Affiliate marketing and multi-level marketing are two popular ways to make money online without creating your own product. Both have their pros and cons, and both have evangelists who swear that their business model is the best and that the other is a scam. This post will go over the main differences between the two so you can get a better understanding of how the concepts work and whether they’re worth your time.

What is multi-level marketing?

Multi-level marketing is defined as “the practice of selling goods or services on behalf of a company in a system whereby participants receive commission on their sales as well as the sales of any participants they recruit.” It’s also commonly referred to as network marketing, direct sales, MLMs, or pyramid schemes if you’re feeling sassy. 

Popular MLMs in 2021

This Wikipedia has a full list of multi-level marketing companies if you’re wondering “is ___ an MLM?”. Some of the most popular companies on the list that you might recognize include:

Amway

Avon

Herbalife

Mary Kay

Beachbody

Young Living

DoTerra

Melaleuca

Norwex

Monat

Younique

Color Street

Pure Romance

Rodan & Fields

Scentsy

SeneGence

Nu Skin

Paparazzi

These companies often encourage people to sign up through promises of “owning your own business” and “working on your own terms, around your own schedule.” That’s exactly what Amway, for example, does on their business opportunity page. When you sign up for a company like Amway, you have to join under a sponsor who’s also a current distributor. This person becomes your “upline” and as part of their downline, you’re part of the team that makes them extra commission every time you make a sale or stock up on products. The upline and downline are required for a company to be considered multi-level marketing. 

In recent years, MLMs have become notorious for the “hey hun, thought you’d be interested in this makeup/weight loss shake/business opportunity” messages we’ve all received from at least one Facebook friend we haven’t seen since high school. It’s become such a prevalent occurrence that a whole movement has formed around people who are anti-MLM and want to shed light on the problems with the industry. 

Pros of MLM

• The companies usually give you some sales training 
• You can set your own hours and work from home around your own schedule
• If you’re good at convincing people to buy products, you can potentially make good money 
• Some companies will set up a custom website for you to direct your customers, so the startup part of the business is done for you (because it’s not your business, it’s somebody else’s business)

Cons of MLM

• Some have expensive startup costs or monthly fees/sales quotas
• There’s an increasingly negative connotation with MLM companies, so that could automatically turn people off – the antiMLM subreddit is proof of the number of people who will not buy from MLMs on principle
• Even if you don’t want to recruit other sellers, your upline and the company want you to recruit so they can widen the pyramid (and make more commission without having to do more work on their end)
• Many companies have intentionally convoluted commission scales (here’s DoTerra’s, for example) and income disclosures (who wants to make less than $500 a year selling essential oils?) designed to look appealing at first glance
• You’re not working for yourself as many of them claim – you’re technically working as a contract-based salesperson for the company – but they reel you in with the “business owner” talk so that it sounds appealing and so that any issues you experience are entirely your own fault. They might even refer to you as an “affiliate” or “influencer” of their brand in order to distance themselves from the MLM stigma, but that doesn’t change the fact that a company that operates this way is an MLM.

What is affiliate marketing?

Affiliate marketing is defined as a “marketing arrangement by which an online retailer pays commission to an external website for traffic or sales generated from its referrals.” So when you sign up for a company’s affiliate program, you get a custom link to share on your blog, social media pages, or wherever else you want. When someone buys through that link, you get a commission. This is a common way to monetize product reviews, how-to guides, and other content that people might search for before buying the product you’re promoting. If you’ve ever bought something through a blogger’s recommendation, chances are that link was an affiliate link.

So many brands for products that are sitting in your house right now have affiliate programs that you can join. Target has an affiliate program. Sephora has one. Samsung. Apple. Etsy. Ebay. Amazon. Google any brand + affiliate program and see what comes up. 

This means that instead of pretending you’re suddenly a Monat shampoo evangelist or that LuLaRoe sells the “best leggings ever”, you can share links to products you’re already using. 

 If you’re thinking “WHY DIDN’T ANYBODY TELL ME ABOUT THIS?!?” I know. That’s why I’m telling you right now. 

PROS OF AFFILIATE MARKETING

• Millions of trusted and well-recognized brands have affiliate programs
• You’re not tied to one company and can join an unlimited number of programs
• No upfront costs, starter kits, or monthly sales requirements, making it one of the cheapest and easiest ways to start making money online
• No recruiting and no upline pressuring you to make sales
• Some programs let you create custom coupon codes to share with people
• If you’re good at (or willing to learn) writing content such as product reviews or how-to guides, you have the potential to make great money with affiliate marketing
• You can start by sharing links on your personal social media pages if you don’t have a website
• There’s no built-in business model you have to follow involving an upline or downline

CONS OF AFFILIATE MARKETING

• It’s helpful to have a blog or website where you write content and can share affiliate links, which can take time to set up for beginners 
• Choosing products and niching down can be overwhelming if you don’t already have anything in mind that you want to share
• Some brands are neglectful of their affiliate partnerships and don’t offer much in terms of support (but in many cases you won’t need it since sharing links is pretty self-explanatory)

Difference between Affiliate Marketing and Multi-Level Marketing

If both of these sound remarkably similar, that’s because – spoiler alert – multi-level marketing and affiliate marketing are nearly the same thing. In both cases, you’re sharing links to products in exchange for commission. 

However, just because the concept is similar does not mean the outcomes or obligations are the same. 

When you join an MLM, it’s common to have to pay for things like:

• Startup kits or membership/registration fees
• Company website fees
• Business conference tickets
• Product samples to demonstrate in videos or at parties
• Transportation to get to and from said parties
• Unsold product inventory
• Time spent on virtual team meetings or other events (here’s a leaked Beachbody meeting where the leaders are like “if you’re not working from the toilet you’ll never be successful”. Sounds empowering!)

You can see how it doesn’t take much before you’re suddenly the customer of an MLM just as much as you’re a distributor. That’s an intentional part of the design. If you’re not good with sales, there are plenty of other ways they’re getting money out of you whether it’s a $10 monthly website fee or conference tickets that can cost into the thousands. 

The other problem is that most MLMs want you to work for them exclusively, so it’s often discouraged to join other programs or look for other side hustles. They want all your time and energy dedicated to them as their free salesperson. It’s the exact opposite of the advice any successful entrepreneur will give you, which is to have multiple income sources. 

The truth is that the key to online business isn’t in finding the perfect product to shill: it’s in your ability to get people’s attention on the internet. The secret to getting people’s attention is by creating the thing that we’re all sitting on our phones consuming 11 hours a day, the thing you’re consuming right now: free content. Whether it’s a niche blog, YouTube channel, TikTok video, or Instagram post, knowing how to create content is the ultimate secret to making money online. The simplest way to monetize the content you create without selling your own product or service? Affiliate links to the products you reference in your posts.

Affiliate programs do not charge you to sign up, and they’re typically only a very small portion of a company’s advertising, not a core part of their business model. The only expenses are those associated with your own assets, like web hosting. If you’re only planning on sharing links on social media for now, you can start sharing links without spending any money.

New parent? Share affiliate links for the products that are keeping your baby most happy right now. 

New at-home gym routine? Share affiliate links for the weights you bought, the tank top you can jump rope in without a bra, the type of water bottle you like to keep on hand.

Reading 30 books this year? Share an affiliate link with your thoughts whenever you finish a book. 

Here’s a practice exercise you can do: think of a product you already use in any random MLM product category. For example, if your friend invites you to start selling Monat shampoo, look for an affiliate program for the shampoo you actually use. If there’s no affiliate program, check if it’s on Amazon and use the Amazon affiliate link. If you’re thinking “but why the fuck would I share my Herbal Essences on my personal Facebook page, that’s weird,” the only way to feel more weird is if half your friends are wondering why you suddenly care about Monat and whether you’ll try to recruit them to a pyramid scheme.

If you’re on Instagram, go through the Stories and Highlights of some of your favorite influencer-like accounts and try to spot any affiliate links. You’ll start to realize that everyone’s been doing it the whole time – they’re everywhere! 

A word of warning: some MLMs refer to their salespeople as “affiliates,” so if you say to someone “sorry, I don’t do MLMs” they might claim that it’s an affiliate program, not an MLM. This is when you ask them if they have an upline or downline team, request commission information, check the company’s latest income disclosure, and search the company name in the AntiMLM subreddit.

In Conclusion, Affiliate Marketing is Superior to Multi-Level Marketing

There’s no good reason to join an MLM once you discover the world of affiliate marketing. Your success as an affiliate depends on your own efforts in building a brand rather than how well you can widen and sustain a pyramid of recruits. 

If you’re willing to put in the effort, the reward is so much better when you control the variables.  

Check out these posts to get started with affiliate marketing:

This post lists the most common affiliate networks that host thousands of popular brands.

This post has some ideas for how to create content and share affiliate links organically.

This post has a step-by-step process for starting a self-hosted WordPress blog like this one.

More reading:

How to start a leggings boutique without joining LuLaRoe

How to start an essential oil business without DoTerra or Young Living

How to sell jewelry online without joining an MLM like Paparazzi

How to start an online business selling digital products on Etsy

How to start an apparel business with no inventory