Nobody knows exactly when
MLM began, because it really evolved over a number of years, prior to World War II.
Most observers agree that Nutrilite – now an Amway subsidiary – was the first
true MLM company. In addition to being the founders of network marketing, they were
the founders of the vitamin and food supplements industry, way back in the 1920s.
So the historical connection between MLM and nutritional products dates back over
most of the twentieth century – a fact unknown to most people (especially those who
think that, somehow, MLM companies are johnny-come-latelies to nutrition. Most of
the major product breakthroughs in that industry have been pioneered by MLM companies,
in fact.)
The beginnings
of MLM
In 1949, two young men named
Rich DeVos and Jay VanAndel became Nutrilite distributors. In the ensuing decade,
they build a large, prosperous organisation across America. But, in the late 1950s,
a problem arose that was to continue to plague many MLM companies even until now.
And it almost sank their business.
The manufacturing arm of
Nutrilite was owned separately from the marketing arm. And, as often happens in such
circumstances (not just in MLM), the marketing arm was seen to be making most of
the money. There’s nothing unusual in this. It’s a fact of life that those who connect
manufacturers to their markets take the lion’s share of the selling price, in any
industry.
To make a long story short,
a standoff developed between the manufacturer and the marketer. DeVos and VanAndel
watched, alarmed, as their distribution network dwindled rapidly due to lack of product
and the resulting lack of income from sales. Unable to bring the two parties to an
agreement, they decided to create a product of their own that they could supply to
what was left of their network.
Amway is born
 |
| Jay Van Andel and Richard DeVos |
What happened next is legendary.
In 1959, they formed Amway Corporation. Within ten years, they’d bought Nutrilite,
and Amway has rarely looked back ever since. It’s still the largest MLM company worldwide.
Of course, that kind of spectacular
success soon attracts attention and, before long a rash of MLM companies sprang into
existence. But there was also a dark side to the story – one that still causes problems
to this day.
It didn't take sharp operators
long to realise that they couldn't take advantage of people under the strict, ethical
rules of conduct required by the MLM companies. So they came up with a counterfeit
version, based on a scam from the late 1920s (The Ponzi Scheme) that looked
like MLM, but allowed them to fleece people who were basically the same as themselves…
lazy and greedy.
Thus was born the Pyramid
Selling Scheme.
The counterfeits
soon emerge
It’s ironic that people still
mistakenly accuse MLM of being pyramid selling when it was actually the reputable
MLM companies that first petitioned government authorities to have pyramid selling
outlawed.
It didn’t take long for legislation
to be passed to rub out pyramid selling. But pyramid selling isn’t really a system
or structure, despite its cunning name. It’s a mentality – an attitude – which is
very hard to legislate against. Consequently, many anti-pyramid laws also discriminate
unintentionally against legitimate network marketing, “throwing the baby out with
the bathwater.”
Over the following decades,
MLM has evolved and developed further into the wide array of companies, product ranges,
reward plans and cultures that exist today. This unique, powerful system of free
enterprise continues to grow, attracting more and more people to it. As we prepare
to enter the twenty-first century, MLM has never been so well-respected, so healthy,
so attractive or so rewarding.
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