MLM sector sees fewer companies, but revenue soars

MLM sector sees fewer companies, but revenue soars

MLM businesses now offer many high-quality products that meet the various needs of consumers, which has resulted in increasing numbers of users and a continuous increase in product consumption

Illustration photo. The number of authorised businesses dropped from 67 in 2015 to just 15 this year. — Photo baonghean.vn

The number of multi-level marketing (MLM) businesses has declined, but revenue continues to grow.

According to a report by the Ministry of Industry and Trade (MoIT), the number of authorised businesses fell from 67 in 2015 to just 15 this year, while the sector's revenue has steadily increased.

A report from the Multi-Level Marketing Management Department under the National Competition Commission showed that, alongside the drop in the number of businesses, the number of people involved in MLM activities has also decreased.

The total number of participants in MLM was 634,567 in the first half of this year, a decrease of 13.43 per cent compared with the same period last year (732,997), leading to a reduction in the overall size of the industry.

Despite the overall decline in both businesses and participants, Hoàng Thị Thu Trang, deputy head of the Multi-Level Marketing Management Department, noted that although regulations have tightened since 2018, the industry’s revenue has continued to grow, with some periods even seeing significant spikes.

The stricter management has thus created a healthier business environment for legal and genuine enterprises to operate.

The VOV online newspaper quoted Nguyễn Phương Sơn, head of Communications and External Relations of the Vietnam Multi-Level Marketing Association, as saying that MLM was once a new field with many regulatory loopholes, which led to the rise of exploitative businesses, a loss of trust, limited participation, and low revenue.

Regulations on managing MLM activities have now been formalised and made transparent, with many consumer protection measures in place, resulting in a sharp increase in revenue.

In addition, MLM businesses now offer many high-quality products that meet the diverse needs of consumers, leading to growing numbers of users and a continuous rise in product consumption, he added.

Revenue from MLM businesses still primarily comes from health supplements and cosmetics, which account for around 92 per cent of total revenue.

Revenue from household products, fashion, electronics and other items makes up approximately eight per cent.

MLM products have reached many consumers beyond their distribution networks, gradually establishing brand recognition and reputation.

Most businesses in the sector have also had their multi-level marketing licences renewed, continuing to contribute to the overall development of the economy. 

Bizhub