According to HubSpot research, the cost of customer acquisition for online stores has increased by more than 50% over the past 5 years. This trend forces entrepreneurs to seek new ways to expand their customer base and they are increasingly turning to network marketing tools. But how can an online store with MLM help successfully scale your product business? Let’s find out.

Growth of online sales and new challenges

E-commerce has long ceased to be just an additional channel for selling products or services via the internet. Today, it is a full-fledged business model shaping the future of retail. According to Statista, in 2023 alone, the global volume of online sales grew by 10%, reaching an impressive $5.9 trillion.

The COVID-19 pandemic acted as a catalyst for the rapid growth of the e-commerce industry, as we all began to rely more on online stores to meet our needs. Thanks to convenience for shoppers, changing consumer habits, and continuous technological development, e-commerce continues to gain momentum. Statista predicts that sales through various online platforms will increase to $7.4 trillion by the end of 2025.

The promising future of e-commerce encourages many entrepreneurs to create their own online stores or join marketplaces, which inevitably increases competition. Attracting new customers is becoming more challenging and requires ever-greater financial investments in advertising campaigns. In such conditions, an online store with MLM, which combines the power of personal recommendations and digital technologies, can be the best solution for the dynamic development of your product business in the online environment.

What benefits MLM brings to business

Multi-Level Marketing (MLM) is based on the promotion of products and services through the recommendations of independent partners who receive financial rewards from the value of purchases made by attracted customers. According to SpringerLink, a single personal recommendation has 4 times more influence than paid online advertising. So, it’s no surprise that the MLM industry is growing rapidly and has already reached global sales of more than $223 billion.

Almost every successful business now uses an MLM component in its activities in the form of referral or affiliate programs. Companies like Avon, Tupperware, and Herbalife also once switched to the MLM model and have grown into global corporations with multi-million-dollar revenues.

The application of an innovative MLM model opens up numerous opportunities and advantages for your business. Among them are:

  1. Expansion of sales channels. Partners use personal contacts and social media to spread information about your company and products. This opens new sales channels, facilitating faster scaling of your business and even entry into new markets through partners from different cities and countries.

  2. Building trust in your brand and product. According to Nielsen research, 83% of consumers are more likely to trust recommendations from family or friends and genuine reviews when making a purchase decision. Therefore, network marketing significantly boosts trust among your potential customers, leading to active sales growth.

  3. Increased engagement and customer retention. By offering your consumers the opportunity to earn money, you turn them into motivated and loyal business partners. They will regularly purchase your products for themselves and bring in new customers, ensuring a steady stream of sales.

  4. Fixed marketing costs. Instead of investing in traditional advertising, which doesn’t always deliver the desired results, you pay your partners only for real actions - sales. All commissions and bonuses are clearly outlined in the marketing plan, allowing you to easily control your promotional expenses.

  5. Simplifying the process of communicating product benefits. Through personal interactions with potential customers, partners can explain complex aspects of the product in an understandable way and highlight the specific qualities that matter most to the individual. This personalized approach significantly enhances the understanding of your product’s value and increases the likelihood of a purchase.

  6. Resilience to crises. During times of crisis, people continue to support each other, share experiences, and seek additional sources of income. Your partners will also continue promoting the products, as they are motivated to increase their earnings. Therefore, in conditions of economic instability, an MLM business is more resilient and capable of dynamic growth.

How to add MLM to your product business

Taking into account the specifics of network marketing, we have identified several critical aspects that should be taken into account for the successful implementation of MLM in your product business:

  1. Product

Not every product is suitable for promotion through network marketing. The product should have high margins so you can create an attractive bonus structure for partners and ensure the profitability of your business. It’s also important that the product is in regular demand, such as cosmetics, dietary supplements, vitamins, household chemicals, or other home goods. This will guarantee a continuous cash flow through repeat purchases and provide stable income for your partners.

  1. Marketing plan MLM

The marketing plan is the foundation upon which your clients’ desire to become your partners and how active they will be-depends. Therefore, when adding an MLM model to your product business, it’s essential to create a transparent bonus system that motivates partners to increase sales, attract new members to the structure, and achieve all the goals you’ve set. The key here is to find a balance between rewards for partners and the overall business profit to avoid any financial risks in the future.

  1. Business management tools

Another critical aspect is selecting a specialized MLM platform and integrating it with the services already used in your business. Such a platform automates essential business processes: partner registration and training, sales tracking, commission and bonus calculations, and report generation. To ensure long-term stability, it’s better to opt for a custom-developed MLM platform, as its functionality will precisely align with your business goals and needs.

Summary

In conclusion, network marketing is indeed a powerful tool for developing a product business online. It enables you to increase the efficiency of your marketing spend, reach a new level of customer engagement, continuously boost sales, and expand into new markets. However, to successfully integrate the MLM model into your product business, it’s best to enlist the help of contractors who understand all the nuances and have experience in this field.

Our team has been creating flawless software solutions for over 20 years, launching successful MLM projects from scratch, and adding MLM to existing businesses. Contact our experts for a consultation and we will help you reach new heights in your business by leveraging all the advantages of network marketing.