With a large list of nutritional supplements and a nearly cult-like following, Herbalife is a well-known name in the MLM world. Touting their weight loss, beauty, and health products, Herbalife has grown to a billion-dollar company with $4.9 billion in sales in 2018 alone. Is this a legit opportunity for you to earn some money from home, or yet another work-from-home scam?
This Herbalife 2020 review will delve into the company, its products, and its income opportunity. Here’s what you need to know if you’re considering selling Herbalife.
What Is the Herbalife MLM?
Herbalife is a company that sells meal replacement shakes, vitamins, and health products. It’s an established company with headquarters in Los Angeles, California. It sells through members called “Distributors” who work to both sell products and build a downline.
In 1980, a 24-year-old named Mark Hughes launched a company selling protein shakes for weight loss. Soon the company expanded into other nutritional supplements. It didn’t take long for the company to take off, and by 1986 it had gone public.
When the founder died in 2000, Herbalife was purchased by private equity firms. They took the company private and focused on improving its internal operations and making its products better. By 2004 the company was ready to go public again.
The move worked. Today the MLM has over 9,000 employees and sells products in over 94 countries.
Over the years, critics have called Herbalife a pyramid scheme and scam, yet the company remains successful. Today it sells nearly $5 billion a year, made the Forbes Best 500 Midsize Employers list in 2018, and makes a tremendous amount of charitable contributions each year. Clearly, Herbalife is doing something right.
But does that mean Herbalife is the right product for you to sell? Here’s a closer look at the company’s products.
Movers and Shakers – The Herbalife MLM Products
The pillar of the Herbalife catalog is its weight loss products, but it has since expanded into other niche areas. In addition to weight management, Herbalife distributors sell:
- Personal Care items
- Protein bars
- Protein powders
- Skin and hair care products
One of the most popular products available from Herbalife is its Formula 1 Healthy Meal powder. This powder is a protein meal replacement shake mix. Customers replace two meals a day with the shake to help them lose weight.
Does Formula 1 Healthy Meal powder work? Based on reviews on Amazon and other sources, when used with a healthy diet and exercise program, it does help people lose weight. It also has few complaints about ill health effects, so it appears to be relatively safe.
Is Herbalife a Pyramid Scheme or Scam?
Herbalife sometimes draws skepticism and claims that it’s a pyramid scheme. This is due to the structure of an MLM, which favors those with large downlines. Take a look at any Herbalife MLM reviews in 2020 and you’ll quickly see that it’s structured like most companies.
Under the Herbalife compensation plan, independent distributors have seven streams of potential income. These include:
- Retail Commissions
- Wholesale Commissions
- Royalties and Royalty Roll-Ups
- Production Bonus
- Cash Promotions
- Paid Vacations
- Mark Hughes Bonus
In all but one of these, payment comes when the distributor recruits and trains new distributors. The more people in the distributor’s downline, the more potential income that the distributor can make.
Unfortunately, the compensation plan for Herbalife is quite complicated, and few distributors really understand it fully.
The Cost of the Herbalife MLM
Like all MLM opportunities, Herbalife has a startup cost. The main cost is the purchase of a Herbalife Distributor Kit. This costs $94.10 for the International Business Pack or $124.10 for the International Business Pack Super Starter.
Once someone becomes a Distributor, you then buy products at a 25% discount and sell them for full retail price. This is an additional cost and you must be able to manage your inventory to keep your purchase costs down. That increases the cost of doing business for most distributors.
Making Money with Herbalife
When you sell Herbalife as a distributor, you don’t earn a salary. Your income is based on sales commissions and bonuses or other perks from recruiting. This is typical of most MLM structures.
Herbalife Distributors purchase products at a wholesale price and then sell them at a higher retail price. For new Distributors, the markup is 25%.
On a tub of Formula 1 shake mix, which lasts approximately two weeks, the potential profit is $9.78. Even with customers buying two to last the month, that’s less than $20 per customer. Based on that figure, it would take a lot of customers to make a livable wage with Herbalife.
As someone becomes established as a Distributor and increases sales figures, the initial purchase discount increases. Provided that person continues selling products at the suggested retail price, their commission can increase to up to 50%. Established Distributors can also use their increased commission rate to offer sales and incentives to new retail customers.
Herbalife Distributors also make money when they recruit new Distributors. This is where the compensation plan gets complicated. Most recruitment bonuses are figured using complex formulas, and most also require minimum purchases from the Distributor.
How Much Money Do Herbalife Distributors Make?
So how much money is possible with Herbalife? According to Herbalife‘s 2016 Income Disclosure, 86% of Distributors in the United States did not receive any earnings from Herbalife. The company claims that these individuals joined just to get a discount on the products they intend to use for themselves.
One of those who did resell products, about 40,000 earned income from those sales. Of those, 50% of the first-year Distributors earned around $95 a month before business-related expenses. Only the top 10% earned over $740 and only the top 1% earned over $2,690.
Those who had been in the business for more than a year had slightly better results. Half of the other Distributors earned just over $305 a month, and the top 10% earned $3,450 a month. The top 1% earned over $14,175.
According to Herbalife, the top 1% of Distributors are those who have reached the highest level of the business. On average, it takes 13 years of hard work to get to this point.
Also, all of those figures are before business expenses. If a Distributor attends Herbalife events, travels to take products to customers, or opens a storefront, those costs eat up some of those profits.
So can you make money with Herbalife? Yes, but it’s rare for Distributors to make a significant amount. It takes dedication, hard work, lots of selling, and some recruitment to get to that point.
So, no, you won’t achieve financial freedom by going door to door trying to sell smoothies for a commission.
Financial freedom is being able to live from your business, work from anywhere and double what you earn now without working more than 4 hours a week.
That’s what I’ve achieved by generating leads for businesses looking for more business (side note: that’s ALL the businesses out there), and that’s why it’ll always be my #1 recommendation.
The Herbalife MLM Guarantee
One thing that sets Herbalife apart from other MLM opportunities is its guarantee. If a Distributor decides the MLM is not for them within the first 12 months, they can cancel their membership and get a full refund of their International Business Pack.
In addition, any Distributor can return unopened products they purchased within the past 12 months for a full refund. Herbalife even pays for these items to get shipped back.
This type of guarantee is rare in the MLM world, and it draws in a lot of excited new Distributors who are anxious to see where the products and sales opportunities will take them. It does limit the risk of signing up as a Distributor, as long as the new recruit can keep tabs on that 12-month return period.
Herbalife MLM Lawsuits – A History of Controversy
Though Herbalife is a successful company with a long history, it is not without controversy. There have been many lawsuits filed against the company over the years.
One class-action lawsuit in particular claims that Herbalife misrepresents the number of money Distributors can make. The plaintiffs in these cases lost thousands of dollars while attempting to follow the Herbalife business model and grow an income. According to the plaintiffs, the company pushed them to attend costly events in order to grow their business success, which actually caused them to lose even more money.
Other lawsuits called Herbalife a pyramid scheme. Some lawsuits indicate false claims made by Distributors of the health benefits of the products.
Some of these issues came to a head in 2016 when the FTC required Herbalife to pay $200 million back to some of its Distributors because of false income claims. Based on FTC analysis, the company’s main income-making venue is recruitment, not retail sales. According to the FTC complaint, this was false advertising.
After the FTC ruling, Herbalife had to restructure its business so that 80% of the company’s net sales were real sales, not recruitment. It also had to rewrite advertising claims and restructure the compensation plan.
Pros of the Herbalife MLM Opportunity
A company cannot become as successful as Herbalife with its long history and high earnings figures without some benefit to its sales force. If you’re considering becoming an Herbalife distributor, here are some of the potential benefits:
Herbalife has been around for over 40 years. In the MLM world, that’s a very long time.
It was launched in the early 1980s, and the company continues to provide quality products today. Since its launch, it has weathered controversies and lawsuits and still continues to survive. With billions of dollars in sales each year, Herbalife will likely continue for a long time.
Low Start-Up Costs
You can start an Herbalife business for just $94.10. You don’t have to maintain minimum purchases each month to stay a Distributor, though you may for certain types of compensation. As far as MLMs go, that’s a very low starting point.
Excellent New Distributor Guarantee
The 12-month refund policy is one of the best in the MLM world. If a Distributor takes advantage of this refund policy, they won’t end up stuck with a room full of supplements they can’t sell. If at any time the Distributor decides Herbalife isn’t for them, they can ship back unopened products purchased in the last 12 months for a full refund.
In addition, retail customers have a 30-day refund policy. If they don’t like their Herbalife products or have an adverse reaction to them, they can get their money back.
One thing Herbalife has done well is partnering with celebrities to promote their products. Since Herbalife has excellent income, it is able to use some of that income to promote its products.
Specifically, Herbalife partners with athletic sponsors to promote their products. Many famous athletes have Herbalife‘s name or logo on their jerseys. This creates a high level of visibility for the company’s Distributors.
How does this help if you join as a new Distributor? Chances are high the people you talk to about Herbalife have heard of the products or seen the logo. That helps open the door to new conversations.
If you’re going to join an MLM, you want to find one that does a lot for the community. Herbalife has its own charity, the Herbalife Nutrition Foundation, where it spends some of its earnings helping others.
HNF strives to help children through good nutrition. HNF provides millions of dollars in funding to organizations in over 61 countries around the globe to ensure children can grow and thrive. It also provides disaster relief when needed.
At the heart of the Foundation is Casa Herbalife. This nutrition program works with orphanages, schools, hospitals, and similar organizations around the globe. It also helps with the care and education needs of these children.
Partnering with a company dedicated to charitable efforts definitely feels good, so this is a clear perk of Herbalife. Of course, you’ll want to make sure that you can make income as a Distributor before signing on, but this is a definite “pro” on Herbalife‘s side.
Cons of the Herbalife MLM Opportunity
Like all things in life, there are good sides and bad sides to Herbalife. Here are some of the reasons the company has developed a bad reputation, with some even calling it a scam instead of a legit business:
History of Controversy
Herbalife‘s celebrity endorsements give it positive publicity, but its lawsuits and controversies give it negative publicity. The company has been sued many times, and every time it gets sued the action creates negative press.
While some of the lawsuits stem from Distributors who don’t follow company rules, some stem from Herbalife itself. Specifically, the business model has been criticized as emphasizing recruitment too much, leading to a costly settlement paying back money to Distributors who have lost thousands trying to run a business.
When a company has a history of lawsuits, it’s going to get some negative press. Of course, MLMs all have their critics, but Herbalife seems to have more bad press than most. Major television networks have done investigations into the company, which have aired to a global audience.
If you join Herbalife, you need to be prepared for people seeing these documentaries. Clearly, this will make building your business more difficult.
Herbalife products aren’t cheap. This is the first major hurdle you’ll have as a Distributor. People have to buy your products for you to make money, and they can find similar products cheaper with other companies.
Not only that, but they can often find cheaper Herbalife products from others.
Why? Because Herbalife structures it’s business so experienced Distributors can buy at a lower price.
In theory, these experienced Distributors should still sell at the suggested retail price, but they don’t have to. They may run sales and offer discounts to boost their own sales figures. Thus, as the new player, you have to compete against Distributors offering a better price on the same thing.
From a consumer’s standpoint, why would they buy from you?
Complex Compensation Plan
Five ways to earn sounds great until you start trying to figure out just how much you can earn. A complex compensation plan and many different types of recruitment bonuses make it difficult to determine your potential income. If you’re planning to rely on your Herbalife income to sustain your family, you’re going to struggle to make real income estimates.
Making Money Is Hard
Finally, one of the cons of the Herbalife MLM is the fact that it’s hard to make decent money with the company. Remember, according to Herbalife directly, 86% of Herbalife Distributors do not receive any money from the company. That’s over 466,000 people who are not making an income.
Only those in the top 10% of the company make anywhere near a sustainable income, with averages of over $3,450 a month. On top of that, only about 40,000 Distributors earned money from sales at all in a typical month of 2017. Clearly, you can make money with Herbalife, but it’s not easy to do so.
Final Thoughts – What’s the Bottom Line?
So is the Herbalife MLM a scam or a legit business opportunity? What will Herbalife MLM reviews state about this company after over four decades in business?
It is possible to make money with Herbalife. As far as MLMs go, based on Herbalife‘s long history and income-earning reports, it is one of the better ones.
Still, take the time to read any Herbalife MLM review, and you’ll find many dissatisfied customers and former Distributors. It is hard to make money with this company, and the compensation plan heavily favors recruitment.
If you choose to join Herbalife, weigh these pros and cons carefully. This established company could be your means to wealth, but it will require dedication, hard work, and time to get there.