What is the Difference Between Direct Selling And Network Marketing

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network marketing images
network marketing images

Direct selling refers to a distribution method, whereas multilevel marketing refers more specifically to a type of compensation plan found in direct selling.

A direct selling company that offers a multilevel compensation plan pays its representatives/distributors based not only on one’s own product sales but on the product sales of the people a representative/distributor has brought into the business.

What is ‘Direct Selling’

Direct selling refers to the selling of a product or service directly to consumers, away from a fixed retail location. The EU Directive on Consumer Rights (Directive 2011/83/EU) defines “direct selling” as contracts concluded between traders and consumers with the simultaneous physical presence of the trader and the consumer, in a place which is not the business premises of the trader. These products or services are marketed face-to-face by salespeople who, depending on the company, may be called representatives, consultants, distributors, etc. These salespeople in most cases are working as independent sales agents or resellers but some direct selling companies may also utilize employees.

Direct selling is interesting for consumers because of the convenience and service it provides, which includes personal demonstration and explanation of products, home delivery, and satisfaction guarantees.

Direct Selling represents also an opportunity for individuals looking to start a business due to the low investment necessary to work as a direct seller.

What is ‘Network Marketing’

Network marketing is a business model that depends on a network of distributors for growth, such as in multilevel marketing. It is a direct selling method that features independent agents that make up a distribution network for goods and services.

Some network marketing systems are based on tiers that denote how many levels deep a sales and distribution network goes. In two-tier or multi-tier examples, the people that make up the top tier of a distribution network are also encouraged to build and manage their own networks of salespeople. Each network creator (or “upline”) then earn a commission on their sales revenue, as well as on the sales revenue of the network they have created, otherwise known as “downline.”

There are many examples of reputable network marketing operations, though some have been criticized for being pyramid schemes and have been banned in some countries as a conduit for consumer fraud.

What is the Difference Between Direct Selling And Multilevel Marketing?

Direct selling refers to a distribution method, whereas multilevel marketing refers more specifically to a type of compensation plan found in direct selling.

A direct selling company that offers a multilevel compensation plan pays its representatives/distributors based not only on one’s own product sales but on the product sales of the people a representative/distributor has brought into the business.

What Products and Services are Marketed Through Direct Selling?

Direct selling suits the sale of almost every category of products that can be found in traditional retail locations and in department stores. It is also very convenient for the sales of services such as telecoms, gas and electricity supplies.

Cosmetic and personal care products, household items and wellness are the strongest sectors in direct selling. Other products categories include food and beverages, nutritional products, jewelry and clothes, books, toys and games, home improvement products, etc.

Types of Direct Marketing

1. Direct Mail

Direct mail is posted mail that advertises your business and its products and services. There are several different types of direct mail (e.g. catalogs, postcards, envelope mailers). Direct mail campaigns are usually sent to all postal customers in an area or to all customers on a marketing list. Learn more about direct mail.

2. Telemarketing

Telemarketing involves contacting potential customers over the phone to sell products or services. It is capable of generating new customer prospects in large volumes and is also a useful tool for following up on direct marketing campaigns. However, a successful telemarketing involves planning and using accurate and well-researched customer data to match customer profiles to product profiles. Find out about telemarketing.

3. Email marketing

Email marketing is a simple, cost-effective and measurable way of reaching your customers. It can include e-newsletters, promotional emails to generate new leads or offers for existing customers or ads that can appear in other business’s emails. Learn more about email marketing.

4. Text (SMS) Marketing

Text messaging allows businesses to reach individual customers and send messages to large groups of people at a low cost. You could use a short message service (SMS) messaging to send customers sales alerts, links to website updates, appointment or delivery reminders, or personalised messaging. Find out about text (SMS) marketing.

5. Leaflet Marketing using Letterbox Drops and Handouts

Distributing well-designed leaflets or flyers through letterbox drops and handouts can work well for a local business whose products or services appeal to a broad audience. It is a simple, inexpensive and effective way of reaching customers, although it is a less targeted form of direct marketing. Learn more about leaflet marketing using letterbox drops and handouts.

6. Social Media Marketing

Social media can be used effectively as a marketing tool for business as it gives you the opportunity to interact directly with your customers and regularly share relevant product or service information. Social media platforms also make it very easy for your customers to share your content with their entire network, increasing your reach exponentially. Consider developing a profile for your business that allows you to promote your products and services while also encouraging customers to provide feedback by leaving comments. Find out about social media marketing.

7. Direct Selling

Direct selling is an effective way to grow a flexible, low-cost business. Direct selling involves an independent salesperson selling products or services directly to customers, often at a customer’s home or workplace. Traditional direct selling methods include door-to-door sales, party plans and network marketing. Learn more about direct selling.

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