Three years ago, Cynthia Marshall of San Antonio, Texas, was
looking for a business opportunity. She'd recently signed up
for pre-paid Internet access with FlashNet Communications, based in
Fort Worth, Texas, and was happy with the price and service.
"I was thinking, 'I wish a real company like FlashNet
would try network marketing,' " Marshall says.
Marshall had tried her hand at selling diet pills and Tupperware
but hadn't managed to build what's needed for success: a
"downline" of people she'd recruited into the
business. Then she received an e-mail: FlashNet was launching a new
division, FlashNet Marketing Inc., to sell its services directly to
consumers through a network of independent sales representatives.
Marshall attended the first opportunity meeting in San Antonio in
July 1997 and signed up immediately.
Since then, Marshall has personally signed up more than 100
customers, who pay $17.95 per month or $129.95 per year for
Internet access and the seasonal promotions to buy electronics at a
discount. By recruiting friends and family members into the
business, who in turn have recruited others, she's built a
downline of 360 representatives serving 3,200 customers. As with
other distributors in network marketing (also called multilevel
marketing, or MLM), she receives overrides on the sales generated
by everyone in her group. Soon she cut back to part time at her
airline job to focus on her burgeoning business.
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Like other independent representatives and distributors in the
industry, Marshall has found that the Internet is a valuable tool
in building her business. She has a customized Web page linked to
the official company site, which her customers use as a portal to
the Internet. She places classified ads on various Web sites to
attract potential recruits. She uses Internet technology to keep
track of sales generated by her group. But she knows she can't
simply rely on the Net alone. "The Internet is just a tool,
just like the classified ads," she says. "Once you
establish contact, you have to spend a lot of time building
relationships."
It's partly because of the Internet that the MLM industry is
growing so fast all over the world. The Direct Selling
Association estimates that retail sales in the U.S.
direct-selling industry (consisting almost entirely of network
marketing companies) grew steadily from nearly $13 billion in 1991
to more than $23.17 billion in 1998. During the same time period,
the U.S. sales force, of which 90 percent work part time, grew from
5.1 million people to 9.7 million. The Internet—which allows
distributors to get information out quickly, keep track of their
organizations, stay in touch with other distributors and meet
people they wouldn't otherwise meet—is largely
responsible for that growth.
However, the Net also poses a threat to the very people it
helps. "Just because an MLM distributor puts up a Web site
doesn't mean it will generate queries on its own," says
Dr. P.K. Kannan, a marketing professor at the Robert H. Smith
School of Business at the University of Maryland in College Park.
"It's basically word-of-mouth. People are not going to
compare Web pages and join."
"A Web site won't help you with training new recruits
on how to get started," nor will it necessarily bring in the
right people for your business, adds Jerry Vitale, director of
sales for Enviro-Tech International Inc. of Las Vegas, a network
marketing company that sells waterless cleaning products, personal
care products and food supplements. "People become obsessed
with some guy in Germany, while ignoring the guy two doors down
who's praying for the right business opportunity."
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