What is Multi-Level Marketing?
Multi-level marketing (MLM) is a retail distribution model in which a group of registered independent members market and distribute a manufacturer’s products directly to consumers.
MLM is therefore a type of direct selling. It is distinguished from other direct selling methods by its compensation system, which awards income to members both for their “personal sales” (sales they themselves generate to end users) and the personal sales of members downline from them (that is, members who are introduced to the program and mentored by the upline member) generate to end users.
The MLM model of compensation is widespread. For example, in 2011, 15.6 million direct-selling members in the United States generated $29.87 billion in retail sales.1 Worldwide direct-selling sales were $153.727 billion in 2011, generated by more than 91.5 million direct-selling members.1 As of 2011, the United States was the largest national market for MLM sales.1 Almost all of the 241 current and pending members of the US Direct Selling Association use a multilevel form of compensation.1 Other direct selling companies who use a multi-level marketing model include Amway, Avon, Shaklee and Tupperware. Visit www.dsa.org for a full listing of all members of the US Direct Selling Association.
1 Source: Direct Selling Association
Are Herbalife’s products good? Are they healthy? Are they safe?
Our products are based on proven nutrition science, a commitment to ongoing nutrition research and development, a rigorous quality assurance program and the control of product integrity from ‘seed to feed.’ Herbalife’s products are not medicines and Herbalife does not make disease diagnosis, prevention, treatment, or curative claims — but Herbalife products can be used as part of a healthy and active lifestyle.
Our flagship Formula 1 healthy meal replacement shakes are market leaders. Herbalife’s market share in the meal replacement category for 2010, 2011, 2012 and 2013 was respectively 24.2 percent, 26.6 percent, 27.6 percent and 29.6 percent1, consistently making Herbalife the Global market leader in this category.
In 2012, Herbalife spent $44 million on scientific areas of research, quality assurance, product safety and compliance. A former FDA official oversees the quality of our products. We also partner with world-class ingredient suppliers to leverage their science, research and production competency to better our own products.
1 Source: Euromonitor International Limited; all retail channels, 2014 edition; retail value sales at retail selling prices.
In 2012, Herbalife spent $44 million on scientific areas of R&D, quality assurance, product safety and compliance and hired a former FDA official to oversee the quality of our products.
What is Pershing Square and who is Bill Ackman?
Pershing Square is a hedge fund founded by Wall Street billionaire Bill Ackman. In December 2012, Pershing Square and Ackman took a “short” position on Herbalife’s publicly traded stock, betting $1 Billion against Herbalife. Despite Pershing Square’s bet, and Ackman’s relentless near-daily campaign to mislead the public about Herbalife in an effort to make money for himself and his investors, Herbalife continues to thrive.
Herbalife reported revenue growth of 20% in the quarter that ended on December 31, 2013, evidencing the widespread demand to consume Herbalife products and the legitimacy of the Herbalife business model. Pershing Square stands to make a lot of money if the Herbalife share price goes down. Conversely, they stand to lose hundreds of millions of dollars if Herbalife’s share price rises significantly above the price at which they placed their bet.
How can members earn income from the Herbalife business opportunity?
People become Herbalife members for a number of reasons. The majority (73%) join us primarily to receive a discounted price on products they and their families consume and enjoy.
Some wish to earn part-time money, wanting to give direct sales a try and are encouraged by Herbalife’s low start-up costs (at their option, a mini Member Starter Kit at $59.50 or full Member Starter Kit at $92.25) and money-back guarantee. These people can begin to earn income from immediate profits on retail sales to customers. Over time, some customers may themselves become members and begin to build a sales network (their ‘downline’) beneath the existing member, which can lead to additional forms of income over time.
Others are drawn to Herbalife because they can be their own boss and can earn rewards based on their own skills and hard work. These individuals can, over time, build a significant network of members in their downline and can earn commissions and bonuses on the sales of their downline organization.
Anyone considering an active membership needs to understand the realities of direct selling. It is hard work. There is no shortcut to riches, nor is there any guarantee of success. However, for those who devote the time and energy to develop a stable base of customers, and perhaps mentor and train others to do the same, the opportunity for personal growth and an attractive part- or full-time income exists.
Further details may be found by downloading the Statement of Average Gross Compensation, found at Herbalife.com or www.myherbalife.com
What can Herbalife say about suggestions that the FBI and/or Department of Justice (DOJ) are conducting an investigation?
We have no knowledge of any ongoing investigation by the DOJ or the FBI, and we have not received any formal nor informal request for information from either agency. We take our public disclosure obligations very seriously. Herbalife does not intend to make any additional comments regarding this matter unless and until there are material developments.