What is Herbalife?
Along with industry pioneer Amway, Herbalife is one of the world’s biggest multilevel marketing companies and nutritional/diet supplement manufacturer.
It currently has a valuation of more than $8 billion, with nearly 3 million distributors spread out over 91 countries.
Compared to other popular companies of its kind (i.e. nutritional or wellness supplement distributors/manufactures like GNC and Slim Fast), Herbalife clearly outshines the competition by a factor of 6 to 1 in terms of the amount of product sold per year.
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How Do You Make Money With It?
People make money with Herbalife through two methods: direct sales and multilevel marketing.
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But before delving into the financial specifics, let’s take a look first at the lifeblood of the whole Herbalife establishment- its products.
Herbalife was founded by entrepreneur Mark Hughes in 1980 as a distribution platform for his weight management products. Over time, Herbalife would become known for its range of protein shakes, diet snacks, and other health supplements that target people who are trying to lose weight.
The Formula 1 protein shake is currently the company’s flagship product and its most popular offering; this soy based drink is practically the same product that founder Mark Hughes had introduced to the public in the 80s.
In this age wherein obesity has become a global health problem, it is no wonder that the weight loss/ diet industry has practically ballooned over the last couple of decades.
This market is what Herbalife is tapping into…and from the looks of it, it’s something that the company is quite good at.
So here’s a rough outline of how the direct sales aspect of the Herbalife business works. Buyers get their Herbalife weight loss shakes from official Herbalife “distributors.”These distributors are the people that make the whole Herbalife business go round.
To become a distributor, one would need to buy an Herbalife Member Pack (regular price $92.25) which would provide a person with a few product samples, plus the right to purchase additional stocks from the company at a discount.
These stocks can then be resold to buyers with a little bit of markup.
As an MLM company, Herbalife distributors can also earn by recruiting more distributors as their downlines.
Recruiters get a commission out of every referral, plus they also receive some of the earnings that their downlines make too.
Are There Any Issues With Herbalife?
The issues that surround Herbalife are common for MLM companies of the same sort. For example, the MLM aspect of Herbalife comes close to being a pyramid scheme (instead of being a legitite MLM model), especially if the distributors are focusing on the recruitment side of the business rather than the selling of the products.
This is an issue that prominent activist-investor Bill Ackman has been bringing up in the past couple of years.
But the issues of Herbalife are not apparent just from reading through its website alone. We have to delve deeper and know what other people are saying.
What are Others Saying Around the Web?
A Google search for “Herbalife.com review” will reveal a lot of complaints not for the company’s products, but rather for the behavior of most of its distributors.
Desperate to recruit more downlines under them, some distributors would resort to fraud (e.g. posting up fake job ads and then tricking job seekers into an Herbalife sales pitch) and other shady practices that would turn off most people from the company itself.
There are reports that some distributors would invite people for “free breakfasts” at Herbalife nutrition clubs and then have them listen to sales talk that they totally did not sign up for.
Do take note that MLM can be a viable business model if done right. These shady distributors are doing more damage than good to the overall public perception of MLM.
It seems that the main problem here is that Herbalife is not guiding nor coaching its distributors about proper recruitment techniques like lead online generation that would help them attract more people, without resorting to shady practices.
Watch the Pershing Square Documentary on Herbalife Distributors.
Herbalife can make you money, if you do it right. Since Herbalife does not provide that much training in sales and/or recruitment, you would need to find outside sources to learn about the best practices in these fields.
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