Herbalife was founded in 1980 and continues to be successful at selling a variety of health-related products. Their range includes dietary supplements, sports nutrition, personal care and weight management items. At present, Herbalife has more than 3 million distributors and is present in more than 90 countries globally.
These statistics make Herbalife an impressive choice, especially as there are many other health MLMs out there. Some of their products are popular too, which is always good for distributors.
Despite all the positive aspects, Herbalife has a dark side too. The company has been strongly criticized for its MLM structure, to the point of being charged by the FTC.
After a 2016 run-in with the FTC, Herbalife agreed to dramatically restructure its compensation plan. Herbalife also needed to pay $200 million in fines as compensation for the way that it had misled customers about the money that they could potentially earn.
All of this history makes Herbalife a dicey proposition. Even so, the company has made changes and their compensation plan has been looked at more closely than many other MLMs. The required changes also mean that Herbalife is very up-front about what you can expect.
This post takes a look at those two approaches and how they work in Herbalife's current compensation plan. I also talk about the overall potential of Herbalife as a way to earn money.
Before we get into the products that Herbalife offers, I want to talk about the way that you're making money. Herbalife uses a resell model. This means that you are buying the products at a discount and then selling them on.
Herbalife offers an initial discount of around 25%. This can increase to 50% if you are able to increase your sales enough.
Herbalife recommends selling the products at their recommended retail price, while also passing along taxes and shipping. They give the example of their meal replacement shake Formula 1, which has an initial distributor cost of $31.42 (excluding taxes and shipping). The recommended retail price is $41.20, which gives a $9.78 profit.
An initial profit margin of roughly 25% isn't horrible, but the requirement to purchase the products first is frustrating. This style means that the distributor is taking more risk. It's very easy to lose money in the process.
Additionally, the profit margin is based on the idea that you're selling products at full retail price. Any discounts will cut into how much you earn.
This is a pretty serious problem, as competition can be fierce. You'll be competing against other distributors and all the Herbalife products that are available elsewhere (like on Amazon). You're also competing against any similar products out there – and there are a lot of those.
Herbalife makes the process more difficult still with its Preferred Member program. This program provides a 20% discount on Herbalife products. You might find that some potential customers are unwilling to pay full price and join the program instead.
This brings me to the second area – the products themselves. Herbalife has a decent range and is particularly well known for meal replacement shake mixes.
I had a chance to try their chocolate mint meal replacement and it was pretty damn tasty. Too pricey for me to buy on a regular basis, and the health benefits are way overblown, but I can't deny that the consistency and flavor was pretty amazing.
They also have a variety of other items that are related to health or weight loss, such as supplements. These tend to get good reviews and people do regularly use them.
Still, none of the products are unusual. Many other companies in the industry offer a similar range. Herbalife's products are also on the expensive end of the scale. These aspects limit your potential audience and could make it more difficult to get sales.
Building a team with Herbalife is a way to increase income. Herbalife currently offers various ranks and teams that members can be a part of. Progressing through these is based mainly on sales volume.
The initial set of ranks are the distributor ranks, which look like this:
- Distributor: 25% discount
- Senior Consultant: 35% or 42% discount
- Qualified Producer: 42% discount
- Qualifying Supervisor: 50% discount
The next part of the system involves being a Supervisor. This still provides a 50% discount, but you are also able to earn up to 5% from your first, second and third level downline. There are also more advanced levels after this, including the World Team, GET, Millionaire Team and President's Team.
While the ranks and requirements can seem complicated, the overall idea is that you need to consistently make sales and recruit people into the company. Anyone that you recruit needs to do the same.
The idea can work and some people are successful, but it's important to be realistic. Herbalife has been around for a long time and has been linked to some pretty bad press. Are people going to be willing to invest their time and money into the company?
At one point, Herbalife was a horrible system. People were spending thousands of dollars to purchase products so that they could hit the deeper discount levels. Keeping those discounts meant spending even more.
Producers who could sell as much as they purchased could turn a tidy profit, but many would not have been able to do so. In fact, many Herbalife distributors lost money instead of earning it.
The changes that Herbalife has made should make it easier to earn with Herbalife. The ongoing costs do seem to be lower, along with the risks. Herbalife also provides stats about what distributors earn, so it's easy to get an idea on what you can expect.
These stats show that people are earning money, but not a large amount. For example, 50% of first-year distributors earned upwards of $170. That means the other 50% earned less than that. Yikes!
Patterns like this show a common pattern in MLMs. While the system can be okay for some money on the side, most members don't make large amounts.
It's true that you might be able to hit the higher tiers with consistent effort and planning. My question is whether the process is worth it. Getting to the higher income tiers takes a lot of work. Personally, I'd rather put that amount of work into a business that I have control over.
I don't feel comfortable with ever trusting all of my income potential to a single company. There's too much that could go wrong.
Still Selling Junk To Your Friends?
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