A direct marketing company that sells picnic baskets sounds adorable. Adorable, wholesome, all-American, and like something that would do really well…
…in 1953.
Depression-era, handwoven oak baskets are great, but people aren’t exactly jumping at the chance to gather around a friend’s dining table and discuss them. That being said, Longaberger is still around.
Does this mean I’ve been involved?
This video explains everything:
Make sense? Either way, here’s the full review on Longaberger.
Overview
The Longaberger Company was started in 1973 by Dave Longaberger and stayed a family-owned and operated business until it was taken over by CVSL in 2013.
The company was founded in Dresden, Ohio, and became one of the biggest employers in the small town, with over 8,200 full-time employees and $1 billion in sales. It was also infamous in the area for its headquarter building, shaped like a giant picnic basket after the maple wood baskets the company sells. That came back to bite them in the ass, but more on that later.
The basket-making direct sales company has a very long, very American history. Dave Longaberger’s father, J.W. Longaberger, became a passionate apprentice at The Dresden Basket Factory way back in 1919. Unfortunately, the factory shut down shortly thereafter due to The Great Depression.
The Longaberger family wasn’t giving up so easily. J.W. continued to make and sell his baskets on the weekends, and eventually they raised enough money to purchase the closed factory and start up their own business. In 1973, Dave Longaberger opened J.W.’s Handwoven Baskets, and a few years later, the company began selling the Longaberger baskets via a direct sales model. [1]
Tami Longaberger, the daughter of founder Dave Longaberger, led the company after Dave passed away, all the way up until May 5, 2015 when she announced that she would resign. John Rochon Jr. is now the current leader of the company. [2]
Longaberger has seen better days, to say the least. What was once one of the largest employers in Dresden now only employs 75 full-time and part-time employees.
While they’re still in business, they’ve peaked wayyy back in 2000 with $1 billion in sales, and have since then plummeted to only $100 million in 2012. [3], Longaberger’s parent company CVSL, which owns eight direct-selling companies, reported a 28% decline in first-quarter revenues. [4]
Due to the drastic cut in employment, the company made the decision in the summer of 2016 to sell their headquarter building and move their remaining employees to Newark, Ohio. [5]
They put the building, a 7-story beloved road trip landmark which cost the company $32 million, on the market for only $7.5 million. As of September 2016, the price had dropped to $5 million, a steal for 180,000 square feet, but no one wants it. Why would they? A giant picnic basket might make for a cheesy roadtrip gimmick, but it doesn’t make for a serious headquarter for any company other than Longaberger. [6]
It sounds like Longaberger could really use the cash, too, In August of 2016 it was reported that the company is coming under fire for unpaid phone bills and late financial filings multiple quarters in a row. [7]
How much does Longaberger cost?
They offer two business starter kits that cost either $79 or $264.
Products
Longaberger started out selling hand-crafted maple wood baskets, each one individually signed and dated.
Of course, that was way back when. Companies nowadays have traded in handcrafted for Made in China and quality work for assembly lines.
While Longaberger hasn’t gone so far as to ship manufacturing over to China, their baskets are notably less personal than they used to be. They’re still lovely, and they do offer some more expensive custom-crafted options. But really, how many basket does one person need?
That’s probably why the company branched out and started to sell a variety of other products, including home goods, decorative items, woven furniture, and kitchen accessories. They even have a “couture” line of hand-woven, meticulously crafted urns, vases, and more, but retail prices are in the thousands.
Opportunity
Longberger’s compensation plan, or their “Dream Builder” plan, isn’t extremely detailed or easy to find, but I did come across some information.
Home Consultants can earn up to 25% commission on personal sales. If they hit certain sales numbers, they can unlock a 50% discount on samples. Basic Home consultants get a free personalized website and the opportunity to earn rewards and trips, but they aren’t eligible to recruit new consultants or earn team commissions.
Senior Home Consultants are consultants who have sponsored 1-2 team members and at least $350 in personal sales. Additional benefits for these consultants include monthly sponsoring overrides and “the reward of helping others grow their sales and discover their potential”. Aw, it’s a touching sentiment, but personally, I prefer cold hard cash. These consultants get a 1% override on direct recruits’ override sales and .5% on Showroom Sales, and that’s not a lot in terms of cold hard cash.
Executive Home Consultants have at least 3 direct qualified recruits and are eligible to bank 2% overrides on their personal and direct recruits’ override sales and 1% on Showroom Sales.
Executive Home Consultants who have achieved a Manager rank (a minimum of 6 direct qualified recruits, group sales volume of at least $6,000, and $350 in personal sales) qualify for tons of extra perks and rewards, including a 6% override sales on their central group, 3% on direct break-offs, 4% on Showroom Sales from central, and 2% on showroom sales from direct break-offs.
Senior managers with 9 direct qualified recruits and a group sales volume of $10,000 bump those numbers up to 7% override sales on central, 4% override sales on direct break-offs, 1% override sales on indirect break-offs, 4% showroom sales on central, 2% showroom sales on direct break-offs, and 1% showroom sales on indirect break-offs.
Director level and above get all kinds of perks, vacations, and attention. Here’s what their overrides look like:
Directors get 8% override sales on central, 5% override sales on direct break-offs, 2% override sales on indirect break-offs, 6% showroom sales on central, 4% showroom sales on direct break-offs, and 1% showroom sales on indirect break-offs.
Senior Directors get 9% override sales on central, 5.5% override sales on direct break-offs, 2% override sales on indirect break-offs, 6% showroom sales on central, 4% showroom sales on direct break-offs, and 1% showroom sales on indirect break-offs 2 levels down.
Executive Directors get 10% override sales on central, 6% override sales on direct break-offs, 2% override sales on indirect break-offs, 6% showroom sales on central, 4% showroom sales on direct break-offs, and 1% showroom sales on indirect break-offs 2 levels down.
Recap
Longaberger is a historic company, at least for the Midwest, which might not be saying a lot.
Still, they’ve made a name for themselves doing honest business. Unfortunately, that business isn’t doing so well anymore.
Even with the best compensation plan in the world, jumping in at this point, when they’re clearly on a downhill slope, would be a bold (arguably stupid) move.
But if you like automated ways to build passive income, you might have better luck with something like this.
(and you can trash those old MLM habits, too)
from MLM Companies
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