The History of Network Marketing

The first Network Marketing plan was invented for a vitamin company called Nutrilite in 1945 by two Californians, Lee Mytinger and William Casselberry. They found they could pay sales people not only for their own sales but also on the sales of those they sponsored into the Network.

They found they could eliminate advertising by creating word of mouth through their independent distributors.

They also found they could eliminate expensive distribution middleman costs. Their customers were their distributors.

Two Nutrilite distributors, Rich De Vos and Jay Van Andel in Ada, Michigan, left Nutrilite to form Amway in 1959 with two cleaning products, SA-8 and LOC, and they bought out Nutrilite in 1972.

Amway has since become one of the most dramatic success stories in America. In 1994, the two low-profile owners of Amway, DeVos and Van Andel, were worth $2.7 billion apiece, according to Forbes magazine.

The Network Marketing industry has had to defend itself against a huge public misconception and a very poor image. Just like franchising in its early days, Network Marketing has been confused with fraudulent in its early days, Network Marketing has been confused with fraudulent pyramid schemes. Amway, the the pioneer in the industry, was hit the hardest by the media and the Federal Trade Commission (FTC).

In 1979, Amway won its four-year court case with the FTC, proving that Network Marketing is a legal business opportunity, not a pyramid scam.

In the ten years after that decision, the FTC and the Attorneys General in every state agreed on guidelines for deciding what is a legitimate Network Marketing business and what is not.

Illegal pyramid scams squeeze large entry fees out of new members and don’t deliver valuable products.

Reputable Network Marketing companies make money solely by selling valuable products and services.