In this post, we are here with a few of the major Network Marketing/MLM statistics that you need to know in 2022. Before understanding the statistics, let us first understand what exactly MLM is.
MLM or Multi-Level Marketing can be defined as a marketing strategy that focuses on hiring representatives or affiliates to sell products as well as services of the business. It is also referred to as Direct Selling or Network Marketing. Many MLM companies have been supposed to be Pyramid or Ponzi schemes but it is crucial to understand that MLM is not illegal. When the MLM company is purely driven by sales or services and not by recruitment, it is legal and safe to join.
Even though many MLM companies have resulted in being scams looting innocent and illiterate people but at the same time there is a high number of people connected with MLM companies and many of them have resulted in being multi-billion-dollar industries.
There arise many questions such as do people earn in MLM? It is possible to succeed in MLM? Is it easy to earn in MLM? And many more. The below statistics will provide answers to such questions and many more.
Top-selling MLM Products
As per the statistics, wellness and cosmetics or personal care products have been the top-selling products among most of the MLM companies. After these two, household products stand third in the list. Around 30% to 35% sales are recorded of wellness and personal care products whereas that of household is around 12%.
Drop ratio of MLM participants
Not all people succeed in MLM. There are many reasons behind this such as people are not dedicated to selling products or services, they might not be happy with the slow success they get, might not be able to invest financially and many more. Surveys and stats show that around 50% of people drop out of the MLM business after one year and around 90% of people are not able to reach 10 years.
MLM and Technology
Meanwhile, MLM companies have automized their operation using high-end MLM Software. MLM Software makes day-to-day management tasks easier for companies and easy communication with members. Direct sellers can also track their business on smartphones. Ventaforce is our product which is MLM Software. It offers 150+ most lucrative features and MLM mobile application development at a very affordable cost. You can take a free demo to know more about it.
Investment in MLM
There are numerous incentive programs included in the compensation plan structure of MLM companies. The major reason behind this is many participants never invest more than $1000 in MLM. Stats show that 66% of participants never invest $1000 even though they get the opportunity to do so. Surveys also show that 24% of the surveyed people spent between $1000 to $4999. Following different mediums and by recruiting more participants, people seem to earn more rewards and commissions instead of investing more money in MLM.
Active participation of Americans
As per data, 6.2 million Americans actively participate in the MLM companies at the current point of time. This can be equalized as around 2% of Americans and this percentage is again deteriorating as the young Americans are not seen much interested in MLM.
One of the most surprising stats show that 8% of Americans have participated in the MLM companies in some or the other way and at some level. It is seen that about 1 in every 13 Americans has participated in the MLM at some point.
Minimum costs for MLM participants
MLM participation is not only about joining, earning and recruiting, there even has to be expenses made while you join any MLM company especially if it is a larger company having numerous products or services. The average expenses expected for the MLM participants is $25000 a year.
Such expenses may include purchasing products, making minor incentives, technology, learning skills, taking training, advertising, travelling and many more. Hence a part of your income goes away in the expenses made to earn it. This is an assumed value and can be different for company-to-company rules and regulations.
Gross value of MLM industry
Even though the MLM market is not stable and the drop ratio is high, the MLM is still a remarkably strong network of people who work hard to earn more and get a rich lifestyle. The reports show that MLM has generated more than $35 billion by selling products or services.
Profit of MLM participants
Even though the MLM stats are very hard and show that the majority of people lose money or do not earn much, it is seen that around 25% of participants earn profit whereas 27% break even. Only half of the participants lose money in MLM. Among surveyed people, it was seen that 14% people made less than $5000, 6% of them made $5000 to $9999, 3% made around $10,000 – $24,999 and 3% made $25000 or more. However, 0.05% of people also made $100,000 or more with MLM.
Companies turning MLM
In the 1990s only 25% of the member companies turned out to be MLM based which has increased to 94.2% in the modern world. Hence it can be concluded that modern people are moving more towards the MLM companies and companies are also turning from being only manufacturers to being Multilevel markets. The MLM is more likely to grow in upcoming years.
Accuracy of profit-making representation
MLM has already earned a poor reputation due to fake schemes and luring activities performed by a few MLM companies where applicants were supposed to pay upfront costs and were stuck with the low-quality products that couldn’t be sold further. The studies show that around 52% of participants find that the company’s plan or way of achieving success through direct selling is not accurate or the data is not enough to understand everything in detail.
These were only a few of the statistics, there are numerous more points regarding MLM that keep on changing with the acceptance and modernization of companies.