Heard the two REAL work from home opportunities – Multi Level Marketing (MLM) vs. Affiliate Marketing, but which is right for YOU?
You are here because you are looking for working from home opportunities. Perhaps a side hustle, but has the potential of becoming a full-time income? You want a job that provides flexible hours, so you can work around your busy schedule.
For me, after reducing my hours at work so I can spend more time with my children, I was pretty much told that I have reached the glass ceiling in my corporate 9 to 5 job. Not willing to trade more time for the next promotion, I decided to take control of my own destiny and started looking for opportunities that I am passionate about but also have an earning potential.
In the searching for real work from home opportunities, I came across and tried so many “make money online” gigs, many of which are disguised in 2 main categories:
Multi Level Marketing (MLM) and Affiliate Marketing.
… which is exactly why I want to share with you the ins and outs of MLM vs Affiliate Marketing, what they are, the pros and cons for each, what type of person is each best for, and why I made my decision, so you can make your own, without wasting time (like I did).
Just to be clear, my purpose of this post is NOT to sway you on one over the other.
I know many people who are successful from either one. With this post, I simply want you to go in with your eyes open, by knowing who you are, what you are looking for, and what you are getting yourself into before you make an educated decision.
At the end, I will provide resources for both MLM and Affiliate Marketing so you can take the next step that’s right for you.
Without further ado, let’s start with what MLM and Affiliate Marketing are in simple terms…
What is MLM?
MLM is Multi Level Marketing in short. If you came across the term – Network Marketing, the same thing.
MLM is a way of earning income by selling products while recruiting people to do the same thing. The people you recruit are part of your team, by which you take a percentage of their commission when they make a sale.
As your team continues to grow their own teams, it essentially forms a pyramid.
Whoever sits at the top of the pyramid, gets the most profit, but if you are at the bottom, your profit gets shared by everybody on top of your pyramid.
In other words, the more you recruit, the more money you can make, which is one of the main reasons that motivate MLMers to focus on “building a team” more than selling products.
Is MLM a Pyramid scheme? Or Is MLM Legal?
You may have heard that pyramid schemes are illegal, so if Multi-level marketing is a form of pyramid selling, Is MLM legal?
MLM is legal in most countries, including the UK, US (50 states), Canada etc, however, it is illegal for countries like China, Bahrain and Vietnam.
While many MLM businesses walk a fine line of being pyramid schemes, to spot a legitimate MLM business is to understand the way how they run the business. If the entire focus is to get your money and recruit others, and no emphasis on the products and services they are selling, I would run, and avoid this like the plague.
What is Affiliate Marketing?
How many times have you clicked a link to make a purchase after watching a Youtube or read a review on a particular product? – That is affiliate marketing.
Affiliate marketing is a way of making commission on products and services that you promote.
Is Affiliate Marketing a pyramid scheme?
As there’s no team building, it’s a simple two-way street. The profit is shared between you (the affiliate) and the company that you promote products for.
And it is completely legal, just in case you are wondering.
MLM vs. Affiliate Marketing, what’s in common?
Before we get to the question – What is the difference between MLM and Affiliate Marketing, let’s take a look at what they have in common.
- Both are long term games. Neither of these are “get-rich-quick” schemes. It takes some time to get good at what you do before it can be profitable.
- Both require hard work. Just like starting any business, it takes hard work and discipline to get it going.
- You make commissions from selling the products and services. The business structure is very different between MLM and Affiliate Marketing, but at the end of the day, you make profits from people buying.
So if these 3 criteria are a turn-off for you, neither MLM nor Affiliate marketing are for you.
What are the Differences between MLM and Affiliate Marketing?
There are 5 major differences between MLM and affiliate marketing, when it comes to deciding which one is right for you.
1. Start-up cost
MLM – 8 out of 10 MLM companies ask for a fee for you to join. It varies widely from company to company.
This initial fee typically includes your purchase of a “starter kit” of their products. It ranges from £30 to thousands, depending on the products.
However, occasionally companies run promotions that you can join at a cheaper cost or even for FREE with a qualified purchase.
Some companies may also offer you a free website or an optional monthly fee for you to have a website.
For those websites, make sure the URL doesn’t belong to the MLM company. In other words, when you decide to part with the company down the road, you will not be able to take the website and the value you built with you.
If that’s the case, I would consider investing your own website that is not attached to a particular MLM company.
Affiliate Marketing – It cost nothing to be an affiliate with a company (if you are asked to pay, I would run the opposite direction as fast I can). You are basically acting as a freelance marketer to promote products for them. You help them to make more sales, and share a percentage of profit. It’s a win-win situation.
However, there might be an initial cost involved to set up a website to promote the products and services, which typically costs around £40 ($50). On the other hand, if you choose to use other platforms like Youtube, Instagram, Pinterest etc, it’s completely FREE.
For affiliate marketing, I strongly recommend you to have a website as one of the platforms to promote. Whatever you invest in the website, the traffic and audience you gain, become valuable assets for your business.
2. How do you Make Money?
MLM – You have 2 main sources of income from MLM.
- From the products, you sell to people.
- By recruiting members to join your team.
If recruiting is a turn-off for you, you CAN make money just from selling the products. However, many MLM companies reward with healthy bonuses from recruiting members, which makes a much better return for your effort.
To begin selling products or recruiting members, many new MLMers start with their family and friends. You may have been on the receiving end of that in the past? But many also utilize online advertisements and social media to reach their targeted audience.
To close the deal, you will need to give a sales pitch and get your prospect to join or purchase the products.
Affiliate Marketing – Have you ever wondered how those 20-year-old Youtubers made 6 figures a year just by vlogging random pop culture subjects or the Instagrams who pose everyday with their fish pouts became overnight sensations?
The secret is through affiliate marketing, and not many people know how it actually works…
There are 4 steps to make money from affiliate marketing:
- Identify your platform.
- Pick your topic (also called niche).
- Attract the audience by creating helpful content with affiliate products.
- Make commission from affiliate products when someone makes a purchase from your link.
3. Are there any on-going expenses?
MLM – There’s usually a monthly or annual membership fee. Certain companies also require you to achieve a monthly quota, which can be achieved by selling to others or purchasing the stock. Other on-going expenses you may need to consider are, autoship, parties, wholesale purchases, distributor fees.
Affiliate Marketing – There’s NO on-going expense to do affiliate marketing. However it would be smart to invest on your on-going education to sharpen your affiliate marketing skills. How much you want to spend is entirely up to you based on what you can afford.
If you choose to have your own website, some on-going expenses to be aware of are Keyword search tools (to help your site rank higher on google), email autoresponder, auto scheduler for Pinterest and Instagram etc. Again these are OPTIONAL investment, not REQUIRED.
4. What skills are required?
MLM – To be successful at MLM, not only you need to be focused on selling the products, but also building your team. To achieve both, will require you to be good at selling, be confident, enjoy making connections with people, the ability to motivate and coach your team.
Affiliate Marketing – As the affiliate marketing doesn’t require you growing a team, it’s simply product focused. However, to get good at attracting an audience on whatever you are promoting, you need to have a “voice” whether it is in the form of writing or making videos, or posting on social media.
5. Do they provide training and support?
MLM – Most of the MLM companies provide training and support. You are also likely to be mentored by your upline. The more effective you are, the more profitable the company and upline can be.
Affiliate Marketing – Many companies that you promote products for also provide you with FREE training. However, if you want additional training, you may have to pay for it (especially the GOOD ONES). Unlike MLM, you may have less of a handheld training process.
The Pros and Cons of MLM?
As I never dipped my toe in an MLM business, to make this list unbiased, I asked the questions to my MLM friends on Facebook. Here is the list in their own words.
- Flexible hours
- “Building confidence”
- “Making friends”
- “In total control of your business”
- Training and support provided
- “Build a team and see them grow”
- “You are in business for yourself, but never by yourself…”
- “The reputation and stigma the (MLM) industry gets because the minority ruin it for the majority”
- Hard to navigate between legitimate MLM companies vs. scams.
- Most companies charge a startup fee, and there are on-going expenses to be part of the company
- Can be restrictive on what products to sell
- Your profit gets shared by who is above you in the hierarchy
- “As the company gets big, there are too many reps fighting for the same customers”
- “Struggling in the early days to get a client base going and brand awareness…”
- “It is not a get rich quick scheme, it takes a while to build your client base”
When you consider joining MLM, it’s a fine balance between joining a reputable one and it is relatively new.
Remember, as the company gets bigger, the market size doesn’t. So eventually it will become harder to make sales and recruit people because there are too many reps who are fighting for the same customers.
The Pros and Cons of Affiliate Marketing?
- Low to no startup cost
- No nagging of your family and friends to buy products
- You set your own hours
- No recruitment required
- Simple commission structure between you (the affiliate) and the company you promote products/services for
- Limitless products and services to promote, usually things you use and love
- No commitment to products or services you promote, and you can change anytime
- The income is super passive
- You don’t need to rely on a team, you get 100% benefit of your effort
- No inventory required (cost and space)
- Whatever you invested on your website, you own the assets
- The earning potential is limitless
- You are not in control of the commission rate. If the company decided to close its affiliate program or reduce the rate (Amazon as an example), there’s nothing you can do about it.
- No control of products/services. If the product or services don’t live up to the expectation, that’s a bad reflection on you. That’s why it’s important to pick affiliate products that you trust and believe in.
- Less handholding training process
- You rely on yourself to be highly motivated
- It takes time to build and attract your audience
Why did I choose Affiliate Marketing over MLM?
Over the years, I have been approached and actively considered many MLM companies, however, I never bit the bullet for 3 reasons:
- I have a very small network of friends and family and the thought of having to do that makes me cringe. This may not be the case for MLM anymore, but at least that was the initial fear that stopped me moving forward.
- I also don’t enjoy direct sales. As I am an introvert by heart, selling things based on having to make direct connections with people is not something that energizes me.
- I couldn’t find a company with products that I TRULY stand behind. Over the years, I came across some amazing products from MLM companies, but I enjoy trying different things. Selling 1 type of product for 1 company just feels like a HUGE commitment to me.
but I prefer making money…PASSIVELY
Don’t get me wrong, I’ve always been interested in ways to make money, (especially those real work from home opportunities) and I fully understand in order to make money, I will have to sell something (either products or services). But I much prefer the passive way of making these commission…
When I found out how affiliate marketing works, to me, it felt like a much more feasible selling method. I am in control of picking the niche that I am passionate about, the products/services that I choose to promote without any long term commitment, and I get to hide behind my computer screen (well, for the most part) to create content that is helpful for my audience.
In addition, from my own experience, building a team and holding them accountable is just… EXHAUSTING.
However, I am a highly motivated person. I love the fact that being in affiliate marketing as a blogger, I get 100% benefit from the effort that I put in.
So, MLM vs. Affiliate Marketing, which one is right for you?
Now you know how MLM vs. Affiliate marketing work, to decide which one is right for you, a lot of it depends on how well you know yourself.
If you are an extrovert who enjoys making connections with people and find direct selling energizes you, then you have the potential to thrive with MLM.
On the other hand, if you are like me, who is not a natural salesperson, but prefers to make passive income through creating helpful content, then affiliate marketing is the way to go.
⇒ Find out how you can get your affiliate marketing started.
Final Thought on MLM vs. Affiliate Marketing, which one is right for you?
I truly believe both MLM and Affiliate Marketing are both real work from home opportunities to earn money while providing the flexibility that you are looking for.
But one might be more suitable for you than the other.
Hopefully, by understanding all the ins and outs for each and knowing who you are, and what you enjoy doing, it will help you to decide which one is right for you.