MLM, affiliate or your own online shop? An honest comparison

Anyone who wants to build a terrace has three options. You can build it yourself. You can hire a firm. Or you can join a crew that builds similar things and will help you.

None of them is wrong. Each asks for something different: time, hands or nerves.

The same applies when you want to start a business alongside your job. Only instead of a terrace you are choosing between MLM, affiliate marketing and your own online shop.

Right at the start I admit it: I do network marketing myself, so I’m biased. I’ll try to give an honest comparison of MLM vs affiliate marketing and your own online shop. That includes what I don’t like about MLM.

MLM vs affiliate marketing: what is the difference?

The difference between MLM and affiliate marketing is that MLM stands on recommending and building a team inside one company, while affiliate marketing is recommending other people’s products independently through a unique link, without a team.

I’ll explain both terms simply.

MLM, or multi-level marketing, is one form of direct selling. A partner recommends the products of one company and can build a team around them.

Affiliate marketing is recommending the products or services of other sellers. You get a link through which people buy, and the seller pays you something for it as agreed. You don’t need a team for it.

I covered the basic concept of MLM in the main article What is MLM.

What is direct selling and network marketing?

Direct selling is selling goods or services directly to the customer outside a traditional shop, for example in person or online. Network marketing is a form of it in which partners also build a team.

The terms are a bit muddled, so let me untangle them:

• Direct selling is the umbrella term.
• Network marketing and MLM mean the same thing in practice.
• Affiliate marketing is not part of direct selling. It is recommending through a link, not personal selling.

If you want to know where honest network marketing ends and a prohibited pyramid begins, read How to choose an MLM company.

MLM, affiliate or your own online shop: where is the difference in practice?

In practice the three models differ mainly in how much you invest at the start, how much time it takes, what skills you need and whether you will be on your own. None is free, you just pay in a different currency.

Comparison of MLM, affiliate marketing and your own online shop

Criterion	MLM	Affiliate marketing	Own online shop
Start-up costs	Usually lower, with honest companies a low fee or none.	Low, often just a website or a channel.	The highest: website, goods, storage, advertising.
Time	Regular and long term, a lot of communication with people.	A lot of time for creating content and attracting visitors.	The most time, including operations and customer care.
Skills	Communication, leading people, patience.	Writing, marketing, basics of SEO or social media.	Marketing, finance, logistics, technology.
Team	Part of the model, you can build one.	You usually work alone.	As needed, often you pay for it.
Risk	An uncertain result, the reputation of the field, dependence on one company.	Dependence on other people’s conditions and platforms.	The financial risk of goods and investments.
Support	Training and a team, but only if you have a good sponsor.	Support tends to be limited, mainly guides.	You are responsible for everything yourself.

The table is a simplification. Reality depends on the specific company and the specific person.

Who is MLM for and who is affiliate for?

MLM is for someone who wants to work with people and learn from a team. Affiliate is for someone who likes writing or creating content and wants to be independent. Your own online shop is for someone who wants full control and can bear a higher investment.

1. Consider MLM if you enjoy people, don’t mind starting slowly and want a team around you. I’m an introvert and I still found a place in it. Having a system helped me.
2. Consider affiliate if you can create content, like writing or filming, and don’t want to lead anyone or depend on anyone.
3. Consider your own online shop if you have an idea, goods, the patience to run it and a reserve for the first period without profit.

For people who are afraid of approaching others, I have a separate view in the article How to approach people in MLM.

What are the risks of each model?

Every model has its own risk and none has zero. The risk of MLM lies in the reputation of the field and the quality of the company, the risk of affiliate in depending on other people’s conditions, and the risk of an online shop in the investment in goods and operations.

With MLM, watch the law. A pyramid scheme, where the reward is paid mainly for bringing in more people, is prohibited under the Unfair Commercial Practices Directive 2005/29/EC, which every EU country has transposed into its own law.

With affiliate, watch the programme conditions, which can change. With an online shop, watch the goods that don’t sell.

Honestly, once more: in no model will anybody guarantee you a result. Whoever promises it isn’t telling the truth.

How do you choose the right model?

Choose the right model by what you can do, how much time you can give and how much you can afford to lose. Start with the smallest risk and don’t go into debt for any of them.

1. Write down what you can do and what you enjoy. People, writing, numbers, making things?
2. Set a time frame. How many hours a week can you really find?
3. Set a ceiling. An amount you can lose without anything happening.
4. Try it on a small scale. Before you commit, try it for a month as a rehearsal.
5. Ask someone who does it. Not someone who wants to recruit you.

Frequently asked questions

Is MLM better than affiliate marketing?

Neither is better in general, each suits someone different. MLM suits people who want to work with people and have the support of a team. Affiliate suits independent content creators. It depends on your skills, your time and your willingness to take risks.

Is network marketing the same as MLM?

Yes, network marketing, MLM and multi-level marketing describe in practice the same way of selling through a network of independent partners. MLM stands for multi-level marketing. Some people choose the words network marketing because the abbreviation MLM has a worse reputation.

Which is better: MLM or your own online shop?

It depends on what you want and what you can invest. Your own online shop gives you full control over goods and prices, but needs a higher investment and a lot of work. MLM usually has a lower entry cost and the support of a team, but you depend on one company.

Is affiliate marketing legal?

Yes, affiliate marketing is a legal way of recommending products. But you should state clearly that you recommend for a reward, and follow consumer law and the programme conditions. Misleading reviews or hidden advertising break the rules.

Can I combine MLM with affiliate or an online shop?

You can combine anything, but first read your contract with the company. Some network companies have rules about how and where you may offer the products. Doing two things fully at once usually isn’t possible anyway, so start with one and add the other once the first is running.

So what should you choose?

You can build a terrace in three ways. What matters is that you know how you decided and why.

I chose a team. With a spade it’s simply more fun.

If you are interested in what network marketing looks like where people are led decently and nobody is pressured, arrange a private presentation. With no obligation and no pressure.

Sources

• Directive 2005/29/EC concerning unfair business-to-consumer commercial practices (Annex I)

Tom