Company Name: Vemma
Costs: Not specified, but you do have to purchase a product pack
What Is It?
A health and nutrition MLM that has come under some fire from the FTC recently and was even shut down for a while.
Vemma doesn’t have a great reputation right now and that alone makes joining the company unappealing. While the company’s products do look decent they are on the expensive side, and there are hundreds of similar products on the market. At the same time, the company has a fairly standard compensation plan, with an added complication as the result of the FTC’s influence. At the end of the day, there is little unique or particularly appealing about Vemma and a lot about the company that raises questions.
Vemma’s focus is on health and nutrition, and the company’s product selection reflects this emphasis. Their products are broken down into five main categories:
- Boe.ē Pro
I’ve actually talked specifically about Verve in another post, so I’m not really going to go into that here. Essentially though, Verve is an energy drink and is more expensive than most other energy drinks. That alone would make sales very difficult.
The Vemma set of products basically contains drink-based supplements. They might sound like a good product, but do you honestly think you could sell them?
Most products like this don’t have any noticeable effect on a person’s health, which makes the sales process that much more difficult. Additionally, most people who are interested in this type of product already purchase something similar. Convincing them to switch to Vemma’s (expensive) alternative wouldn’t be an easy task.
The Boe.ē and Boe.ē Pro range are different types of protein supplements, powders, and shakes.
The site doesn’t offer much information about any of the products and personally, I’m a little suspicious. Yes, protein shakes and the like can be good for health and many people swear by them.
But, there is already a huge amount of these products on the market. There isn’t anything about Vemma’s line that makes it stand out. You would have to be really well versed in health and the science behind it to effectively convince people that these products were better than the other products out there.
The last group of products is NEXT. Actually, this is just a single product. It is a liquid children’s multivitamin supplement. Once again, the product might be good, but there is nothing that makes it stand out.
The Company’s History and Reputation
With any MLM, the history and reputation of the company are just as important as the products. In fact, that’s true of most types of businesses. Realistically, who is going to trust products from a company known to be shady?
In Vemma’s case, the company doesn’t have a very appealing history or reputation and this is continuing to get worse as time goes on. Much of this comes down to the model the company uses.
The MLM model often gets companies in trouble and that really isn’t surprising. The problem is that the approach is really operating at the edge of the law. MLM companies are legal but only just, and only if they are very careful about the way they design their plans.
The reason for this is that an MLM is so much like a pyramid scheme. Saying that tends to get people mad, especially people who participate in MLMs. But, it is still true.
With a pyramid scheme, the idea is essential that you pay money to the people above you and recruit people below you. This creates a pyramid structure, as each person recruits multiple people.
There are many variations of these schemes, but often it is based on the idea that you send a certain amount of money (or a gift, depending on the scheme) to the person above you, and then receive the same from people below you. Smaller amounts are then typically passed further up the chain.
This approach is a scam, pure and simple. It only works because there are layers of people at the bottom of the pyramid who put money into it and never see a return.
Now, pyramid scams are illegal but MLMs are a little bit different.
An MLM sells products and in theory, you could actually make money just from selling those products. But, the emphasis of the company is always on recruiting others and building your downline. That results in a similar structure to a pyramid scheme. Real success in an MLM comes from building your team under you and getting them to do the same.
But, just like a pyramid scheme, there are always people at the bottom who lose out.
For MLMs to operate within the law, they have to have a commission scheme that doesn’t place too much emphasis on recruitment. In other words, there has to be an emphasis on selling products and it has to be possible to make money that way.
I bring all of this up because Vemma has a history of skirting the line between MLM and pyramid schemes.
For example, in 2015, Vemma went under temporary receivership, while they tried to figure out how to make the company both profitable and legal. One finding of this process was that around 86% of all product sales were to other affiliates (i.e. distributors for the company). That means that only 14% of the sales were to customers.
That’s huge – because distributors often buy products to bring their commissions higher or to stay active. Many distributors in that position end up operating at a loss. Those numbers also clearly show that selling Vemma products is not a highly profitable venture.
Vemma also received FTC complaints about its practices and was taken to court. There were two main issues with the company. The first was that the income potential of Vemma was misrepresented by the company. That’s not uncommon in MLMs and marketing often does imply that you can earn a lot of money.
The second complaint was that the emphasis of Vemma is strongly on recruitment, rather than sales. I talked about that before.
At the end of the day, Vemma was initially shut down for its approach, but the company has since been allowed to become active again.
The focus has been on developing a compensation scheme that promotes product sales over recruitment. Vemma has been working on this but has had limited success so far.
This has huge implications for anyone wanting to be a Vemma affiliate.
Right now, the company is too unreliable to invest time and money into. Aside from the typical MLM issues, there is a very real chance that Vemma will get shut down for good at some point in the future.
These issues with Vemma may eventually spell the end for the company and also for other MLMs.
At the end of the day, many MLMs use similar models and retain that strong focus on recruitment. If the FTC is starting to get strict about this model, then change may well be in the air. Realistically, I suspect most MLMs cannot actually make a profit if they take their emphasis away from recruitment.
Vemma’s Compensation Plan
With this company, I’m focusing on the compensation plan that they have on their site at this point in time. The recent events with the FTC may well mean that the plan changes at some time, but for now, this is what the company offers.
One interesting thing about this is the 51% rule – something that arose as a result of the FTC issues. The 51% rule means that if 51% (or more) of the sales a distributor and his team make come from customers (rather than other distributors) then the distributor earns money from the sales of the team. If not, the distributor doesn’t.
That’s a dramatic change from most MLMs.
The change does encourage sales to customers over other distributors. But, to be honest, the approach could make it harder for distributors to make money.
The plan also offers bonuses based on the performance of distributors and their teams. One example of this is bonuses based on the way that one team performs compared to another one.
Another example is cases where teams are balanced. The company gives a number of examples of how this can be achieved.
The funny thing is that you can start to see the pyramid structure of the model even in images like this one. There are other bonuses in the commission scheme too, but I’m not going to focus on these. In general, the bonuses are connected to your own performance and how the different parts of your team do.
The other main part of the compensation plan is ranks. This is another fairly typical part of any MLM. Your rank in the company influences the bonuses you can earn, so your rank also influences your profit potential. Going up through the cycles is surprisingly simple. It just involves how many cycles the distributor goes through in a four-week period.
Vemma isn’t entirely clear on what it means by cycles in that context, but it seems to be connected to the commissions of one team compared to another. That does suggest that going up ranks may be harder than it seems, especially as the number of cycles required in the latter ranks is quite high.
Making money with an MLM is always difficult, particularly as you have both recruitment and product sales to focus on. Vemma’s brush with the FTC doesn’t seem to have improved its commission scheme much and I suspect that most members still wouldn’t make money with the company.
To make matters worse, I haven’t even talked about some of the other challenges involved in making money with an MLM. For example, actually making sales or recruiting people can be very difficult, especially as you are competing against other distributors and even against your own team.
MLM VS Affiliate Marketing
As you can see, the opportunity that MLMs provide is certainly not as good as they imply. Instead, distributors often end up spending more money buying products than they actually make from the opportunity. Now, some people do get lucky and manage to make money, but they are the minority. The vast majority of people don’t make money from an MLM.
Affiliate marketing is an alternative way to make money and it has some distinct advantages. For one thing, you don’t have to heavily rely on any one company. So, your business won’t die if the company you are promoting does. In fact, some people choose to promote products from many different companies, which helps to protect them. This is great for comparing and contrasting!
The most important thing with affiliate marketing is that you are in control. You also get to take advantage of the online environment. That lets you make sales via a website, rather than trying to sell directly to people.