Direct selling is selling and marketing of products directly to consumers from the business from a fixed retail location – location may be physical or online. Direct selling differs direct marketing because selling coordinates individual sales agents dealing directly with clients. Direct marketing however is about the organization creating a direct link and relationship with consumers with the help of an agent/consultant.
While Direct Selling and Network marketing refer primarily to the distribution system, the term Multi-Level Marketing emphasizes the compensation plan more. Network Marketing and Multi-level Marketing are generally considered to be synonyms, and a subset of direct selling. Other terms that are sometimes used to describe multi-level marketing include “word-of-mouth marketing”, “interactive distribution”, and “relationship marketing”. Critics have argued that the use of different terms and buzzwords is an effort to distinguish multi-level marketing from illegal Ponzi schemes, chain letters, and consumer fraud scams. Some sources classify multi-level marketing as a form of direct selling rather than being direct selling.
The Direct Selling Association, an American industry body, reported that in 1990 twenty-five percent of members used MLM, growing to 77.3 percent in 1999. Companies such as Avon, Electrolux, Tupperware, and Kirby all originally used single level marketing to sell their goods and later introduced multi-level compensation plans. By 2009, 94.2% of members were using MLM, accounting for 99.6% of sellers, and 97.1% of sales. The DSA has approximately 200 members while it is estimated there are over 1000 firms using multi-level marketing in the US alone.