Goods and services exchange hands every single day in the world economy. Companies use several channels to move their products and services. I am going to briefly cover the three channels that I use on a regular basis.
Affiliate Marketing is a channel that a company or individual uses to sell products and services. The affiliate advertises and promotes the product or service both online and offline in exchange for a percentage of the sale or commission. The amount of the commission is agreed upon when the Affiliate applies to the company or individual on a contractual basis. The affiliate is NOT an employee. Once the sale is made, the company will pay the commission either one time or on an ongoing basis depending on the agreement with the company. Some subscription services affiliate programs can pay residual income as long as the customer continues the subscription.
Direct sales is the process where a company gets its product or service directly to the customer. There are direct sales reps that earn income by promotions that target consumers. Many companies use direct sales with home party plans. Tupperware has used home party sales to get its products directly to customers for decades.
Marketers like me also have products and services on websites where a customer can make a purchase via a payment processor. I use Pay Pal for my customers orders. The customer purchases the product off my site and pays through their Pay Pal account. I receive an email of the transaction and then either ship the product out of my inventory or drop ship it from my supplier to the customer directly. I strongly suggest being involved with companies that will allow you to drop ship and NOT be required to stock any inventory. I keep a certain amount of inventory on hand after analyzing the amount of demand from my customers.
Network Marketing or Multi Level Marketing
Depending on who you talk to, Network Marketing is a scam or the greatest distribution model ever invented. Thousands of companies are turning to Network Marketing because the company can grow rapidly without having to market or advertise their products or services. The company instead pays a distributor that builds a network of consumers. This frees up companies to concentrate on the core business of having the best product or service in its category and allows for the marketing discipline to be handled by eager distributors.
Robert Kiyosaki is a well known author of the book: Rich Dad, Poor Dad. He made a statement that most people go to work for employers every work day. Entrepreneurs build networks. Every person has a network. Networks include people you went to school with, friends, social contacts, community contacts, and business associates. It is common knowledge that a well connected person has at least 200 people show up at a memorial service when the person dies.
In the 1930's, Wachters introduced a sea vegetable to consumers via Network Marketing. This company began during the Depression and is still in business as of 2012. Wachters paid distributors commissions for the network of consumers that purchased Wachters products. Many other companies have successfully used the Network Marketing channel to get their products and services to the end consumer. Why is Network Marketing a smart business model?
Network Marketing pays residual income. When a person goes to work for an employer, they are trading time for an hourly salary or set amount of money. When you build a network of consumers you can earn monthly commissions over and over again as long as the customer continues to purchase the product or service. A good example of residual income is an insurance agent or the internet service provider you are using. These companies get paid over and over again as long as you continue to use their service or product.