Network Marketing in Ukraine

Network marketing - the philosophy of life for several million Ukrainians. Despite its controversial reputation, partnership business is developing and attracting with its simplicity and accessibility. Let's remember what multi-level business represents:

Network marketing - the principle of direct sales of goods and services, creating a network of distributors. In addition to product sales, independent partners attract people who receive similar rights. Structure participants earn commissions for sales volume and receive bonuses for the productivity of their teams.

History of MLM Development in Ukraine

In the early 90s, during a difficult time for Ukraine, foreign network companies entered the market. Entrepreneurs of that time attracted relatives and friends to their business, promising financial well-being and rapid career growth to post-Soviet society.

Shortages, unemployment, and the habit of buying things "from our own" influenced the fact that by the end of the 90s, every fifth Ukrainian had joined network marketing. Teachers, doctors, engineers who were left without income in their field found recognition in network marketing.

Traditional business, like today, required a large initial capital and responsibility, was associated with huge risks and the need for "protection" in conditions of an unstable and opaque legislative field. MLM companies allowed Ukrainians to demonstrate their work initiative.

In many ways, network products became breakthroughs in their niche, monopolizing for many years. For example, companies like Avon and Oriflame found it quite easy to compete with the limited assortment of Soviet cosmetic products. Discussing and testing cosmetics was a popular pastime among women.

The first team leaders, lacking the necessary level of competence and experience in network marketing, believed that reaching the top could be easy and simple. Obviously, newcomers had a false idea of the principles of MLM and were disappointed by reality. Also, the reputation of honest network companies was tarnished by scammers who became active upon seeing the popularity of the multi-level marketing system. As a result, a stereotype emerged in society that "network marketing is created for housewives and losers."

Current MLM Positions in Ukraine

Even now, having gone through a crisis and having enough information about network marketing, MLM is still viewed with skepticism. People who have assessed the potential of direct sales systems are cautious in choosing companies, avoid getting involved in projects about which nothing is known about the management, etc.

Networkers with years of experience have formed a core of leaders and actively work on their reputation. They are interested in the transparency of the business and the loyalty of partners, as they plan to pass on the business as an inheritance. They also share knowledge with newcomers and try their hand at info-business.

Since the 2000s, network marketing has begun to yield leadership positions to retail networks. According to the Ukrainian Direct Selling Association (UDSA), the purchasing power of Ukrainian citizens has increased. At the same time, many "traditional" companies are adopting the experience of multi-level sales and importing partnership programs into their business processes.

You can read more about this in the article Why Classic Business is Increasingly Transitioning to MLM

MLM companies' products often sit on the same shelves as traditional cosmetic business products. Although networkers' products are generally more expensive than retail counterparts, the price is fully justified by the quality and economy of the product in everyday life.

As in any other business sphere, career heights in affiliate sales are achieved by few. The main rule in MLM that a novice needs to understand is that big money comes from big work.

Legality of Network Companies in Ukraine

First of all, it is worth noting that network companies operate completely legally in Ukraine. They are usually registered as limited liability companies (LLC), which typically pay a corporate income tax (18% annually or quarterly), a unified social contribution (USC), value-added tax (VAT), and other taxes. Also, companies certify their products in accordance with Ukrainian legislation.

As for individual distributors, they usually start working as regular consultants. Later, partners must register as individual entrepreneurs (PE) and pay a unified tax to the state monthly, depending on their profit.

It is noteworthy that the government and tax authorities of Ukraine have not yet resolved the issue of taxing network marketers. The state does not interfere with the activities of multi-level businesses, except in cases of direct violation of Ukrainian legislation by these companies. Many officials simply turn a blind eye to network marketing, holding only major players accountable.

In practice, most distributors work "in the shadows," without registering as individual entrepreneurs. In this situation, the country does not receive the funds due to the state treasury, but gains in terms of combating unemployment.

Network Companies in Ukraine

Currently, the country's economy is actively transforming, and more and more new companies are being created. This is definitely facilitated by new technologies (blockchain, bots, distribution services) that simplify doing business online.

Currently, there are about fifty companies operating in the Ukrainian market that use network marketing to distribute their products. Among the largest players in the market are the names of foreign companies, namely:

Avon

- Product: cosmetics, personal care products, perfumes

- Year founded: 1886, USA

- Countries covered: operates in 120 countries

- In Ukraine: since 2006

- Total annual turnover: $10 billion

Amway

- Product: household chemicals, dietary supplements, personal care products

- Year founded: 1959, USA

- Countries covered: operates in 90 countries

- In Ukraine: since 2003

- Total annual turnover: $9.2 billion (2010)

Mary Kay

- Product: cosmetics, personal care products, perfumes

- Year founded: 1963, USA

- In Ukraine: since 1997

- Countries covered: operates in 35 countries

- Total annual turnover: $2.6 billion (2010)

Oriflame

- Product: cosmetics, personal care products, perfumes

- Year founded: 1967, Sweden

- Country coverage: operates in 60 countries

 - In Ukraine: since 1992

 - Total annual turnover: $1 billion

Faberlic

 - Product: oxygen cosmetics, perfumery

 - Year of foundation: 1997, Russia

- Country coverage: operates in 20 countries

- In Ukraine: since 2001

- Total annual turnover: $250 million

Herbalife

- Product: specialized nutrition products, dietary supplements, cosmetics

- Year of establishment: 1980, USA

- Countries covered: operates in 95 countries

- In Ukraine: since 2002

- Total annual turnover: $4.427 billion

Network marketing has shown high crisis resistance and is successfully developing in conditions of unemployment. MLM companies provide the opportunity to earn income in complex economic situations in the country.

If you are inspired to create your own network company or want to boost sales through an affiliate program, the experts from FlawlessMLM are always ready to help and provide a free consultation. Contact our manager in the website chat (flawlessmlm.com) and learn more about solutions for your business.

Network marketing has become the fastest way to expand a new business in the world. That is why analysts call it the next step in the evolution of free enterprise.

You can read about the specifics of conducting network business in other countries in the articles listed below:

- Features of network marketing in Russia;

- Features of network marketing in America;

-Features of network marketing in China;

-Features of network marketing in India.