.
The major difference between a Multi-level marketing(MLM)/Chain Marketing/Pyramid scheme and Affiliate marketing is in Affiliate marketing the Affiliate vendors will not charge a single penny to promote their product.
Although, they will even provide you a review copy for free to try and test their product for you to decide in order to promote it or not.
These are some of the top Network marketing companies in India among hundreds of other companies. Network marketing in India is a great strategy to learn new skills and earn money.
If you are interested to learn Affiliate marketing, then you can Email me here at [email protected] and I help you out with it.
Is Network Marketing/Multi-level marketing (MLM) legal in India?
This is a complicated question and most people are confused about it. Although, In this section, I will try to answer this question in a most helpful way.
MLM companies that sell their product via Direct selling method without involving a chain or a network system are legal in India.
There are Ponzi schemes that make money circulation without any involvement of a legit or genuine product and these companies are illegal as such stated by the Reserve bank of India.
Key points to decide if the Network marketing company is legal in India
Is the Company charging you some money as a joining fee?
If yes, stay away from such companies. Such MLM companies are usually fake and fraud and the reason is quite simple, Joining MLM companies is usually free of cost. You don’t have to pay them money in order to join their platform.
Is the company providing you with a Tax Invoice whenever you purchase a product from them?
It is important to comply with all the government guidelines and it is important to issue a tax invoice whenever you purchase a product that ensures tax is being paid to the government.
For example, If an MLM company is issuing a Tax Invoice it is a sign of legality of the company. Invoice is generally issued by the seller to a buyer and this identifies both the trading parties describing the date of purchase, price of the product, mode of transport, and other payment terms.
Type of Product
This is another key point you can consider to check the authenticity of the MLM company. There are different types of products available in the market. For example, It could be a physical product that could be delivered to your home address. Or it could be a Digital product or a service that might be available digitally.
Digital products that are available online on the companies website might be a sign of concern and the reason for this concern is that the website can also be taken down. For example, If the website by any means goes down you will lose access to your account and the products that you have purchased with the company.
Check for how long the company is functioning and its reviews before joining. I would recommend you to cross-check on platforms like QnA sites like Quora for an unbiased user experience.
Mode of payment
The next thing you can check is the mode of payment. Most companies pay directly to your Bank account rather than the involvement of wallets.
Although, most companies hold payment for few days for security reasons and you should be able to transfer those funds to your bank account as the clearing time ends.
If the company is willing to pay you with cash, this could be a sign of concern. Most MLM companies pay you instantly upon successful sale.
Registration status of the company
Is the company registered with all the necessary procedures?
This is another checklist you should consider. It is important to make sure if the company is registered with the respective ministry of corporate affairs.
You can also visit the companies office and cross-check their manufacturing units in case of physical products.
By verifying all these points, you can have an idea about the companies legality.
Although, these MLM companies might help people make some passive money. People who are unemployed can also try these companies to earn some extra money. However, you can get a handful of experience interacting with people improving your speaking skills.
There are lots of Network marketing companies in India that are continuously growing and growing. Network marketing in India is a great way to make money.
Concluding Thoughts about Network marketing in India
I have come across a lot of companies that provide network marketing in India. Most of these companies sell Digital products like Affiliate marketing courses, Personality Development, and Etc.
Generating leads using network marketing tools can really help you boost your sales.
I have come across many people who suggested me to join these Network marketing in India. Although, In my opinion, it’s hard to generate leads in these schemes and you might end up making hardly any money.
There are various other ways to make money in India other than Network marketing. This includes Freelancing, Blogging, completing surveys, and many other opportunities available online.
You might join Network marketing companies with lots of interest and remember it’s not that easy to generate leads with digital products. However, if you work hard and smart, you can still make some passive money with Network marketing companies or Multi-level marketing companies.
Your revenue generation completely depends upon your hard work. This is the reason, why it is important for you to make the right choice and not invest your hard-earned money in something that is not worth it.
These are some of the facts about Network marketing in India you should be aware of.