The basic concept of MLM is far too simple and attractive to be entirely modern. Although I can find no recorded history of its being used much more than fifty years ago, we must assume that variations of it have been practised since the dawn of commerce.
Before we examine the development of MLM, however, we must consider direct selling, from which it evolved.
Direct Selling
Direct selling as defined earlier, began mainly as a by-product of the industrial revolution. In earlier times there was very little travel between centres of population and generations of families lived and worked and died within a few miles of their birthplace.
Everything necessary for subsistence was produced within the community and consumed by the producer or bartered or sold to other members of the community.
Industrialization brought mass production and the need to develop sales outlets in places far removed from the place of manufacture. Improved means of transportation and the development of retail shops in large towns gave many people the opportunity for the first time to buy manufactured goods originating far away from their locality. But a great proportion of the population still lived in small villages and towns without access to such a variety of goods.
It was the travelling salesman who brought the modern world of mass- produced goods to these far-flung communities. On the road for months at a time, these original practitioners of direct selling would stop at each town to enthral the inhabitants with miracle cure-all medicines or the latest aluminium cookware. Sales would take place in the Church hall, on the village green, or door-to-door.
Although some of these itinerant traders were nothing but con-men who would never visit the same place twice, the concept of person-to-person selling became recognized, despite opposition from shopkeepers, as a successful and ethical way of doing business.
Some of the largest and most reputable companies in the world use direct selling exclusively, eg Avon Cosmetics, Encyclopaedia Britannica, Tupperware.
Reference: Multi-level Marketing: 2nd ED: Peter Clothier