Affiliate marketing vs MLM businesses

Legit ways to make money online: MLM vs Affiliate Marketing

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There are thousands of different legit ways to make money online. You want to be 100% sure that the business model you enter is a legit way to make money online. Many people confuse Affiliate Marketing with Multilevel Marketing (MLM). Affiliate Marketing is entirely different from MLM. 

MLM businesses have been in existence for a very long time. My mother has been a part-time MLM marketer for a beauty product basically my whole life and she has made money with it.  

Also consider your expectations, the risk of possible loss or failure. The lower your cost of entry and the cost of failure the lower the risk. 

How exactly does MLM businesses operate and what is the difference between MLM  and Affiliate Marketing? 

The scope online

Traditional marketing efforts are not sufficient anymore to grow a business. Businesses need to be active in the places where their market is active. With audiences being constantly online there is a shift of businesses to also operate in that sphere. 

It is definitely possible for MLM’s that are invoved in direct selling to promote their products to the public online with various platforms like 

  • Websites
  • Social media
  • Emails 
  • and video 

Affiliate Marketing comparison to MLM’s main promotional efforts are focused online. This offers large scope because a much bigger marketplace is available online for entrepreneurs.  

How do MLM's work?

Multilevel Marketing is also referred to as “network marketing” or “direct selling”. 

A legitimate MLM business is where a business follows a strategy whereby it recruits independent sales people to distribute the company’s product directly to consumers in the community. These non-salaried sales people earn commission on their direct sale of products to the public. These products are mostly sold by word-of-mouth or direct sales. 

Commission is also earned on the sales of people they recruit to sell . A layer of commission is then earned as you earn a percentage of the commission “down the line” from sales of the people you have recruited. The people higher up in the pyramid earn the most of the commission. 

How do you start an MLM business?

In most cases MLM’s starts with by buying a “starter kit” from an existing member. You can only become a member by buying these products. You then register as a seller.

You generate sales and income from orders that are placed by you. As a  distributor you are encouraged to recruit as many other sales people as possible. This is achieved by giving you a percentage of the commission from the sales of the sales people you have recruited. In theory you can earn sufficient commission from your recruits without having to sell the product. 

In many cases you need to sell a certain quantity of products or recruit a certain amount of successful sellers. If this is not achieved you can lose your status as a re-seller. 

Some MLM’s also work on a point systems where you earn a certain amount of points dependending on how many sales people you have recruited, which is then converted into a commission amount.  

Is MLM a pyramid scheme?

Pyramid scheme guy on top takes the money

Almost any product can be sold with Multilevel Marketing and there are some really good legitimate MLM businesses that delivers quality products or services to consumers.  

It may be a pyramid scheme or it may not. According to the USA Federal Trade Commission (FTC) some Multilevel Marketing are not legitimite when it is a pyramid scheme. The FTC define a pyramid scheme as

"If the money you make is based on the number of people you recruit and your sales to them, it could be a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money."

USA Federal Trade Commission (FTC)

To distinguish between a legitimate Multilevel Marketing business and pyramid scheme is to apply the test as to whether the plan’s rewards for recruiting new distributors is more than it is for selling products to the public. 

Also consider other aspects such as: 

  • The product is more expensive than it should be;
  • Unproven, unwarranted claims of making quick and easy money;
  • The product is of low quality; 
  • High starter kits to get into the business; 
  • The company’s reputation for positive customer satisfaction; 
  • Training and seminars are more about motivating to recruit more hopefuls rather than the aspects and quality of the products; 
  • Sellers join or form groups with a hidden agenda to rather recruit more people into the business than selling the product;
  • The business has been sued for deceptive business practices; 
  • People have already lost large amounts of money by investing into this “business”; 
  • Unclear and complicated system of earning commission;
  • Continuous attempts to up-sell (upgrade) your commission level by your investment without any product delivered or real value being given.

Examples of MLM businesses 

Here is a list of some of the most known MLM businesses. You might have been approached by someone selling products from some of these companies. 

  • Herbalife
  • Arbonne
  • Stella¨
  • Younique
  • MONAT
  • Isagenix
  • Nu Skin
  • doTERRA
  • Acti-Labs
  • LuLaRoe
  • Jamberry
  • Amway
  • Usborne Books
  • Mary Kay
  • Forever Living Products
  • Juice Plus
  • Tropic Skincare
  • Utility Warehouse
  • Avon
  • ENJO
  • Nu Skin
  • Color Me Direct
  • Total Life Changes
  • ACN
  • Beachbody Shakeology
  • SeneGence 

What is Affiliate Marketing?

4 Steps of an affiliate making money

Wikipedia defines Affiliate Marketing as:

“Essentially affiliate marketing involves a merchant paying a commission to other online entities, known as affiliates, for referring new business to the merchant’s website. Affiliate marketing is performance-based, which means affiliates only get paid when their promotional efforts actually result in a transaction.”

Do you see the difference? Affiliate Marketing is not direct selling nor is it recruitment of sales people from whose efforts you will receive a commission. 

Millions of companies embark on a strategy of partnering with individuals for referring readers or visitors to a business’s particular product or service and in return pays a commission on a successful sale. 

This has become one of the most successful ways for individuals to earn an income online. Many large successful corporations has affiliate programs and has grown exponentially from the efforts of affiliate marketers. 

It is a win-win solutions for many individuals and companies. 

How do you start an Affiliate Marketing business

You start an Affiliate Marketing business by following these 5 steps

  1. You choose your niche of interest and opportunities 
  2. You build a website with the goal to attract visitors to your website
  3. You build relevant content that provides information to your visitors
  4. Your visitors become customers when they buy the products you promote by using your affiliate links 
  5. You earn commission from the retailer whose products you promote and you make money.

As you can see affiliate marketing is a totally legit way to make money online. Millions of companies trust affiliates to market their products online. 

What distinguish Affiliate Marketing from MLM

The differences between Affiliate Marketing and MLM and why you might rather choose Affiliate Marketing over MLM as a legit way of making money online. Is laid out below:

MLM vs Affiliate marketing

Multilevel marketing (MLM)

Affiliate Marketing

Start

You start by buying inventory or a "starter kit"

Start

You start for free. You only need your own website and or Social Media page. No investment in physical goods required.

Specific products

You can only sell specific MLM products

Unlimited product or services

You can only sell any product or services that you love

Brand loyalty

You are loyal to your brand and ignore the bad qualities.

Sell competing brands

You can sell different competitors products. You inform your audience about all the product qualities, the good, the bad and the ugly.

Recruit

You recruit more sales people to sell the product.

No recruitment

You sell a product or services not a business opportunity.

Pyramid commission

The commission structure is complicated and difficult to understand. You earn commission from other people's efforts.

Direct commission

You make a sale you earn a percentage commission, straight and simple.

Dependency

Your income is dependent on other people's sales.

Independent

Your sales = your commission. You are not dependent on other people's efforts "down-the-line"

Limitations on products

You are limited as you cannot sell products from competing brands.

Unlimited choices

There are over 550 million products that you can sell, you have unlimited choices.

Unrealistic expectations

You are being told that you will achieve financial freedom quickly and easily.

sustainable business

You have a realistic expectation of building a business that grows over time into a sustainable business.

traditional sales channels

You start by selling to family and friends something they may not need or want. You form or join groups to sell the products directly to the public.

Leverage the internet

Your business is internet based. You optimize your website and content to be "search engine friendly" and provide solutions to people who search for solutions on the internet.

Convince people to buy

You convince people to buy the product.

People decide for themselves

People find the product because they search for it on the internet. They decided for themselves if they want it based on your review.

Motivational training to keep you inspired

Training are of a motivational nature.

training is knowlege based

Training is centered about building an online business based on your passion and getting the knowledge to do it.

low success rate

The chances for success is slim and the fall-out rate is very high. It is very difficult to earn a sustainable income. The people at the top of the pyramid earns the most.

High success rate

What you put in is what you get out. You are not dependent on other people's efforts. There are nobody at the top of the pyramid. What you refer is what you earn. Your chances of success are much higher.

Conclusion

There are legit ways to make money online. We have looked at two possible avenues you can follow with a MLM business or as an Affiliate Marketer.  Both can work depending on your circumstances.  There are definitely risks involved with a business where you mainly recruit people to sell underneath you. 

In my opinion: if your business has a website, you have an online business. If your business has a Facebook page or Instagram profile or you promote your business via Email or Online Classifications you are then involved in a business online.

Are you aware of the vast opportunities online? and what you could achieve with your business if you know how to use the online space to leverage your efforts to make profit or extra income?

With the right method and the application of appropriate knowledge, a business can be promoted online resulting in much more revenue with lower input.  

At the Wealthy Affiliate “University” there are plenty of people that make a living online. Those people post their achievements on a constant basis. You can be rest assured to know that the question of whether people make money online is true and well documented. 

Then the most important question is: “how?” The “how?” requires a set of integrated, constant, knowledgeable activities. It is without doubt possible and there is definitely a recipe to follow with specific ingredients that ensures success online. A program like Wealthy Affiliate gives you the recipe  and the answer to the “how”. 

I, for one being in favor of simplicity, am regularly testing, trying and contemplating what the next move is with my ventures online. 

To “make it online”, requires the right quantity, of the right ingredients to make that wonderful business tick like clockwork online. Simply put, you need the knowledge and then you need to start applying that knowledge. 

Any experience with a MLM or an Affiliate business? I would love to hear your story, please comment below. 

About Louis Munro

Louis is the founder of Infinite Affiliate Marketing. Louis is a qualified Chartered Accountant (SA) and an entrepreneur for more than 16 years. Louis is passionate about helping people to become successful online entrepreneurs. 

12 thoughts on “Legit ways to make money online: MLM vs Affiliate Marketing”

  1. Dominique JV Rensburg

    What a great article! This information needs to reach individuals trying to make money online. This is the type of article you need in your arsenal when contemplating an online marketing venture.

    1. Hi
      Yes, you want to know beforehand what you are getting yourself into and be sure that you relate to that type of business model.
      Online businesses truly provide for many legit ways of making money but keep your expectations realistic, it is going to take work as well.
      Louis

  2. Hey Louis,

    I really enjoyed reading this article on “Legit ways to make money online” as its interesting and contains tonnes of valuable information. To be honest, I never knew about MLM before but after reading this post, I got some idea on it. By the way, is MLM passive income or active income?

    In my opinion, I tend to think that affiliate marketing is one of the best ways in order to make passive income online. If an individual is capable of investing time and effort, he/she can really reach the sky.

    Thanks in advance for answering my question and for writing this blog post. Keep up the good work Louis!

    1. Louis Munro

      Hi
      Thank you for reading this article and posting your question.

      I think MLM can be a great source of passive income if you have recruited enough people underneath you that can do direct selling very well and in whose commission you share. If you rely on your own direct selling this business model will not be passive income anymore. One also has to consider the legality of the business if it relies on recruiting people only.

      As long as people seek answers online and buy online Affiliate Marketing will have potential as a business. Once your Affiliate business is seen as an authority it can definitely create passive income. One of your reviews that you created 6 months ago might suddenly bring you a un-expected commission.

      All the best with your business
      Louis Munro

  3. Thank you so much for expressly stating that MLM is quite different from Affiliate marketing, Thou one can make reasonable amount of money from both ends but I seriously feel that affiliate marketing puts you in full control of your own business and make you more creative in writing your own content as well as promoting products. 

    1. Louis Munro

      Hi Clement
      Absolutely both models MLM and Affiliate Marketing can generate a good income, I guess the most important is to know exactly what you are getting yourself into.
      All the best.
      Louis Munro

  4. fintan duggan

    This website infinite affiliate marketing is well written about the subject of affiliate marketing.It looks at the many different ways to make an income from becoming an affiliate of many different companies.The beauty of being in a position that you can promote many types of products without any major cost.Compare this business model to MLM marketing where by you have to invest a lot of money to get started,attend weekly or monthly meetings, you may have to ask your family and friends to buy product to meet your monthly targets.Affiliate marketing is a relatively risk free way to make a living online.this website goes into great detail and explains why you should consider becoming an affiliate marketer and more importantly how you should go about this.

    1. Louis Munro

      Hi Fintan
      I also lean towards affiliate marketing, I do not like the idea of being tied down to one product nor do I like the idea of persuading people to buy or sign up to my offering. I prefer the affiliate marketing model where you provide true and honest reviews and people can make up their own mind if they want to align themselves with the offering.
      Good luck with your journey.
      Louis Munro

  5. You have done such a great review looking at these two ways of making money online. I must say both ways can work, it all depends on the ability of the individuals. If you are good at sales and convincing people to take up certain products, then MLMs can really work for you but if you are good at just product reviews and maybe writing content around products then affiliate marketing would work for you. 

    1. Louis Munro

      Hi Anita
      That is so true. I think it boils down to your natural abilities and doing what resonates best with you.
      All the best for you and your business.
      Louis Munro

  6. Thank you for this great review of Legit ways to make money online: MLM vs Affiliate Marketing.This review is very helpful for those who are newbies like me. This helped explain everything for me like MLM, Affiliate marketing and pyramid scheme. For those are who are newbie, I highly recommended this review for you. Love to read more of your upcoming reviews!

    1. Louis Munro

      Hi Bong
      Thank you for your positive comment. We all start at some point being a newbie and hey do you know what, it just takes time and consistent action to become an authority. Being a true authority leads to online success within your niche and is within everybody’s ability. Good luck and all the best to your business.
      Louis Munro

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