Shaklee MLM – The Latest Online Scams and How to Avoid Them

Shaklee promises you the opportunity to change your financial future and the financial future of your family for generations. But what are the odds the Shaklee opportunity will work for you, and what must you do to succeed? Here’s what we found. Is Shaklee a good opportunity? Because Shaklee does not provide “sufficient information to enable a reasonable evaluation of the opportunity,” as directed by the DSA Code of Ethics, it is assumed that Shaklee is NOT a good opportunity. Click to Discover a Proven Path to Financial Independence! Although Shaklee’s website is highly professional and persuasive, it does not reveal the percentage of ALL distributors that earn a profit or the number who fail. Shaklee's lack of transparency is troubling. Before starting any business, it is essential to conduct proper due diligence. That is the purpose of this article. Joining Shaklee without first thoroughly investing the opportunity may result in damaged relationships, debt, and humiliation. Is Shaklee a Good Opportunity? “Opportunity” means different things to different people. In this article, opportunity means the chance to earn a reasonable return on your investment and efforts. What does opportunity mean to you? Shaklee is a Multi-level Marketing company, also known as Network Marketing or Direct Sales. Although not all direct sales companies are MLM. MLM has a poor reputation, and most people who try MLM lose money. However, a few DO make money, and a tiny percentage of people make a lot of money. Only you can decide if Shaklee is an opportunity for you. This article pulls back the curtain on Shaklee and shows you what you need to know. What Do You Hope to Achieve with Shaklee? If you are looking at the Shaklee opportunity, be crystal clear on what you expect from it. Do you hope to make a little extra cash each month? Or do you wish to replace your job? Maybe you want it all, just as Shaklee promises, and you hope to change your financial future. Take a moment to reflect on what you hope to achieve if you become a Shaklee distributor. By the time you have read through this article, you will know if you have a reasonable chance for success with Shaklee and what you must do to succeed. Shaklee Will Cost You. Every business opportunity involves expense and risk. Shaklee is no different. You can never be sure if you will succeed, and there is always a risk of losing everything. The one thing you can be sure of with the Shaklee opportunity is that it will cost you money. What does opportunity mean to you? To be a qualified Shaklee Distributor, you must buy a Distributor Welcome Kit and a Success Pack. The Welcome Kit costs $49. Success Packs range in price from $298 to $1,000. As a minimum, expect to pay about $350 to start your Shaklee business. And then expect to buy a minimum of $100 worth of product each month to remain “qualified.” Before you join Shaklee, be sure you understand the odds of earning back your investment. You Must Think Like a Businessperson. The Shaklee website has a lot of feel-good emotional messages that may seduce you into joining the company before you have thoroughly evaluated the opportunity. It is essential to avoid letting your emotions cloud your thinking. If you hope to succeed with Shaklee, you must think like a businessperson from the beginning. Check your emotions at the door. The Shaklee opportunity is a business proposal. With a clear mind, gather the information you need so you can make an informed decision. Click to Discover a Proven Path to Financial Independence! What is Shaklee? Shaklee does not describe itself as a Multi-level Marketing or Network Marketing company. However, it is a member of the Direct Selling Association. Wikipedia states that the DSA “engages in public relations and lobbying efforts against regulation of the multi-level marketing industry…” Also, Shaklee is profiled on MLMLegal.com, a legal service for MLMs. ReferenceForBusiness.com reports that Shaklee products are sold through a multilevel marketing system. Shaklee is an MLM company owned by the Japanese Pharmaceutical giant, Yamanouchi Pharmaceutical. Each year, Shaklee generates over $800 million in revenue. Shaklee Products. Shaklee sells an extensive range of products, including health, nutrition, weight loss, cosmetics, and environmentally friendly home cleaning products. Shaklee manufactures its products in facilities they own and holds many patents for product formulas. According to Wikipedia, Shaklee supplied NASA with a customized rehydration beverage for all Space Shuttle missions. The Problem with MLM. In the following few sections, I am writing about the MLM industry in general and NOT Shaklee. Before you can hope to succeed with Shaklee, you must understand the MLM industry and the long odds you face as a distributor MLM Has a Bad Reputation. Multi-level Marketing has a poor reputation. It’s known for promising opportunity only to pressure distributors into exploiting friends and family and ultimately delivering heartache and debt. MLM has ruined many relationships. With most MLMs, the so-called opportunity is little more than a ploy to hook people into buying lots of overpriced products. Shaklee is an MLM. The promise of an opportunity isn’t about helping people make money. It’s about luring them into an endless cycle of buying products each month. Research by Dr. Jon Taylor published on the Federal Trade Commission’s website shows that the typical MLM is NOT an opportunity. Promising opportunity is how an MLM can sell 5 dollars’ worth of vitamins for $50. Often a distributor will be so hooked on the dream of opportunity and making money; they go broke trying to make the scheme work. Failure can leave them disillusioned and alienated from family and friends. Most People Lose Money with MLM. According to research posted on the FTC’s website, more than 95% of people who try MLM lose money. A lot of them go into debt. This same research shows that, on average, less than 1% of all distributors earn a profit (Source: MLM Abysmal Numbers). Statistically, the odds of success are better in a casino. Why Distributors Lose Money with MLM. There are at least five, and possibly six, reasons why most distributors lose money with an MLM opportunity. Distributors are forced to pay for the privilege of selling the company’s products. This expense might be concealed as a licensing fee.Distributors are forced to buy a minimum number of products each month to stay “qualified” to earn commissions.Some companies load their new distributors with an excessive inventory of products.MLM products are more expensive than similar products available at retail stores or online.MLM encourages a distributor to exploit friends and family.MLM is an outdated and highly inefficient business model akin to door-to-door sales. It requires a tremendous amount of work to earn a small return. Sneaky Product Loading Tactics. A common practice throughout the MLM industry that is very profitable for the company but often devastating for the distributor is product-loading. Also called front-loading or inventory loading. Here’s how product-loading works. When a recruit joins an MLM company, they trust the person who introduced them to the opportunity and excited about making money. They are also vulnerable to manipulation. In this state, they are sold a costly Starter Kit full of products. Starter kits might cost hundreds or thousands of dollars. Usually, the new distributor is encouraged to charge the expense of the Starter Kits to her credit card. They might be told they will soon be making money and can quickly pay the card off later. In reality, most distributors quit the business within a few months and never earn enough to break even. MLM companies know that most distributors will quit within a few months. Product Loading is a tactic to squeeze as much money out of a distributor as possible before they drop out. Pushing a new distributor to load up on product inventory defies common sense and basic business principles. Anytime a new business is started, it is essential to minimize risk until profits are rolling in. MLM has it backward. Not surprisingly, Product Loading is very profitable for the company and the upline involved. However, it is a betrayal trust. Ethical MLMs, if there is such a beast, have buy-back policies in place. A buy-back policy protects the new distributor from being exploited. If an MLM company has a buy-back policy, and if a distributor is loaded with products, the distributor can sell it back to the company and recover her money. The Ridiculous MLM Business Model. The most significant flaw with the MLM business model is that it demands that anyone wishing to sell their products first pay for the privilege. No other marketing model expects its sales force to pay for the privilege of making money for the company. The ridiculous notion that the sales force should pay for the privilege of selling the company’s products is presented as an “opportunity.” This silliness is no different than Tom Sawyer talking his friends into paying him for the privilege of whitewashing the fence in the book The Adventures of Tom Sawyer. This silly business model is why MLM companies, and a few distributors at the top of the sales force, make a killing while the rest of the sales force loses money and goes into debt. There is no logical reason to pay a company for the privilege of making them money. Why would you pay a company for the privilege of making them money? Outside of the MLM industry, thousands of companies that will gladly PAY YOU to sell their products. Nowhere is the difference between the outdated Multi-level Marketing business model and Affiliate Marketing more evident than in how they treat their salespeople. MLM companies TAKE money from their salespeople, while in Affiliate Marketing, the companies GIVE money to their salespeople. Which is the GREATER OPPORTUNITY? To see the many benefits of Affiliate Marketing, read Why Affiliate Marketing is Better than MLM. Is There Such a Thing as an Ethical MLM? I suspect most critics would claim there is no such thing as an ethical MLM. They have a good point because the nature of MLM is to exploit people with the false hope of opportunity. If an MLM were transparent, it would be obvious the so-called opportunity wasn’t real. While ethical MLMs may be as rare as unicorns, some MLMs are more transparent than others. If an ethical MLM existed, I would expect it to follow the Direct Selling Association Code of Ethics and to openly publish all the information a prospect needs to make an informed decision about the company’s opportunity. Such information must include the following; An Income Disclosure Statement showing how much ALL distributors earned or failed to earn.A Compensation Plan showing ALL the costs of participating in the opportunity imposed by the company.The company’s Policies and ProceduresThe company’s buy-back policy. A Closer Look at Shaklee. Now that we understand the MLM industry and why most distributors lose money, we are better prepared to see how Shaklee’s opportunity measures up. Shaklee’s Reputation. There are very few complaints about Shaklee online. The ones I found were about the difficulty in getting a refund for a product, not about the opportunity. Shaklee has been a member of the Better Business Bureau since 1965 and has an A+ rating. Most of the reviews on the BBB website are positive, and the single complaint was resolved to the reviewer’s satisfaction by a Shaklee customer rep. Of the dozens of MLMs I’ve researched, Shaklee has the least number of complaints. Most reviews of Shaklee praise the company and the products. Many customers have been avid fans of the products for decades. Does Shaklee Provide All the Information Needed to Evaluate the Opportunity? Shaklee is a member of the Direct Selling Association, and, as a member, it is required to follow the DSA Code of Ethics. In Section 8, paragraph b3, the DSA Code of Ethics states; “…prospective salespeople must be provided with sufficient information to enable a reasonable evaluation of the opportunity…” As mentioned earlier in this article, “sufficient information” would include; An Income Disclosure Statement showing how much ALL distributors earned or failed to earn.A Compensation Plan showing ALL the costs of participating in the opportunity imposed by the company.The company’s Policies and ProceduresThe company’s buy-back policy. Most of this information is not available on the Shaklee website, although much of it is available with an online search. Shaklee's Income Disclosure Statement. A Shaklee Income Disclosure Statement showing how much ALL distributors earned or failed to earn cannot be found. The closest thing to a Shaklee Income Disclosure Statement is the Shaklee 2014 Average Annual Income table found online. Respecting Shaklee’s copyrights, I will not reproduce the Shaklee 2014 Average Annual Income table here. To read it, go here. Failing to report the revenue of ALL distributors is a common trick MLMs use to make it appear like all their distributors or at least a very high percentage, are making money. The Shaklee 2014 Average Annual Income table does not report the percentages of distributors, only their rank. This table is misleading because it only reports the income of distributors who were paid, NOT the countless distributors who worked the business but failed to earn anything. The table only shows that some people made money, and some made a lot of money. It does NOT show the percentage of Shaklee’s 750,000+ distributors who made money or the percentage that made nothing at all. Without the percentages, we have no way to know the odds that you or anyone else can succeed with Shaklee, or how long it might take if you tried. This single omission is enough to not trust Shaklee and to avoid the so-called opportunity. Without an accurate Income Disclosure Statement, we must rely on the MLM industry figures available on the FTC’s website. These figures tell us that 99% of the people who try MLM lose money. Less than 1% make a profit. Shaklee does not provide the information we need to make an informed decision. Unless Shaklee can demonstrate otherwise, use the industry’s figures as your guide; that is, 99% lose money, and less than 1% make a profit. Shaklee's Compensation Plan. In addition to an honest Income Statement, we need a means of knowing how much the Shaklee opportunity will cost. For this, we look to the Compensation Plan. You won’t find it on the Shaklee website either. However, it is available online. You can read it here. In addition to purchasing a Distributor Welcome Kit for $49. You will be encouraged to buy a Success Pack too. This will cost between $298 and $1000. In addition to this initial purchase, you must also purchase a minimum of 100 PV of products each month to stay “qualified.” You can expect to be encouraged to enroll in monthly auto-ship so you will remain qualified month to month. It’s not clear how much 100 PV (Personal Value) is in dollars, but it is assumed to be $100. So, right out of the gate, if you join Shaklee in hopes of making money, you’re down $347 to $1049 and obligated to buy $100 worth of product each month. Shaklee Policies and Procedures. In the policy and procedures document, we hope to find the details of Shaklee’s buy-back policy. While the Policy and Procedures document is not available on the website, the buy-back policy is. In the footer of the Shaklee website, you can find a link to the company’s “Shipping & Return Policy.” The first 80% of the Shipping & Return Policy page is about customers returning a product. However, near the bottom, the policy covers the return of excess inventory, such as refunding the cost of Success Packs. The Shaklee return policy allows for a distributor to sell back to the company any excess inventory, minus a 10% charge, and assuming the product is in pristine condition and can be resold. The kicker is if a distributor wants a refund on inventory or a Success Pack, they must resign their distributorship. Click to Discover a Proven Path to Financial Independence! Does Shaklee Load Distributors with Product? Technically, Shaklee does not load distributors with products. Because Shaklee has a buy-back policy in place that is backed up by the DSA, the company cannot load its distributors with product. However, in my opinion, Shaklee gets as close to legally loading their distributors as the DSA Code of Ethics permits. The Shaklee Buy-Back policy is buried in the Shipping & Return Policy. Unless someone pointed it out to them, most distributors might never see it and assume they cannot sell excess inventory back to the company. Shaklee knows that most of their distributors will not make money and will quit within the first year. However, they still encourage new distributors to buy a $1000 Starter Pack and then bury their Buy-back policy where few people will find it. How Much Will the Shaklee Opportunity Cost? It will cost $49 for the Shaklee Welcome Kit and $298 to $1000 for a Starter Kit. Plus, $100 a month to remain “qualified” through purchasing products. As a minimum, expect the Shaklee Opportunity to cost $347, plus $100 a month. Your first year as a qualified Shaklee distributor will cost a minimum of $1547. The average Shaklee distributor in Canada earns $250 a year. How Much Can You Expect to Earn with the Shaklee Opportunity? Because Shaklee does not publish the percentage of ALL distributors who earn commissions or who fail to earn commissions, we cannot determine how much you can expect to make. Or, if you will make anything at all. Based on Dr. Jon Taylor’s research of hundreds of MLMs, including Shaklee, less than 1% of ALL distributors earn a profit. 99% of ALL distributors spend more on products than they make with the opportunity. BestCompany.com reports that Shaklee’s Canada Income Disclosure states that a typical distributor makes an average of $250.27 annually. Remember, the Shaklee opportunity will cost you a minimum of $1547 in your first year, and you can expect to earn $250 or less. A net loss of $1,297. What Does it Take to Succeed with Shaklee? The big money in MLM is made by building a large sales organization. You will need enough people in your downline to populate a modest city. Before you can hope to succeed with Shaklee, it’s essential to understand that most Shaklee distributors will be distributors in name only. Although they will do all that is required to qualify each month, they will not earn a profit. These people might think of themselves as distributors who are building a Shaklee business, but they are really captured customers who are buying $100 or more of products each month. Your success as a Shaklee distributor is dependent on recruiting hundreds of people into the “opportunity” and persuading them to enroll in auto-ship. Because most distributors will quit within a few months, you must recruit new blood faster than your distributors leave Shaklee. Unless you have access to hundreds of people who are obligated to follow you in mass, recruiting requires an enormous expenditure of energy. In addition to mastering recruiting, as you build your organization, you will need to develop the skills to motivate and manage large numbers of people. Expect to lose money the first year or two as you build your business. Protect Your Friends and Family. MLMs typically encourage new distributors to recruit their family and friends. This is a horrible way to build a business and usually only alienates the distributor from the people who love him. Friends and family are too precious to exploit for a commission. It’s insulting for a friend or family member to be pitched an MLM opportunity or sold over-priced products. It takes years to build friendships and trust, please do not throw that away because you’ve been sold the Shaklee opportunity. Cherish the people who love you. They are the foundation of your life. They will share your joys and your sorrows. And, they will lift you up when you have been beaten down. You can’t put a price on that. Protect your friends and family. Click to Discover a Proven Path to Financial Independence! The Last Word on the Shaklee Opportunity. We began our journey of discovery by asking what opportunity means. In the context of this article, opportunity means the chance to earn a reasonable return on your investment and efforts. After careful analysis based on information on the Shaklee website and industry statistics published by the FTC, we conclude the Shaklee opportunity is not truly an opportunity at all. At best, if you try the Shaklee opportunity, you have less than a 1% chance of getting a reasonable return on your investment and efforts. Multi-level marketing is an outdated business model that never has worked for most people. As one of the original MLMs, Shaklee launched 63 years ago, in the middle of the last century. In 1956, when Dr. Shaklee started his company, Dwight D. Eisenhower was president of the United States. Gasoline cost 29 cents a gallon, and minimum wage was $1. The height of technology was the rotary telephone, and very few homes had one. Perhaps the only reason MLM is still with us is that it’s an extremely lucrative business model for the people who own the company and a few distributors at the top of the sales organization. Shaklee is a typical MLM. Maximizing profits is the highest priority of the owner, Yamanouchi Pharmaceutical. All the feel-good marketing on the Shaklee website serves the bottom line. As a Shaklee distributor, you are, first and foremost, a captured customer buying $100 or more of products each month. Because it is so difficult and expensive to make a profit with Shaklee, it would probably be best to avoid the opportunity. A Better Option for You. It’s not 1956 anymore. We are two decades into the 21st Century. We have the internet. The internet offers everyone access to the global marketplace and a genuine opportunity to earn an unlimited income. An internet marketing business can be launched and made profitable for less than $50 a month. If you want to make money, you can either trade your time for it, or you can discover how to leverage the internet to your advantage. Why chase after your friends, pitching a relic of the last century, when you can build a profitable Affiliate Marketing business from your laptop and make money 24/7? Work smart. Let technology do the heavy lifting. To discover how you can leverage the internet to earn more, enjoy more free time and realistically achieve financial independence, read Why Affiliate Marketing is Better than MLM. Related Articles: Why Affiliate Marketing is Better than MLMThe Heartbreak of MLMIs Zrii a Good Opportunity?