By: Teresa Craighead
We’ve heard over and over all the ways in which 2020 was denounced as terrible, catastrophic, and unbearable. But from the perspective of many companies in the channel, those words don’t really apply. Strange, unpredictable, and unprecedented may be more apt, and for many companies, bountiful, outrageous, and exciting are better descriptors.
The channel’s biggest opportunity remains the fact that over 50 million Americans are involved in the gig economy today and are willing to step out of conventional ways to earn income with maximum freedom and flexibility leveraging current assets or skills. This overt expression of personal responsibility and mental openness to income creation is a great place to start the conversation around the possibilities of creating an opportunity in the direct selling space, leveraging some of the unique features of the space such as work from home, digital social marketing platforms, unique products, especially in the wellness space, leveraged income, global opportunity and more!
— Al Bala, CEO, Mannatech
By Dave Rauf
The vast majority of participants in Success By Health lost money as the company’s compensation plan rewarded distributors based on how many new recruits they could sign up and how much inventory they could sell to those same recruits, not from retail sales.
—Paraphrased from FTC suit against Success by Health
“The FTC is trying to rewrite the law through enforcement proceedings.”
—Brent Kugler, partner, Scheef & Stone
The Federal Trade Commission (FTC) has dropped the hammer on another MLM, marking the third pyramid scheme case brought against a direct seller in the last several months as part of a series of enforcement actions that have rattled the industry.
Without warning, company restructures compensation plan to single-level; field leaders stunned
By Teresa Craighead
The sudden announcement has created speculation throughout the channel, with [experts] asking why a company with $472 million in revenue would choose to so dramatically change its business model, seemingly overnight.
“The FTC has basically told us what the right way to do business is. [FTC Associate Director] Lois Greisman has repeatedly said ‘look to the settlement’, ‘look to the MLM business guidance.’ This seems to be a pretty clear indicator they weren’t kidding around.”
—Al Bala, CEO Mannatech
Number of people involved in Direct Selling (in Millions). Source: DSA’s Growth & Outlook Survey, Salesforce Statistics.
By David Rauf
“Segmentation is a critical part of understanding the FTC’s view of what is legal and what is not.”
—Larry Steinberg, partner, Buchalter
“From an industry perspective, people in the regulatory community clearly had a hard time seeing how the model worked. Segmentation will help to better demonstrate who is using the product and who is buying the product.”
—Joseph Mariano, president, DSA
By David Rauf
Mannatech and Reliv both report losses in fourth quarter.
Note: We listen in on the public company earnings calls and read the transcripts so you don’t have to. Check back each quarter for our review with insights and takeaways for your own business.
This report includes an update on the earnings calls from Mannatech and Reliv, both of which had revenue losses for the year-end quarter.
Please see the March and April issues for reports from the other public direct selling companies.
The Flower Mound, Texas-based nutritional supplement maker Mannatech says it successfully launched several new products in 2018—including a global expansion of its signature product line—but reported flat sales figures for 2018. Revenue also decreased during Q4. And the company’s stock dropped by 11 percent to $17.04 in March after reporting earnings, but rebounded to $18.00 by the second week of April.