Does “social selling” mean “network marketing”?

You’re scrolling through Facebook (editor: so you must be older than 30) and you see a few friends selling stuff. Maybe it’s jewelry, maybe it’s skin care or make up. You look a little closer and you come across the phrase “social selling.” Makes sense, right? They’re on social media…selling stuff. Simple.

But if you’re curious and dig for more info, your next question may be, “isn’t this one of those network marketing companies?” If you’ve had this experience and wonder what is different between social selling and network marketing, this post is for you.

First, some basic definitions. Network Marketing has been around for decades. It’s a business model in which a company sells something (a product or service) through a network of independent distributors. These distributors earn commissions from their sales, and they often recruit other distributors to sell with them, but some companies have flat or nearly flat organizations and recruiting is not emphasized. 

As a distributor adds other distributors to his or her organization (usually called a “downline” or team), the recruiting distributor typically earns additional income from the sales made by recruits. Because these recruited distributors are organized on layers or levels, the business model is also often called multi-level marketing, or MLM. Another common name is “direct sales,” which encompasses many more types of companies. 

Because of the way organizations develop over time, many people are skeptical about network marketing companies because they can resemble illegal pyramid schemes. The tell-tale characteristic, however, is that a pyramid scheme doesn’t involve a legitimate investment vehicle or the sale of a product or service. Wikipedia has a very informative entry for illegal pyramid schemes. 

In contrast, reputable direct sales companies offer a good or service, and in fact many offer innovative, disruptive products that directly compete with retail giants. Example: for the last three years, Rodan + Fields has been the top-selling skin care brand in the U.S.

Social selling, for our purposes, is the kind of marketing outlined at the beginning of this post — It’s a fairly recent trend exemplified by everyday people offering products (mostly) to friends, and using social networks as a primary sales channel. (Readers should be aware of a broader meaning of “social selling” that applies to B2B sales.)

With the definitions established, here’s a key point: Not all social selling is network marketing. In like manner, not all network marketing is social selling. For example, many “Influencers” promote products, perhaps even their own, and earn an income from sales, but they may be doing it without any connection to a direct sales company. Furthermore, many people involved in network marketing do little or no engagement on social media, sticking instead to traditional face-to-face interactions.  

Many direct sales companies that have emerged in recent years, such as MONAT, LUMINESS, EVERRA, and JOIYA, have used the term social selling or social marketing to define how they operate. Given the stigma and, as mentioned above, association with potentially illegal activity that many still attach to the term “network marketing,” it’s no surprise companies might shy away from a term that can be a turn-off. 

But we’re not here to hide anything, and neither are they!

If social networks evaporated tomorrow, network marketing companies would carry on with minimal disruption (there might be a little bit of a scramble to find phone numbers and email addresses) because it’s all about connections. By its very nature, direct sales IS social. That’s why calling it social selling is an appropriate fit. 

Facebook and Instagram have made it easier than ever to connect with people literally all over the world. And you can’t scroll your feed very long before you see someone sharing something they love — a new movie, restaurant, shoes, etc. Our desire and need to share combined with a global audience on-line make for a perfect digital recipe that IS social selling.