Servicing The Complex Needs of Global Payments For The Multi-level Marketing Industry
Multilevel marketing (MLM) organizations face unique challenges when tracking and dispersing payments and commissions. MLM’s function in a tiered, commission-based structure with direct person-to-person sales as its front line. Product representatives sell to the final consumer and are compensated both for selling products and for enrolling further distributors. Because of commission payouts at each level, these organizations regularly make a large volume of payments in order to distribute commissions to each level of the sales hierarchy.
Commissions have traditionally been paid out via paper check or complex and slow systems, but this can be time-consuming and costly with so many levels of commission to be paid on each sale. Digitizing payments through the Uulala platform can benefit both the company and the individual sales representatives, particularly in developing countries where incorporating mobile payments can help introduce digital into cash-heavy economies.
Network marketing is growing in the global economy
Globally, MLM sales reached $189 billion in 2017, with most growth being attributed to developing countries. By region, Africa & the Middle East experienced the highest rate of network marketing growth in 2017, up 64% from 2016. In fact, emerging markets, in general, have begun to embrace network marketing as a path to entrepreneurship.
Reps have two primary income streams: direct sales commission on the products they sell to the final consumer, and commission on sales made by their recruits and those they subsequently enroll. The distributors that each rep enrolls become the rep’s downline, from whose sales the rep receives a commission, down to a maximum number of levels removed. The other side is the upline, those that receive a commission on a rep’s sales, also to a maximum number of levels.
Frontline direct sales are already a familiar business model in the economies of developing countries, particularly in the informal sector where mobile vendors are commonplace. In Latin America, a region already known for its high rates of entrepreneurship, network marketing offers the potential for would-be micro-entrepreneurs to participate in a business structure that can generate more than one source of income.
Economic and financial inclusion through network marketing and digital payments
According to the International Labour Organization, more than half of the world’s working population is employed in the informal sector, largely in developing countries. With MLM, direct sellers have the opportunity to enroll other distributors and earn commission on their sales as well as their own and begin participating in a more formal business structure.
Network marketing can be an influential tool for development, as it introduces participants not only to a unique system of commissions and recruitment but can also improve financial and economic inclusion with the use of digital banking. Furthermore, Uulala’s blockchain-based immutable record of transactions can help companies comply with government regulations in regions with a high level of economic informality.
Managing complex commissions with Uulala’s Mass Payout
Commission structure varies by organization, but each MLM pays out a percentage of the product price, either wholesale or retail, to their distributors. Commission is paid to the direct seller up the line to a number of distributors, with the percentage payout changing depending on how far removed they are from the frontline seller.
Because of this unique payment structure, the complexity of payment calculations and the number of payments that need to be made, incorporating a robust digital payments platform can be invaluable in streamlining the payment process. Uulala’s Mass Payout is designed to track and distribute payments to multiple recipients in a timely and cost-effective manner. Organizations with hundreds and thousands of payees can use Uulala to keep track of their payees and what percentage of commission they receive for each level of their downline.
Blockchain, digital payments, and global technology
In Latin America, 85% of transactions are still made in cash, perpetuating the informal cash economy and repressing the region’s economic development. Distrust in formal financial institutions, some of it justified, is a key reason for cash’s continued dominance but can be detrimental to the economic advancement of individuals and the economy.
With Uulala, each payee gets their own unique I.D. within the platform, with which they can receive payments almost instantly. Commissions paid to the individual from their company are delivered through the Uulala Mobile Application, and virtual payment pard program. These deposits are recorded on the Uulala Blockchain and are used in building the individual a global blockchain-based credit profile.
In developing economies, network marketing may offer a gateway to formalization and financial inclusion, especially if it is supported by secure, trackable digital payment methods and means of saving.
