Dropshipping | Affiliate Marketing | Multi-Level Marketing
I believe these are the 3 common keywords that would appear on Google when you try to search for a way to make money online.
Let’s leave “dropshipping” aside, today we’ll be discussing affiliate marketing and MLM only, because their advertising models are quite similar, yet they’re not the same. That’s why a lot of newbies will get confused when they first started out in the online business world.
Based on my past experiences in these three advertising models, I’d also give you my personal opinion on why I’d choose affiliate marketing and dropshipping instead of MLM at the very end of this article,
But before that, let’s get started with the basic knowledge first.
Multi-level Marketing (MLM) is also known as Network Marketing.
Literally, the words “Multi-Level” and “Network” have done a perfect job in describing to you precisely what this advertising model is about.
With MLM, you’re allowed to earn multi-levels of commissions by recruiting people to sign up for the program you’re promoting.
The people who recruited by you are called your “downlines,” and the more people you and your downlines recruit, the more money you’ll be making.
Check out the short video below to have a better understanding of how MLM works.
You can work remotely: Your schedule will be very flexible if you’re very successful in the MLM industry. In the beginning, your schedule might be full of meetings and appointments to recruit more people.
It’s possible to make a massive amount of passive income: If your downlines are loyal, they could bring you a lot of income.
It’s a great way to train your mentality: In the beginning, you’ll get rejected many times by people who refuse to join the program. It’s a nice experience for you to learn to keep trying and never give up.
Your friends and relatives might stay away from you: Let’s face it; nobody likes to be sold. Nobody likes a salesperson who always asks them to buy something or join their program.
It’s hard for you to succeed if you’re at the bottom of the network: The earlier you get started with an MLM program, the faster you can make tons of money as the competition is always low at the beginning.
In most cases, you’ll need to pay a pricy introductory fee to join an MLM program: The fee will distribute to the uplines and company. That’s one of the tactics used by most MLM companies to keep them alive.
MLM is ONLY for people who love to socialize: If you’re an introvert and shy person who’s not comfortable in meeting new people and make new friends, then MLM is not for you.
It’s hard to find a reliable and trustworthy MLM program: Most of the MLM programs nowadays are borderline illegal. They’re considered as Pyramid Scheme instead of the MLM program.
Although the advertising model of MLM and the Ponzi Scheme is similar, the Ponzi Scheme is illegal.
The best way to differentiate the MLM and Ponzi Scheme is:-
MLM does provide their member with a real and legit product/service to sell and allow them to recruit new members at the same time. But Ponzi Scheme doesn’t have such a proper system.
The only way for someone to make money in the Ponzi Scheme is by recruiting more new members.
Hence, the Ponzi Scheme is scamming people’s hard-earned money.
Affiliate Marketing is an advertising model that allows you (the Affiliate) to partner up with a merchant, and then earn commission through promoting their products.
Now, you might be questioning:
“Huh? Why it sounds like an MLM too.”
The process of Affiliate Marketing is entirely different. You can see the figure below to gain a better understanding of how affiliate marketing works.
You got a website that’s up and running. You create content that reviews about the product that you like and publishes it on your website.
If your audience reads your article and likes the product, they’ll click on your affiliate link that brings them to the merchant site. It can be Amazon, Etsy, eBay, or any other merchant you decide to partner with, as long as they’ve affiliate program.
If they purchase the product, then you’ll be earning commission from the sales you make.
Freedom of choice: In Affiliate Marketing, you’ve got the freedom to choose your favorite niche and promote any products you like (must be related to your niche) to your audience.
You fully control your income: In MLM, your income is entirely reliant on your downlines. If they don’t sell, you don’t earn.
However, if you want to build a sustainable business that you’ve 100% control over your income and takes the same amount of time to be successful, affiliate marketing is a far better option.
Low start-up cost: As I mentioned earlier, you’ll need to pay a pricy introductory fee to join an MLM program in most cases. So that you’re able to be their associates.
But in Affiliate Marketing, it takes little to no start-up cost to build a stunning website. And you can join any affiliate program and start making money for free!
If you’re not internet savvy, who doesn’t have prior experience in coding like me. Wealthy Affiliate is a great place to build a website that can be done in a couple of minutes.
However, you might need to invest some money in purchasing essential things like website domain and other researching tools if you’re serious and ready to crush it in your business.
But guess what? A domain name might only cost you around $15 per year. And you can find awesome researching tools and web host for free at Wealthy Affiliate, too.
Please be aware of any affiliate program that requires you to pay an introductory/registration fee to join their program. Those are not affiliate marketing but probably a scam.
It takes time to build a high-authority website which drives massive free traffic: Good things take time. To build a successful website, it’ll eats up a lot of your time and effort. In the beginning, you’ll need to create tons of valuable content to serve your audience. This would bring up to the next disadvantage of Affiliate Marketing.
You’ve to be willing to work FOR FREE: You’ve to understand that if you choose to do Affiliate Marketing for a living, you can’t expect a high return at the very beginning. I think this applied to every business, including MLM.
Hence, you’ll need to work for free, continue to put out great content to serve your audience when you first start out in Affiliate Marketing.
It might seem like you’re not making any progress in the beginning, but you’re actually building the foundation of your business. And once your business starts to gain traction, the growth of your business will completely blow your mind.
That’s the power of The Compounding Effect. Then, you can just sit back and watch the commissions rolling in.
After understanding the basic knowledge of MLM and Affiliate Marketing, and their pros and cons, I think it’s easier to know what’re the differences between these 2 advertising model.
However, I will help you to gain a more precise idea by categorizing their differences in table form.
|The Upline and Downline Relationship||There's no multi-level upline and downline relationship in affiliate marketing.|
It's just between you and the merchant, which you're partnering with.
|Yes. there's multi-level upline and downline relationship in MLM.
|Freedom of choice||In Affiliate Marketing, you've got the freedom to choose your favorite niche and promote any products you like.||With MLM, you're only allowed to promote their own products/services. As there're very few legit MLM companies out there, so you might have a minimal selection to choose from, which means you might not be able to get into your favourite niche.|
|The way you get paid||The payout structure of Affiliate Marketing is very straight forward. |
If you make sales, you'll get paid commission, and the percentage of the commission depends on each affiliate program you join.
|There're various compensation plans used by MLM companies to payout their MLMers, such as 'Stairstep Breakaway Plan', 'Unilevel Plan', and 'Matrix Plan'.|
|Dependency||You've 100% control over your income and business.||In MLM, your income is fully reliant on your downlines. If they don’t sell, you don’t earn.|
|Start-up cost||In Affiliate Marketing, it takes little to no start-up cost to build a stunning website.||You'll need to pay a pricy introductory fee to join an MLM program in most cases.|
As I’ve told you earlier, I’ve experiences in both the advertising model. The reason why I choose affiliate marketing and don’t even spend time thinking of MLM is that I was scammed by an irresponsible scammer in an MLM program before.
I can call them a Ponzi Scheme, which is illegal, and they only require people to make money by recruiting more people.
I’m not saying that you can’t make tons of money from MLM. But from what I’ve noticed, 99% of MLM company that claims they’re legitimate out there is Ponzi Scheme.
Even though you’re lucky enough to be an associate of a legit MLM company, but guess what? In most cases, you’ve placed at the bottom of their networking marketing, which means you’ll need to work twice (or even more ) harder to achieve success compared to those who’re already on the network earlier than you.
I know I’m biased, but this is an UNDENIABLE FACT.
Therefore, if you’re anything like me, who’s an introvert and hate face-to-face selling, but you want to earn money from promoting products and services that you like. Then affiliate marketing is a more fulfilling route to financial gains.
That’s also the reason why I think affiliate marketing is better than MLM. With affiliate marketing, you can be your own boss who has the 100% control on your income, and you’re able to help people find products/services that you actually care about at the same time.
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