Network marketing is one of the most popular business models and marketing strategies. It is a business model with independent representatives helping to create leads and sales on a person-to-person basis.
Network marketing could come in different forms, such as multi-level marketing, direct sales, referral marketing, pyramid selling, cellular marketing, and more. These network marketing strategies are often portrayed as the best and quickest way to make sales.
Although it is an industry that has produced several millionaires, however, being successful in network marketing is not as easy as it sounds. To make the most out of network marketing, you may have to build a network of salespeople, entrepreneurs, or business partners to help with creating leads and closing sales.
You may also have to put in the extra work. If you wish to explore the world of network marketing, here are some important statistics that will help you make informed decisions.
Key Network Marketing Statistics
- Network marketing industry generates more than $189 billion in sales every year.
- Network marketing industry reached $35 billion in sales in the year 2019 in America alone.
- Avon founded in 1886, is the oldest multi-level marketing (MLM) company worldwide.
- US multi-level marketing industry includes 36.9 million preferred customers.
- There are more than three million network marketing distributors in Japan.
Statistics On The History of Network Marketing
If you wish to venture into network marketing, having sound knowledge of its history will be beneficial. This will let you know the biggest names in the industry and some steps they took to achieve success. Here are some statistics on the history of network marketing.
1. Avon founded in 1886, is the oldest multi-level marketing (MLM) company worldwide.
(Avon)
Avon, founded in 1886, is one of the oldest MLM companies in history. It was first known as The California Perfume Company. It was named after the town of Stratford-on-Avon. David H. McConnell, who founded the company, was a big fan of Shakespeare’s works and decided to name the company after the playwright’s place of birth. However, before the company embraced the network marketing model, it took a while. Today it is ranked among the top three biggest MLM companies worldwide.
2. Nutrilite is the first MLM organization.
(SSRN)
Nutrilite, founded by Carl Rehnborg in 1934, is a global brand of dietary supplements. The company started marketing its products through MLM while operating as a subsidiary of Alticor-Amway's parent company.
Nutrilite created network marketing in the 1940s, making it the first MLM organization. Most researchers believe that the company was the first organization exclusively dedicated to MLM, although some researchers don’t agree with this origin.
3. In 1868, James Robinson Graves pioneered direct sales through selling Bibles.
(Tennessee Encyclopedia)
Direct sales have been a marketing and sales strategy from trading history. However, its use was first recorded in 1868. James Robinson Graves, a Tennessee-based Baptist minister, is credited for pioneering this business model. He established the Southwestern Publishing House, which trained young men on door-to-door Bible salesmanship in the 1960s.
4. A study on network marketing from 1980 showed that even top Amway earners lost money.
(FTC)
An FTC MLM report showed that in 1980, the top 200 Amway products distributors in Wisconsin lost $900 on average. Bruce Craig, the Assistant Attorney General, studied the top 1% of distributors in the state. The average gross profit distributors made was $12,500, the most lost money after deductible operating expenses.
5. About 99% of network marketing distributors lose money.
(FTC)
Jon M. Taylor, a founder of the Consumer Awareness Institute, wrote the book “The Case (for and) Against Multi-level Marketing.” The book gave a comprehensive analysis of MLM as a business opportunity. It revealed that less than 1% of multi-level marketers make a profit. An alarming 99% of participants lose money.
6. Every year, the all-time Amway’s top distributor moved $2 billion worth of products through his network.
(Charlotte Observer)
Often called the grandfather of network marketing, Dexter Yager is Amway’s top distributor. He is one of the most prominent MLM success stories recorded. Every year he moved $2 billion worth of products through his network. His network was so large at some point that it included 50% of Amway’s total global distributors. In 2011, his annual earnings were more than $12 million.
7. The US multi-level marketing industry includes 36.9 million preferred customers and discount buyers.
(DSA)
Statistics from the DSA’s network marketing for 2019 shows that the US multi-level marketing industry includes 36.9 million preferred customers and discount buyers. Discount buyers can buy and sell products at wholesale prices and sponsor newcomers to their company. However, they only buy products they want for personal use. On the other hand, preferred buyers have contracts allowing them to purchase products at wholesale prices. This implies that none of these groups are building networks.
8. LuLaRoe consultants would have to invest at least $15,000 in inventory.
(Business Insider)
LuLaRoe is a women’s clothing multi-level marketing brand. It has a reputation of having the highest MLM failure rate in the network marketing industry. Business Insider statistics show that a minimum investment of $15,000 in inventory is needed to become a consultant. However, they sell it at a 40% mark-up to break even. This causes most consultants to lose money. Based on this, consultants and suppliers sued the company for damages. The lawsuit is in the tune of millions of dollars.
9. In 2018, about 88% of Arbonne distributors didn’t make network marketing income in the UK.
(Talented Ladies Club)
By 2018, the UK had 21,000 independent Arbonne consultants. Only 12% of them made a profit during that year. Only about 5% of them that made profit earned over $60 throughout the entire year. About 88% of these independent consultants didn’t make a profit. Also, only about 0.4% of the contractors earned more than the 2018 minimum wage.
10. Direct selling businesspeople working full-time or part-time earn an average of $5,176 in sales yearly.
(DSA)
DSA statistics show that the yearly average sales earnings of a full-time or part-time direct selling business person are $5,176. This stat only reveals the gross sales numbers. The cost of the goods sold is not considered. When the cost of goods is considered, it severely undercuts the total annual earnings. In reality, most distributors earn nothing when the operating expenses are accounted for.
Global Network Marketing Statistics
There are hundreds of thousands of people engaged in network marketing in every part of the world. The global network marketing industry generates billions of dollars in sales annually. Interestingly, network marketing businesses keep growing yearly. This section will talk about global network marketing statistics. It will also discuss how much funds revolve around network marketing and the companies facilitating it.
11. In 2019, the United States’ MLM market generated $35 billion in sales.
(Statista)
The United States is home to the biggest market for MLM sales. Its MLM market generated a total of $35 billion in sales. China has the second biggest market for MLM sales. It is quickly closing down on the United States. In 2019, it generated almost $24 billion in network marketing sales.
12. 2017 was a successful year for network marketing.
(Mastermind Event)
The network marketing industry enjoyed great success in 2017. The industry’s global sales hit a record of $189 billion. Asia profited more among all regions involved in MLM, with $85 billion in sales. However, the United States was the country with the most sales.
The record for individual network marketing distributors also increased that same year, with an estimate of 116 million individual distributors globally. This number includes distributors who didn't invest, build a team, or sell any inventory.
13. The United States is home to the top three most profitable MLM companies.
(TitleMax)
The top three MLM companies are Amway, Avon, and Herbalife. They have generated a revenue of $8.8 billion, $5.7 billion, and $4.5 billion, respectively. Vorwerk and Mary Kay Europe are the next two most successful MLM companies in the top five list. These German companies have generated a revenue of $4.2 billion and $3.5 billion, respectively.
14. A Dutch couple made a lifetime network marketing income of more than $135 million.
(BFH. Coin Telegraph)
Andreea Cimbala and Igor Alberts are the most recognized and successful network marketing business partners. They have made a fortune with network marketing and other ventures. But much of their life's earnings have been linked to questionable business practices. OneCoin is an MLM cryptocurrency business they are also associated with. This business venture later turned out to be a Ponzi scheme.
Therefore, it is challenging to calculate how much they made just from network marketing. BFH. Coin Telegraph statistics show that they made more than $135 million from the network market.
15. There are more than three million network marketing distributors in Japan.
(Asenshia)
The United States is the global MLM market leader with the most independent distributors. Japan comes in second place with 3.3 million sellers, based on MLM statistics for 2015. Its MLM sales for that same year accounted for about 8% of global turnover. Interestingly, about 80% of the country’s direct sellers are women.
16. Utah has the most MLM companies in the United States.
(KUTV)
KUTV MLM statistics that there are 15 MLM companies in Utah. It is the state with the most MLM companies in the United States. Also, MLM is the second-biggest industry in the state, behind tourism. Interestingly, there are many speculations about the interplay between Mormonism and network marketing in Utah. It is believed that because Latter-day Saints are a closely-knit community, it makes it easier to succeed in MLM. But no evidence backs this claim.
Network Marketing Success Rate Statistics
The first few things new network marketers think about are how much they can earn, how long it takes to achieve success, and how successful the market is. If these are part of your questions, this section is for you.
17. About 50% of new network marketing enterprises were abandoned in the first year.
(FTC, AARP)
Statistics show that about half of new network marketing companies were abandoned in their first year. It further revealed that about 95% of distributors abandon their network marketing enterprise in the first five years. Only the top-performing distributors continued their network marketing business after ten years.
Many of these distributors reported that they found it challenging to pitch network marketing to family and friends. This happened to be the most common reason for their business failure. The second reason for failure was the inability to earn according to expectations.
18. There is a 7% chance for MLM participants to declare bankruptcy in their lifetime.
(AARP)
AARP MLM stats show a higher rate of declaring bankruptcy for those involved with network marketing than those who don’t. Those who have been involved in network marketing have an 18% chance of declaring bankruptcy compared to the 11% for those who don’t. The stats further revealed that about 72% of the surveyed bankrupt people declared bankruptcy after their involvement in network marketing. Also, about 4% of the surveyed bankrupt people declared bankruptcy while network marketing.
19. Only about 48% of Amway’s independent business operators are active.
(CMU, Amway)
Amway statistics reveal that less than half of their independent business operators are active. The company defines its active business distributors as those presented in the Sales and Marketing Plan. Active distributors are also those who make a retail sale, attend a company or distributor meeting, or receive bonus money in a given month.
It further revealed that the average monthly gross income of the active independent business operators is only around $200. This implies that more than 50% of Amway distributors only buy products for personal use. Interestingly, the company still makes so much profit despite allegations of Amway it being a pyramid scheme. It recorded its best success in 2018 of $8.8 billion in sales, making it the company’s best year.
20. Between 2009 and 2017, more than $600 billion in commissions were paid out.
(Mastermind Events)
Although many negatives are said about network marketing, it is still a billion-dollar industry. Statistics from Mastermind Events statistics revealed that distributors worldwide earned an estimated $600 billion in commissions from 2009 to 2017. It further revealed that the network marketing companies generated almost $1.5 trillion in sales during that same duration.
21. In 2020, the MLM industry hit about $180 billion in global sales.
(Statista)
The global sales of the MLM industry hit an annual record high of $189 billion in 2017. This was recorded to be the best year in the industry’s history. Its global sales began decreasing in 2018, and by 2020 it hit $180 billion.
Statistics From The World’s Biggest MLM
It is reported that everyone must have encountered MLM at some point in time. It could have been on social media, person-to-person, or through other mediums. This is because pyramid schemes have become so popular and seem to be everywhere. American Amway is arguably one of the most successful and popular MLM companies globally when it comes to MLM. This section talks about Amway’s success.
22. In 2013, Amway’s annual sales in China surpassed $4 billion.
(Harvard Business Review)
Studies from Harvard Business Review reveal that China is Amway's largest market. Surprisingly, it has been that way for years despite China’s ban on MLMs. Amway has recorded such success in China due to its unique strategies. It has been wise and knowledgeable about changing its business model in creative ways that help sidestep Chinese regulation. It is obvious that their efforts are paying off.
23. In 2017, about 72.5% of Amway’s distributors in Ireland and the UK didn’t make a profit.
(Talented Ladies Club)
Talented Ladies Club statistics show that only 27.5% of Amway’s distributors earned profits in the UK and Ireland. The remaining 72.5% of distributors didn’t earn anything. Those who earned profits in that year only got an average of $53 monthly. This equals a gross annual income of only $655. Such data is available because Ireland and the UK require companies to disclose certain employee and financial information.
This makes the UK a fantastic place to get MLM statistics. This is the exact opposite in the United States. The United States has many privacy laws and policies that protect companies from making such disclosures. Therefore, Amway’s distributors’ statistics in the United States remain mostly undisclosed.
24. Amway has more than 17,000 employees.
(MiBiz, SmallBizTrends)
Statistics reveal that Amway has over 17,000 employees. This excludes the 13,000 employees Alticor, Amway's parent company, has. Reports further show that the average American business in the company management sector employs about 107 people.
Women In Network Marketing Statistics
In today's world, gender equality is crucial in all areas of life, including marketing. Statistics show that women have taken advantage of the network marketing industry to make serious impacts. Here are some statistics about women in network marketing. This shows how well women are doing in the marketing industry.
25. About 74% of all discount buyers and direct sellers in the United States that engage in direct marketing are women.
(DSA)
In the United States, women are breaking records in the network marketing industry. DSA statistics show that about 74% of all discount buyers and direct sellers engaging in direct marketing are women. These women are between the ages of 35 to 44 years. Only a small percentage of 6% are below 25 years.
26. In India, about 2.7 million women are engaged in direct selling and network marketing.
(Business Standard, MOSPI)
The Indian network marketing industry has one of the highest female participation. As of 2018, the total labor-market involvement for women in India was about 23.3%. Interestingly, network marketing occupied about 53% of the total percentage of women’s labor-market involvement.
Social Network Marketing Statistics
27. About 46% of Americans accept contact from direct sellers on social media.
(DSA)
DSA statistics show that social media is an effective platform for generating network marketing leads. It reveals that about 46% of Americans will accept contact from direct sellers on social media. This is because they are interested in business opportunities.
28. About 90% of decision-makers won’t answer a call, but about 75% of B2B buyers make purchasing decisions based on social media ads.
(LinkedIn)
Although about 90% of decision-makers won’t answer a network marketing call, they still patronize network marketers. This is because most business-to-business buyers find these products on social media. Statistics show that 75% of B2B buyers make purchasing decisions based on social media ads.
29. About 72% of sales representatives that use social media selling as part of their selling strategies had better results than those who didn’t use social selling.
(Aberdeen Group)
A report from Aberdeen Group shows that social media selling is an effective strategy for MLM. It reveals that 72% of sales representatives selling with social media had better sales than those who didn’t. They also surpassed quota 23% more often.
30. Social media is part of the sales strategy of about 90% of top-performing salespeople.
(LinkedIn)
Including social media in sales strategy makes marketing more productive. Statistics show that about 90% of top-performing salespeople use social media selling as part of their sales strategy.
Conclusion
The stats above show that network marketing is a multibillion-dollar industry. But as lucrative as it looks, it requires proper planning and effective sales strategy for you to succeed. It is also not a risk-free business opportunity like many marketers and companies want you to believe. In fact, just a small percentage of people involved in the network marketing business make any money from it.
However, despite the poor success rate in the network marketing business, some distributors have made millions of dollars. Therefore, network marketing statistics are not for smearing legitimate business operators. However, it gives people an idea of what the industry looks like. So, if you wish to invest in the network marketing industry, these statistics should guide you on what to expect and better ways to make a profit.
Reference
AARP
AmWayGlobal
Asenshia
Avon
Businessforhome
Businessinsider
Business Standard
Charlotte Observer
CMU
CoinTelegraph
HBR
SmallBizTrends
Statista
TennesseeEncyclopedia
The post Top Network Marketing Statistics In 2022 appeared first on Codeless.
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