A BRIEF HISTORY OF NETWORK MARKETING
By Jeffrey A. Babener
Excerpted from Network Marketing: What You Should Know, Jeffrey Babener, Legaline Publications
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Cycle 8. The 1990's - The Positive Decade: MLM Goes Services; MLM Goes Corporate; MLM Goes Global Seamlessly
The Network Marketing Industry reached maturity and respect in the 1990's. For individuals who continued to start home-based businesses and entrepreneurial ventures at a record pace, this industry continued to be in tune with the times. It was no longer just a woman's business, but instead, the ratios of men to women in networking began to even out. Industry participation boomed and, by the end of the 1990's, more than 10 million Americans were involved in a $20 billion industry and more than 30 million worldwide had achieved more than $80 billion in annual sales.
For many corporations who observed some of the 1980's successes of this alternative channel of distribution, a number of conclusions were reached.
It was a great way to introduce brand new products.
It seemed to work well for products that needed demonstration or testimonial.
It was a great way to reward the consumer for sharing excitement about products.
This method could result in rapid penetration of the market.
In that commissions were only paid on the movement of product, and massive and costly advertising campaigns could be avoided, it seemed efficient and economical.
As a result, corporate America bet on this channel with varying levels of partnerships for distribution of their products and services: Avon-Mattel; Tupperware-Disney; Amway-Rubbermaid; Shaklee-AT&T;Dupont/-ConAgra-Legacy; Worldbook-IBM.
Corporate America validated the successes of the industry both at home and abroad by embracing public offerings on Wall Street and the New York Stock Exchange. Excel Telecommunications, Amway Pacific, and NuSkin all successfully launched initial public stock offerings on major exchanges.
Corporate services and technology companies fell in love with the industry as it broadened its line to promote services as well as consumer products. Everyone came to the table looking for an additional channel of distribution: telecom, pagers, Internet, satellite TV. Financial services, travel services and consumer benefit services joined the parade. By the end of the 1990's, even deregulated energy was offered through network marketing companies.
Global expansion was the name of the game in the 1990's. Amway and NuSkin had singular successes in Japan, which proved to be an equal in opportunity to the U.S. NuSkin pioneered the global seamless sponsoring concept in which distributors could sponsor and be rewarded on a worldwide basis. For many of the largest networking companies, sales outside the U.S. proved to be the majority of worldwide sales for mature companies. The Internet, global communication and satellite TV provided the tools for global expansion. And the direction was not one way. Foreign-based networking companies set up shop in the U.S. In fact, one of the major success stories of the 1990's health products giant Nikken came to the U.S. from Fukuoka, Japan at the beginning of the decade with virtually no base. Under the U.S. leadership of Tom Watanabe, Nikken posted annual sales in the hundreds of millions by the end of the decade, and established California as its base for worldwide expansion for the new millennium.
Finally, the 1990's was the decade that the tide turned for the press. In the 1980's, the press gave recognition to the MLM industry, but it was often negative. Stories had names like "The mess called multilevel marketing" or "Here comes the scam artists." Some of the adverse press was well deserved, but there was a piling on syndrome. In the 1990's, corporate America discovered the MLM channel and so did male-educated America, and quickly followed the press with coverage of these trends. Positive stories appeared from the likes of the Wall Street Journal to Inc. magazine. Articles continued, rightfully, to emphasize common sense and caution before jumping in, but they also emphasized the positive opportunities being embraced by millions of Americans. Newsstand business magazines such as Success, Entrepreneur, Wealth Building, Business Startups, Home Office Computing touched on the positive. With a positive spin, the industry was finally a player in the business world.
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