Legitimate direct selling and pyramid schemes have often been confused. While there are clear distinctions between the two, pyramid scheme promoters do everything possible to disguise what they really do and to represent themselves as legitimate network marketing activities.
This week we will go over some of the most frequently asked questions on this topic:
Oriflame’s story begins in 1967 in a small office in Stockholm, Sweden. Three partners, Jonas and Robert af Jochnick brothers and Bengt Hellsten give a start by selling cosmetics through the direct sales method.
Company’s name originates from a royal banner of medieval France that was opened only on the battlefield. The original word is “Oriflamme” and means “golden flame”. The first company logo is shown on the right.
The business grows in time, expands into some of the Western European countries and even goes public on the London Stock Exchange. Until late 1980s, Oriflame registers no major international success, though.
From time to time we see career transitions between the corporate world and the field within the direct selling industry. Most often, the direction is from the field to corporate life. It is not common for a direct sales company manager to leave his/her job and start working as a distributor. This is especially true if that person is holding a position like Ben Woodward’s. Ben Woodward has recently left his job as the President of Nikken and moved to the other side.
Let’s hear what Ben has to say on his experiences.
Your last corporate role was with Nikken. Could we start with your educational background and work experiences before joining Nikken?
We have uncovered three great resources to help any entrepreneur, especially a network marketing independent professional! So much is spoken or written on how much you can make in direct sales, and very little mentioned about increasing your net worth! These resources will help you increase your net worth.
Also, the DS Edge Conference is right around the corner. It’s February 4th & 5th, 2016 in Newport Beach, California.
And last but not least, Richard Brooke, founder of Life Matters, and long-time ethics committee member of the DSA (Direct Selling Association) has launched a direct selling legal defense fund. The first recipient is Vemma Nutritional Company.
Here are a few points of interest Richard shared on the site, which I think are worth pondering.
Here are some mistakes that Vemma made which the FTC convinced a judge were worthy of an ex parte action
no due process, no notice, just seize and shut down the company.
Vemma had zero distributor enrollment fees, so most “customers” were also “affiliates” depending on the box they checked. The FTC and judge ruled them, as a result, NOT CUSTOMERS.
Vemma traded ethics and public reputation for immediate sales growth in a segment of the sales force edifying obnoxious behavior.
Vemma allowed distributor videos suggesting significant success by recruiting without appropriate disclaimers.
“And here are the results of the government’s actions.”
* Vemma was entirely shut down worldwide for almost a month while the receiver went about dismantling the company. The receiver repatriated international company bank accounts.
* By the time BK resumed partial control of the company, Wells Fargo had withdrawn his merchant account, placed his name and company name on a watch list (black list), making it impossible to obtain a domestic merchant account, and his sales leaders had cut deals to move to competitive companies.
* The court required Vemma to change its compensation plan to one whereby a sales leader could not be paid on their team sales unless Vemma could prove that 51% of that team’s sales came from customers with the title customer. Affiliate personal purchases cannot qualify them for bonuses, only personally sponsored customer and distributor purchases. That compensation plan is still not effectively programmed and functional as of me writing this almost four months after this event.
* Legal fees have already reached $1.4 million and are expected to reach $3+ million before the case is final.
* Vemma has to get court approval for any compensation, incentive, and/or marketing campaigns it wants to initiate.
TICKETS: Individual tickets are $250 each, but your company can bring up to 4 people for a total cost of only $300. Additional team members are only $75 each. At this low price, bring your team!
LODGING: Book your hotel room now or before Monday, September 21, 2015 to get our group rate of $109 per night, including breakfast for two. Rooms booked after this date will be available at the prevailing rate.
The International Numbers For Direct Selling aka Network Marketing And they Are STRONG!
Direct sales increased 4.6 percent to $29.87 billion
Salesforce sized at 15.6 million sellers in the US
Direct selling market outpaces growth in gross domestic product (GDP) by 0.7 percent
Washington, DC – The Direct Selling Association (DSA) today released the results of its Annual Growth & Outlook Survey, which shows U.S. direct sales totaled $29.87 billion in 2011, a 4.6 percent year-over-year increase from $28.56 billion in 2010.
“There is good news coming from the direct selling segment,” said DSA president Joseph Mariano. “Despite the economic climate, direct selling continues to be a source of income and support for independent consultants across the U.S.”
The U.S. direct selling market grew faster than the overall U.S. economy, which grew 3.9 percent as measured by gross domestic product (GDP).
Nearly half of U.S. direct selling companies experienced sales growth and another 14 percent remained flat.
Smaller direct selling companies (those with annual retail sales under $3 million) fared best with 66.7 percent showing growth, and an average retail sales increase of about 30 percent.
“Growing a small business when the economy is struggling is a tall order,” said Mariano. “As an industry that celebrates entrepreneurship, the achievements made in 2011, particularly by by small direct selling companies, is remarkable.”
DSA released the findings of its 2011 Growth & Outlook Survey during a joint announcement with the World Federation of Direct Selling Associations at the DSA Annual Meeting in Grapevine, Texas.
The U.S. was ranked as the top direct selling market in the world with 20 percent of worldwide sales in 2011. Japan came in second with $23.9 billion (16 percent) followed by China with $16.3 billion (11 percent), South Korea at $12.8 billion (eight percent) and Brazil at $12 billion (eight percent).
“Around the world, the stories of the incredible journeys many people have taken to success through direct selling tell a poignant tale of individual achievement,” said Alessandro Carlucci, CEO of Brazilian direct selling company Natura Cosméticos and WFDSA chairman. “It is through our global statistics that we can begin to paint a picture that conveys the economic and social benefits direct selling provides.”
Global direct sales increased 10 percent from $139.7 billion in 2010 to $153.7 billion in 2011, according to Carlucci.
Additional findings from the DSA 2011 Growth & Outlook survey are available at www.dsa.org/statistics/. View the fact sheet.