You’ve probably heard them all: multi-level marketing, pyramid selling, direct sales, and many other names. And most of the time, they’re couched in upbeat and positive language that makes them sound like the best thing since sliced bread.
But the reality is altogether different. The truth is, the MLM business model is often a poor investment and sometimes downright disastrous.
Sure, there are success stories here and there, but those are the exception to the rule. Hopefully, these network marketing statistics will make you think twice before listening to another pitch about how much you can earn.
The Top 10 Network Marketing Statistics in 2020 You Need to Know:
- Network marketing was introduced as a business model in the 1940s by Nutrilite.
- To make money in network marketing, you need to be in the top 1% of distributors.
- Dexter Yager, Amway’s top distributor of all time, earned $12 million a year.
- The multi-level marketing industry generated $189 billion in sales in 2017.
- Igor Alberts and Andreea Cimbala, from the Netherlands, are the most successful network marketers globally.
- 50% of people who start participating in an MLM business abandon it within the first year.
- China, which reported over $4 billion in annual sales in 2013, is still Amway’s biggest market.
- The MLM industry in the US includes 36.9 million people under contract who don’t work on their business, either full-time or part-time.
- Women make up 74% of the workforce engaged in direct selling in the US.
- Japan is the country with the second-largest direct sales workforce, with 3,300,000 distributors.
History of Network Marketing Stats and Facts
1. Avon is the oldest MLM company—founded in 1886.
Originally called The California Perfume Company, Avon owes its name to the town of Stratford-on-Avon. The company’s founder, David H. McConnell, loved Shakespeare’s works and chose the name after the playwright’s birthplace.
However, Avon didn’t adopt the network marketing model until much later.
2. Nutrilite became the first MLM organization when they created the concept of network marketing in the 1940s.
Although some dispute this origin, most researchers agree Nutrilite was the first organization exclusively dedicated to multi-level marketing.
Nutrilite is a global brand of dietary supplements developed in 1934 by Carl Rehnborg. By the mid-1940s, it was marketing its products through the MLM model and continues to operate as a subsidiary of Alticor, Amway’s parent company.
3. James Robinson Graves pioneered direct sales in 1868, selling Bibles.
To be fair, direct sales have been a sales strategy since the beginning of trade, as we know it—however, its first recorded use is in 1868.
Tennessee-based Baptist minister James Robinson Graves founded the Southwestern Publishing House in 1855 and by the mid-1860s was training young men to be door-to-door Bible salespeople.
Network Marketing Income Statistics
4. An investigation from 1980 revealed that even the top Amway earners were still losing money.
According to an FTC MLM report, the top 200 distributors in Wisconsin for Amway products lost $900 on average in 1980. The Assistant Attorney General, Bruce Craig, looked at the top 1% of distributors in the state for that year.
The average gross profit for the distributors was $12,500. But after operating expenses, even the best ended up losing money.
5. 99% of network marketing distributors lose money.
A long-time president of the Consumer Awareness Institute, Jon M. Taylor wrote the book The Case (for and) Against Multi-level Marketing. In it, he makes a thorough analysis of multi-level marketing as a business opportunity.
The key takeaway?
Less than 1% of participants ultimately turn a profit. Compare that with the available entrepreneurship stats, and you’ll probably come to the conclusion that you’re much better off trying to start your own business than wasting your time and money on MLM.
6. Amway’s top distributor of all time moved $2 billion of products through his network every year.
Sometimes described as the “grandfather of network marketing,” Dexter Yager died in 2019. But he remains one of the most public multi-level marketing success stories ever.
At one point, his network included half of Amway’s total global distributors. And his annual earnings exceeded $12 million in 2011.
7. The US MLM industry includes 36.9 million discount buyers and preferred customers.
At least that’s what the DSA’s network marketing statistics for 2019 seem to indicate. Discount buyers can sell and purchase products at wholesale prices and sponsor new entrants to their company. But they only choose to buy products for personal use.
Preferred buyers are people who only have a contract allowing them to pay wholesale prices for the company’s products.
Put another way, neither of these two groups are building networks. They’re only purchasing products from the company for personal use.
8. LuLaRoe consultants would need to invest at least $15,000 in inventory and sell it at a 40% mark-up just to break even.
A women’s clothing MLM brand, LuLaRoe, requires an initial investment of $5,500 in inventory to become a consultant.
But the initial investment is nowhere near enough to turn a profit. And as increasing numbers of consultants lost money, LuLaRoe developed a reputation for having the highest MLM failure rate among network marketing organizations.
The company is currently facing lawsuits to the tune of hundreds of millions of dollars in damages from both suppliers and consultants.
9. 88% of Arbonne distributors in the UK made no network marketing income in 2018.
(Talented Ladies Club)
Out of their 21,000 independent consultants in the UK, Arbonne only showed income for 12% of them, i.e., for those who actually made some money during 2018. Moreover, only 5% made more than $60 over the entire year.
Finally, only 0.4% of the contractors made more than the minimum wage at the time. This means a minimum-wage position is highly likely to net you more than a network marketing salary in the UK.
10. People who work part-time or full-time on their direct selling business make an average of $5,176 in sales annually.
However, these MLM statistics only show gross sales numbers. They don’t take into account the cost of goods sold, which severely undercuts the total. Accounting for the operating expenses, the vast majority of distributors likely earn nothing.
It’s worth noting that these numbers come from the Direct Selling Association, an MLM lobbying group investing in touting network marketing success rates. Even so, the average reported sales are much lower than the minimum wage in the US.
Global Network Marketing Statistics
11. The MLM market in the United States generated $35 billion in sales in 2019.
The United States is far and away the single biggest market for MLM sales. However, China is closing in fast, with almost $24 billion in network marketing sales in the same year.
12. 2017 was a banner year for network marketing, with global sales hitting a record high of $189 billion.
Asia was the most profitable MLM region, with $85 billion in sales. While the United States is the single country with the most sales, Asia outstrips North America considerably.
In the same year, there were an estimated 116 million individual distributors worldwide. However, those include distributors who did not sell any inventory or invested in building a team. In practice, these non-selling distributors would seem to occupy the same space as customers.
13. The top 3 most profitable MLM companies are based in the US.
Amway, Avon, and Herbalife are the most successful multi-level marketing companies with $8.8 billion, $5.7 billion, and $4.5 billion in revenue.
The rest of the global top 5 comprises two German companies, Vorwerk and Mary Kay Europe. They boast a respectable $4.2 billion and $3.5 billion in revenue, respectively.
14. A Dutch couple is worth more than $135 million in lifetime network marketing income.
(BFH. Coin Telegraph)
Igor Alberts and Andreea Cimbala are widely recognized as the most successful business partners in network marketing. It’s hard to say with certainty how much of their fortune comes from network marketing, but much of it has been attributed to questionable business practices.
They were associated with OneCoin, an MLM cryptocurrency since revealed to be a Ponzi scheme.
15. There are over 3 million network marketing distributors in Japan.
As the global leader in multi-level marketing, the United States has the highest number of independent distributors. However, the second place surprisingly belongs to Japan with 3.3 million sellers, according to MLM statistics for 2015.
Japanese MLM sales accounted for 8% of global turnover in 2015. Additionally, 80% of Japanese direct sellers are women.
16. Utah is home to 15 MLM companies—more than any other state.
Multi-level marketing statistics show it’s the second-biggest industry in the state, after tourism. There is a lot of speculation about the interplay between network marketing and Mormonism in Utah.
Latter-day Saints are a closely-knit community, which might be making it easier to succeed in multi-level marketing. However, there isn’t any concrete evidence to back this up.
Network Marketing Success Rate Statistics
17. 50% of the people who start a network marketing enterprise abandoned it in the first year.
Within five years, 95% of distributors abandon network marketing. Only the top performers remain after ten years, with most of the others choosing to abandon the effort by that point.
The most common reason people gave for leaving was how awkward they found it to pitch network marketing to friends and family. The second most common reason for leaving was the failure to earn according to expectations.
18. MLM participants are 7% more likely to declare bankruptcy during their lifetime.
According to MLM stats from the AARP, people who get involved with network marketing declare bankruptcy at higher rates (18%) than those who don’t (11%).
72% of the people surveyed who declared bankruptcy did so after their involvement, and 4% declared bankruptcy while they were engaged in network marketing.
19. Amway admits that only 48% of their independent business operators are active, and their average monthly gross income is only around $200.
Amway defines an active distributor as “one who attempted to make a retail sale, or presented the Sales and Marketing Plan, or received bonus money, or attended a company or distributor meeting in [a given] month.”
So, it stands to reason that most Amway distributors are only buying products for personal use.
Despite ongoing allegations of Amway being a pyramid scheme, 2018 was the company’s best year, with $8.8 billion in sales.
Amway Statistics From the World’s Biggest MLM
20. Amway’s annual sales in China exceeded $4 billion in 2013.
(Harvard Business Review)
Believe it or not, China is Amway’s largest market and has been for some time. This is despite the ban on MLMs in China.
Amway has been savvy about altering its business model in creative ways to sidestep Chinese regulation. And the efforts are clearly paying off.
21. 72.5% of Amway’s distributors in the UK and Ireland made no profits in 2017.
(Talented Ladies Club)
And of the 27.5% who earned anything, the average monthly payment was just $53, giving them an annual income of only $655 before deducting expenses.
The UK and Ireland require certain disclosures from companies, so they’re a great place to look for multilevel marketing statistics. Sadly, the same is not true for the US, and similar numbers for US distributors remain mostly undisclosed.
22. Amway employs over 17,000 people.
And that doesn’t include the 13,000 employees of Amway’s parent company, Alticor.
For comparison, take into account that the average American business in the company management sector employs around 107 people.
Women in Network Marketing Statistics
23. 74% of direct sellers and discount buyers involved in direct marketing in the US are women.
Most fall into the 35–44 age bracket, and only 6% are under the age of 25. These figures represent both direct sellers and what the MLM industry calls “discount buyers.”
Discount buyers are part of the organization but aren’t actively selling products or growing their network.
24. 2.7 million women in India are engaged in network marketing and direct selling.
(Business Standard, MOSPI)
This is one of the industries with the highest female participation in India. Women’s overall labor-market involvement in India was 23.3% in 2018, while it stood at over 53% for network marketing.
Are MLMs profitable?
Overwhelmingly, no. Most credible evidence shows that multi-level marketing is not a good way to invest time or money.
Moreover, according to the FTC, multi-level marketing has worse profit rates than just about any other investment. In fact, when comparing MLM success rates and earnings-related online gambling statistics, gambling actually seems to come up on top as a potentially more lucrative activity (not that we’re recommending it).
How to make money with network marketing?
Start by asking yourself if you want to put in the work and are willing to shoulder the risk. Some things you’ll need to succeed:
- Sales skills—Unless you’re going to sell products consistently, don’t expect to earn a lot of money.
- A plan—The name “network marketing” is more than just a gimmick. Figure out who belongs to your network if you want to run a successful multilevel marketing campaign.
- Low expectations—Even if you do everything right, you may still lose money because you have no control over the product’s cost to you.
Additionally, gather as much information as you can about the company. Look for any complaints and previous problems it has had. In particular, focus on the company’s compensation plan and estimate the potential benefits of an aggressive recruitment campaign.
If the company lacks transparency, it’s probably because there’s something to hide.
Finally, talk to as many distributors as you can to learn about their experience with the company. Before you sign any contract or agreement, ask a competent advisor to help you review it.
What percentage do network marketers make?
Every company has a different compensation scheme for distributors. But they mostly follow a similar model. For the sake of illustration, Amway’s model allows distributors to sell at any mark-up, which is typical for MLMs.
Furthermore, Amway distributors can earn monthly bonuses based on their sales volume and their team’s sales. This includes one-time incentives and recurring bonuses. A distributor’s Amway success rate depends highly on pursuing and earning these incentives.
For reference, the monthly average gross income for an Amway distributor in 2016 was $207. That doesn’t include inactive distributors or operating expenses.
What is the success rate of network marketing?
According to research conducted by Jon M. Taylor from the Consumer Awareness Institute, less than 1% of people who participate in network marketing ultimately make a profit.
More recent research from the AARP paints a slightly less gloomy picture. That survey asked 601 participants about their experience working with an MLM organization. The results were as follows:
- 47% of the respondents reported losing money as a consequence of their participation.
- 27% reported breaking even, so neither losing or gaining money.
- 25% reported making a profit.
Of those who made a profit, 6% earned between $5000 and $9,999, while 14% earned less than $5000. For reference, the median income of self-employed people running their own business was $51,419 in 2017, and launching a successful startup actually seems to be easier than making any real profit in MLM.
How much is the network marketing industry worth?
Retail network marketing statistics in 2019 show global sales of over $189 billion. The US has the largest MLM industry by sales volume at a little over $35 billion in sales.
As you can tell from these stats, multi-level marketing is by no means a risk-free business opportunity, as some companies would have you believe. The truth is that, by any account, most people who go into the MLM business won’t make any money from it.
These network marketing statistics aren’t meant to smear legitimate business operators. Successful network marketers should be proud of their accomplishments. Instead, the idea is to put forth an accurate representation of the facts.
However, there’s something to be said about a business model that almost always produces worse outcomes than minimum-wage jobs.