What Is Network Marketing — Definition

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Updated: April 2026 Oleksandr Honcharov, CEO at FlawlessMLM What is network marketing definition? Network marketing is a business model in which a company uses a network of independent distributors to sell products directly to consumers. Distributors earn income from their own sales and from commissions on the sales made by the distributors they recruit. This model is also called multi-level marketing (MLM), direct selling, or referral marketing. What does network marketing mean in practice? It means a company replaces traditional retail and advertising with a people-powered distribution system. Breaking Down the Definition Network marketing has three core components: A product or service sold directly to end consumers (bypassing retail stores) Independent distributors who act as salespeople and team builders A multi-level compensation plan that pays commissions across several levels of the organization The "network" in network marketing refers to the web of relationships between distributors and their recruits. The "marketing" refers to the direct selling of products through personal connections, social media, events, and word-of-mouth. Definition: Network marketing is a direct sales business model where independent distributors sell products to consumers and earn commissions on personal sales and on the sales made by their recruited team, structured across multiple levels. The definition of network marketing is straightforward: sell real products through real relationships, and earn from your effort and your team's effort. The model has been around for over 80 years and is used by thousands of companies worldwide across dozens of industries.

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