The Difference between Direct Selling and Network Marketing

 Network Marketing and Direct Sales have frequently been mistaken to mean the same thing.

In fact, they have more similarities than differences. But it is worthy of note that there is a very vital difference between the two systems of products movement.

Most people have erroneously believed that it's just a matter of point of views; if you're looking at the mode of sales of produces, it is called 'direct sales', where as if you're looking at the structure of the business model, you call it network marketing because it is a network.

This is not true, as investigation has shown that the difference between both business schemes is more than just point of views.

Let's go straight up to the differences, since we probably know the similarities. In this post, I will be talking about the three most obvious differences:

1. PRODUCTS.

The products give a very strong clue in differentiating between Direct Sales and Network Marketing, generally.

Direct Selling companies mostly deal with drugs, supplements and health enhancement products which are streamlined to a few options. Where as, Network Marketing Companies commonly deal with a very wide range of common day to day exclusive products; products of general need.

This is because the nature of the products determines what you do once you get them. Obviously, for a Direct sales company, because the products are targeted at people who suffer certain health and cosmetic issues, and the new partner may not have any need for all the products he has bought as a starter package, he will have to sell off. But for a network marketing system, because the products are majorly exclusive daily products, it's target market are those that can afford an exclusive brand. For a new member, the starter package can easily be converted for personal use rather than selling, even though there is that option.

This is why Network Marketing is commonly talked about as a 'sharing network' and not a 'selling network'. Since a new member is basically expected to USE the products and SHARE the experience with someone else in hopes that they too, make a purchase from the company, and not necessarily they themselves.

2. POINT LOAD.

Transactions and achievements in Network Marketing and Direct Sales are majorly valued in points.

Generally, evidences show that the point load for joining a Direct Selling company is generally higher than that required of a Network Marketing company.

Since the total point load varies directly with the number of products (coupled with the point given above), there is so much products in a new members possession; products that he or she may not be able to use because they're targeted at certain people who need them. Again, he has to sell.

But for a new partner with a network marketing company, the products are not much, since the point load is low. And he or she can easily use them and share experiences with others.

3. PRICE VARIATION.

Some companies have varying prices for different ranks in the supply chain. This is quite old school, but I have reasons to believe it happens till date. This move aims to facilitate more sales for people in higher ranks. This is obviously a direct sales company and not a network marketing company.

Generally, there is a difference in concept of both business schemes. While network marketing companies aim to have a network of product users, direct selling companies aim to have a network of independent product distributors.

Of course, both are very good business models and have equal chances at creating wealth for anyone, but it all depends on the company in question and what they aim to achieve.

I hope this has enlightened someone? Drop a comment.