Independent Herbalife Members sell health, wellness, and skincare products directly to consumers; they may also develop their own sales teams and build their own business, earning commission based on their team members’ sales, too.
Herbalife may be one of the most well-known MLM opportunities; it’s certainly one of the largest. It was founded by Mark Hughes in 1980 and currently overseen by CEO Michael O. Johnson; it operates in more than 90 countries. Herbalife International of America, Inc. is a member of the Direct Selling Association and the Direct Selling Education Foundation; the company also holds Better Business Bureau accreditation. Net sales were $1.3 billion according to Herbalife’s 2004 annual report; net sales increased to $4.5 billion per the 2015 annual report.[1]
Signup cost: $60.10 or $94.10 (plus tax, shipping, and handling)
Global revenue: $4.5 billion (2015)
The Good: Low startup cost
The Bad: Federal investigation of the company could affect company performance and/or MLM program
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Products
Herbalife products feature vitamins, minerals, nutrients, enzymes, and other ingredients intended to support healthy and active lifestyles. Doctors and scientists have a role in product research and development; the company also has a Nutrition Advisory Board made up of international members.
Herbalife’s 60-page product catalog offers consumers health and wellness support across several broad categories, with specialized products within each. Herbalife products include meal replacement shake mixes, bars, nutritional supplements, and a skincare line.
- Cellular Nutrition: Formula 1 (Healthy Meal and Nutritional Shake Mix), Formula 2 (Multivitamin Complex), and Formula 3 (Cell Activator)
- Weight Management: includes protein and protein snacks, Formula 1 and Formula 1 meal options
- Targeted Nutrition: digestive health, heart health, stress management, plus immune health, women’s health, men’s health, children’s health, and healthy aging
- Energy and Fitness: sports, fitness, energy, and hydration
- Herbalife Skin: cleansers, toners, and moisturizers; shampoo and conditioner; hand and body cream
Herbalife shake mixes and bars are offered in a variety of flavors. Some products are offered in an allergy-free version that’s without gluten, dairy or soy. The catalog spotlights specific products and product combinations for healthy living goals, including weight loss, maintenance or gain, and athletic performance. Some products are sold in individual packets for on-the-go use.
Herbalife offers a money-back guarantee on its products.
Opportunity
Herbalife’s roughly 4 million Independent Herbalife Members are the only distribution channel for the company. New members have a choice of two Herbalife Member Packs to get started: $60.70 for a kit with sample-size products, and $94.10 for a kit with full-size products.
Members can purchase products at wholesale rather than retail cost, for personal use or re-sale.
Independent Herbalife Members can earn money two ways: on the products sold directly to consumers, and/or by developing a multi-level sales team and earning commission on downline sales. According to materials found on the Herbalife website, roughly 20% of Herbalife members develop multi-level sales teams; no commission is earned for sponsoring new members.
Members who do decide to develop their own business network are supported by monthly trainings and meetings. Online resources for members include product information, online training resources, sales and marketing materials, tools for lead generation, email marketing and invoicing, tools for managing activity of sponsored members and downline sales, and the ability to order products. It’s unclear if there’s a fee or associated cost for any of these services or tools.
The Good
Herbalife offers a detailed summary of compensation and potential earnings online, including general statistics about percentages of members and their corresponding earned compensation levels. Various backend tools are available to members serious about building a business. Members are not subject to minimum inventory and there are no minimum sales required.
Members have 90-day money-back guarantee on their enrollment kit. Members who resign can return unsold and unused product for a refund for limited period of time.
Throughout the website copy and member-solicitation materials, the importance of ethics and realistic compensation expectations are pointed out.
The Bad
Herbalife’s own company materials indicate that the majority of members sign up for discounts on products for personal use, rather than to initiate a sales team.
There’s no policy and procedures manual online, so there’s likely a lot of fine print that prospective members won’t see until farther along in the enrollment process. For example, customers can get a refund from the member they purchased a product from if they’re not happy; however, does that member get back the wholesale cost he or she paid for it from Herbalife? Or does that member eat the full retail cost of the item and take it as a loss?
Also, there’s mention of bonuses for those with multi-level sales teams in place but no additional details – what’s the threshold for earning a bonus? Do Independent Herbalife Members have to have a minimum number of people on their team to earn a bonus? A minimum sales volume?
No prices are included in the catalog, nor are wholesale prices readily available online. There’s no available information as to whether members can set their own retail prices for Herbalife products when re-selling them, or if there are company-issue guidelines members must adhere to.
The Federal Trade Commission (FTC) is investigating allegations that Herbalife’s business opportunity amounts to a pyramid scheme. While talks are reported to be going on between the company and the FTC to resolve the issue[2], it’s possible that this can have an overall negative effect on the company, or result in material changes to the business opportunity Herbalife offers members.
Recap
Herbalife’s health and wellness products are sold exclusively through its distributors, and come with a money-back guarantee; for these reasons, there’s some incentive for people to try and buy from Herbalife members. The company has an established model in place for bringing in and providing sales and marketing tools to independent sales agents to build their own multi-level marketing business. That said, in its own website copy, it’s clear that these Herbalife members are the minority rather than the majority.
Herbalife has demonstrated consistent financial performance and growth over the past several years; however, the impact of a federal investigation may eventually affect it and the Independent Herbalife Members who signed on under specific contract terms.
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