For the last two years, Herbalife has been sharing its distributor earnings data with the public. This move was induced by the short-seller Bill Ackman’s attacks on the company. You will remember that for over a year now, Bill Ackman has been attacking Herbalife to be able to lower its share value so that he would profit from this on the stock market.
Regardless of what the reason was, Herbalife’s move in the direction of increased transparency towards public is a good thing. It is a good thing for the company as well as for the whole industry, keeping it mind Herbalife’s significance within the direct selling environment (i.e. 3rd largest direct seller in the world).
Just like the report on 2012 distributor earnings, 2013 report we mention here is based on U.S. data only. However, I am almost sure that the general picture is no different in Herbalife’s other markets. Moreover, I see no reason why it should be any different in many other companies’ field organizations, too.
Now , let’s take a look at Herbalife’s U.S. data…
According to Herbalife, 73% of its members in the U.S. have no expectations to make any money. They “primarily join us to receive a wholesale price on products they and their families enjoy,” reports the company. This information has been based on a survey by Lieberman Research Worldwide.
77.8% of Herbalife’s organization members have not recruited anybody in their lives. This ratio was 71% in 2012. These members’ motives are to benefit from wholesale prices on product purchases and from retail profit on sales to non-members. We are talking about over 408,000 people in Herbalife’s case! This brings us to the fact that only 22% joined Herbalife to build a network marketing business.
When we look at these people’s actual earnings from Herbalife, we see the below picture:
• In 2013, 199 Herbalife members received payments in excess of $250,000. The average amount in this group was $667,000. This group represents only 0.3% of those sales leaders with a downline.
• 505 people earned between $100k – $250k. This group is 0.7% of the total.
• 56% (40,120 members) of those with a downline made less than $1,000 in 2013. Average income for this group is $302/year.
• 17% of these people sponsored others, but did not receive any payments from Herbalife.
Before concluding, I would like to stress one important fact: In 2012, Herbalife’s total organization in the U.S. consisted of 493,862 members. As of end-2013, this figure is 525,251. This is a 6.4%-growth. However, within these, the group of those who had no downline (in other words, who had no intentions to build a network marketing business) has increased by 16.4%!
These statistics have a lot to tell all of us, as well as to the authorities. I believe the industry will only benefit more from similar steps towards increased transparency.