The Brief History of MLM or Network Marketing Business

The Brief History of MLM or Network Marketing Business

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.)

1934-1979 – FIRST GENERATION in NETWORK MARKETING

1934 - Carl Rehnborg started the California Vitamin Corporation selling what today are known as vitamin supplements. In 1939 the company changed its name to Nutrilite Products Company, Inc.

1945 - Nutrilite contracted with Mytinger & Casselberry to become the exclusive American distributor of Nutrilite products. Mytinger & Casselberry created the first documented MLM compensation plan. It worked like this: A Nutrilite distributor bought his supplies at a 35% discount. (Ex: A distributor bought a box of vitamins for $13 and then sold them for $20 = $7.00 profit.)To encourage the distributor to sell more, Nutrilite paid an extra monthly bonus of 25% on the total sales. 20 customers x $13.00 (wholesale value) = $260 x 25% =$65.00 profit.

Once the distributor proved that he could get 25 customers he was allowed to become a DIRECT distributor - which meant that he could find others who wanted to sell the Nutrilite products and then they would buy their products from him. In essence, once he proved that he could get customers he was “promoted” and allowed to find other distributors and to train them to get customers. As an incentive to train his distributors well, once he and his distributors amassed 150 customers, he received an additional 2% of the total sales volume.

This is not a pyramid - it’s a quota-based system of management. Those who sold the most boxes of vitamins got a higher reward than those who sold little. The MLM compensation plan was simply an extension of the Fuller Brush Company rewarding production. With MLM (Network Marketing) , the company could motivate a sales person to not only sell more products, but to train others to sell more products as well.

1945 - Earl Tupper created a line of flexible, lightweight plastic containers with tight-sealing lids. He started selling his products through conventional retail outlets, but realized the products needed demonstration. Earl Tupper then teamed up with Brownie Wise (formerly with Stanley Home Products) and launched Tupperware Party Plan, now a world-wide billion-dollar company operating in 40 countries.

1949 - Rich DeVos and Jay Van Andel (high school buddies and business partners) returned from military service and became distributors for Nutrilite vitamin supplements in 1950. After a brief dilemma with Nutrilite in 1959, the two abandoned ship and formed the Amway Corporation. In 1972 Amway Corporation acquired Nutrilite.

1956 - Dr. Forrest Shaklee developed a method of extracting minerals from vegetables and used MLM (Network Marketing) to distribute his products.

1963 - Mary Kay Ash creates Mary Kay Cosmetics. By 1996, company sales were in excess of 2 billion dollars.

1972 - Rich DeVos and Jay Van Andel of Amway Corporation acquired Nutrilite.

1975 - The FTC (Federal Trade Commission) filed suit against Amway corporation for operating a pyramid scheme.


1979-1990 – 2nd GENERATION in NETWORK MARKETING.

1979 - An administrative law judge of Federal Trade commission in the U.S, ruled that Amway’s multi-level-marketing program was a legitimate business opportunity, with this decision it is now generally accepted in the U.S that MLM Companies are now legitimate business entities. Thousand of Network marketing company followed i.e.
Forever Living Products own by Mr. Rex Maughan from Arizona.

1991 - Present – 3rd GENERATION in NETWORK MARKETING

- It is recognized that year 1991 marked the start of the new generation of Network marketing. Mr. Richard Poe in his book “The 3rd WAVE” & “The 4th WAVE” of Network Marketing, noticed the adaptation of Network Marketing Companies into new information, communication and computer technologies. They have adapted and implemented fully a automated operation.



Ref. profitclinic/MLM/whats-mlm/history
Firstclassmlm/the-history-of-mlm/