We buy the products we need from our nearby retailer. The product travels thousands of miles from the manufacturing facility to our nearby shop. There are many business entities involved in this process like a C&F agent, Super stockist, Distributor, Wholesaler and our retailer.
They are maintaining the supply chain and makes the product available all time. Huge cost also involved in advertising the product in various media.Here also many entities like advertisement agencies, actors and publishing companies etc are involved. The manufacturer also pays their marketing and sales department to keep the business intact and to see a decent growth. This is how the product we need is made available in our retail shop. All these people earn money in form of commission and salary from the manufacturer.
Multilevel Marketing (MLM)
Here the manufacturer eliminates all the intermediaries mentioned above and appoints its Direct Selling Agent. The agent delivers the products to customers directly. The sale happens from home to home. The agent is permitted to set up his own sales force where all are paid on commission basis. The agent and his team performs all the roles of intermediaries discussed above like advertising (recommending) the product, sales and maintains the supply chain. Here commissions are paid against the sale of product. This form of business model functions in more than 100 countries for more than 75 years. This is also called as Network marketing or Multilevel marketing or Private franchise.