History of Multi-Level Marketing
The oldest ones date back to early 1920's. In this period in the United States, direct distribution of goods was an important part of social life. Many companies looking for opportunities for sale of their products opened sales agencies around the whole country.
Multi-level Marketing (MLM) also called network marketing is a direct selling method through a pyramid structured network of distributors. People recruited as independent distributors sell company’s products or services.
As the growing number of trained distributors generated higher sales, companies rewarded managers for the time devoted to new employees. Companies paid them either sums set in advance or gave them a share in the value of sales of new distributors.
The Nutrilite company was founded in 1934 as the California Vitamin company, adopted a multi-level marketing business model with characteristics similar to but different from traditional direct selling. Carl Rehnborg, Lee Mytinger and William Casselberry of Nutrilite Vitamin company created the multilevel marketing business or Network Marketing concept in 1945.
Its main goal was to encourage distributors to work aimed at sales, searching for and training new employees. On this basis distributors could get 3% from sales of newly formed groups.
In the 1950's the company was hit by a crisis. In 1959, Richar De Vos and Jay Van Andel who were the Distributors of Nutrilite broke away and established their own company — Amway.
At more or less the same time another group of distributors left Nutrilite and found the new Company named Shaklee dealing with Nature’s sunshine products.
In 1972 Amway purchases Nutrilite from Carl Rehnborg’s estate. Since 1994, Amway is one of the largest business organizations in the multi-level marketing industry.
The success of Nutrilite and its marketing plan attracted the attention of other companies like Stanley Home Products, Home Interiors and Gifts, Mary Kay Cosnmetics to the Multi-Level Marketing system. In the 1970's Multi-Level Marketing system came also to Europe.
History of Multi-level marketing