Is Herbalife a Legit Business Opportunity?

Product Name: Herbalife Nutrition

Website URL: www.herbalife.com

Founder: Mark R. Hughes Current CEO: John O. Agwunobi

Price: $94.10; $124.10 to be distributors

Worth It Rating (1-10): 3

Is Herbalife a legit business opportunity? It’s a simple question… it is if you aren’t looking for something that makes a lot of money. It is if you aren’t looking to get rich quickly. It is if you follow their processes and don’t mind being confused by a complicated compensation plan. One more, it is if you enjoy selling nutritional supplements or protein drinks.

So, now you may ask…

Who Are They?

This one is fairly simple. They are a multi-level marketing (MLM) company that specializes in dietary supplements and nutritional drinks. There are a number of products and they have been around for approximately 40 years. Herbalife has 8900 employees worldwide and 3 million Independent Distributors. Its headquarters is in Los Angeles, California and they are incorporated in the Cayman Islands.

Herbalife boasts $4.4 billion in sales for 2018 and is the #3 MLM with Amway (#1) and Avon (#2). Things haven’t been all sunshine and roses for them though.

Their History:

1982: complaints from the FDA about claims they make about their products and ingredients.

1985: grew rapidly from $386,000 to $423 million in sales over the first five years then ended up laying off 800 employees because the California Attorney General sued them for inflated claims of the efficacy of their products.

1986: not a bad one here: they became publicly traded on NASDAQ and rebranded as Herbalife International. This is sort of like what Amway did when they renamed the company Amway Global. See my Amway review here.

1988: Opened up internationally to Japan, Spain, New Zealand, Isreal, and Mexico.

1995: launched personal care, fragrances, and facial cleansing products.

1996: expanded to 32 more countries.

1997: sued in civil court by 2 former distributors because Herbalife withheld earned income.

1999: Mark Hughes tried a buyout to take the publicly traded company, private again. He accused Wall Street of undervaluing the shares of Herbalife. He eventually abandoned the buyout because of a lawsuit from the shareholders

2000: On May 20th, Mark Hughes died at the age of 44 from an accidental overdose of alcohol and doxepin (anti-depressant). Christopher Pair led the company until October 2001.

2002: Company was bought out by J.H. Whitney & Company and Golden Gate Capital. These two took the company private again.

2004 (December 16th): an initial public offering on the NYSE for $14.5 million. It sold for $14 a share.

2014 (March): FTC and the State of Illinois investigated Herbalife

2014 (May 7th): announced a deal with Bank of America Merrill Lynch to purchase $266 million of its stock.

2016 (April 25th): Announced a name change from Herbalife Ltd to Herbalife Nutrition Ltd.

2016 (July): agreed to change its business model and paid $200 million to its distributors in a settlement with the FTC.

2019: Two Herbalife employees were charged with conspiracy in violation of the Foreign Corrupt Practices Act. Apparently, they were accused of bribing Chinese officials to procure sales permits and offering bribes to China Economic Network to influence thin media coverage. Herbalife committed to $40 million to resolve these issues and began negotiations with U.S. Justice Dept. and Security Exchange Commission.

***UPDATE (Aug. 30, 2020): So now Herbalife has settled for $123 million for these bribery charges.

So, that’s who they are in a nutshell. A little rough for them, but hey, they are still in business today.

What Makes Their Success/Failure?

This one is a little bit more complicated to figure out. I mean if you look above at the point they went from a privately owned company to publicly traded on NASDAQ, then back to privately owned again. Oh, wait, than to publicly traded again on the NYSE. So, I am assuming they are still a success and also a sought-after company. Especially since their total revenue in 2019 was $4,877,100.

They do sell nutritional shakes. Whether they are high in protein or actual weight control. there are doubts about that so to speak. They were sued a couple of times. There is a settlement to distributors, so one has to wonder about how successful are they really.

They have even promoted nutrition clubs where you can join and go to enjoy a shake in the company of others. There are a few of these and they are not spoken of very well by a certified nutritionist by the name of Abby Lang, check out her review of them here. There are a few more of her reviews of Herbalife’s shakes as well. I am not affiliated with her at all, but I happen to come across her website as I was doing my research on Herbalife for their successes as an MLM.

The Details…

Okay, their business model is a bit confusing and I only know some of the information. I didn’t have any problems understanding Amway’s or even some other MLMs. But, Herbalife… not so sure. I am able to give some of the bonuses, but the actual business plan escapes me. Maybe that’s the reason that they were sued by Independent Distributors for withholding income…

As most MLMs go, there is the percentage that is earned as retail profit and /or wholesale markup… or whatever they call it. It’s all the same to me. There are also Royalty Overrides (whatever that means) and bonuses (I know what that means).

So, when a distributor is speaking with possible recruits, they tell that there are 7 streams of income. But, exactly how it works is so complex and confusing that 89% of distributors make no money, and 90% drop out in the 1st year. How’s that for a great money-making opportunity? Not for me, that’s for sure.

Since I mentioned the “7 streams of income” in my previous paragraph, I will try to explain them… sort of.

The first one is Retail Commissions– as most MLMs operate by the distributor buying from Herbalife at wholesale and then reselling the product at retail or as Herbalife calls it, Suggested Retail Price (SRP). One thing I noticed when I was with Amway, once there are so many distributors in one geographic area the results are little success in retail sales. The only way to combat that is to sell very cheaply online at a 40% markdown and it is very difficult to beat that price.

The second is Wholesale Selling– (this is a recruiting reward that Herbalife pays out) I read and reread this one and don’t understand it. You would think that it was just buying at wholesale and then reselling at a slightly higher wholesale. But, as far as I could figure out it was a way to profit from your downline selling at wholesale as well. This one was too freakin’ confusing to me. If you research it and discover what it is… PLEASE tell me so I can understand it… LOL!!

The third is Royalties– (another recruiting reward for more than 1st two “streams”) Eligibility is earned by spending a large amount of money to gain 4000 volume points (VP) which is about $3000 to reach the “Supervisor” level. So, you basically have to convince recruits to pay to become “supervisor level” so you can earn the “royalties”. How would you want to be told you need to spend $3000 to become a “supervisor” in any job. Not very likely is it?

Hmmm, coming in next is Production Bonus– (yet another recruiting reward) If you reach the GET Team then you are eligible for this one. You will earn 2-7% on the total VP of their organization.

The next one is a Cash Bonus– (ooh, another recruiting reward, YAY!!) If you reach Active World Team, then you get $500 from Herbalife. Wait, this is the fifth one… awesome only two more to go.

The sixth income stream is Vacations– (hey look, another recruiting reward) Herbalife apparently does like Amway with their vacation promotions if you achieve certain accomplishments. Their vacation promo’s usually run for about 3 to 4 months time throughout the year. One mantra that seems to be repeated with Herbalife a lot is “Qualify for Everything” and that is so you buy more products.

Now, last but not least is the seventh income stream… Mark Hughes Bonus– (yep, you guessed it… another recruiting reward). 1% of the company’s annual revenue is divided up among the top of the pyramid during one of their big celebration bashes. Oh, and there are obviously lots of pictures taken too. $2 million or more is awarded to the top distributors. This is usually someone with Herbalife for 15 to 20 years and probably used sales methods that have since been classified as unethical or prohibited. So, no one can possibly compete to earn that one.

How Long Will It Take to be Profitable?

I cannot possibly even think about how long it may take to be profitable with Herbalife. I do know that you more than likely won’t see a profit in the first year or two. The alternative is to do something else. I do know one way you have a better chance of being profitable in the same amount of time. Again, I want to remind you there is no get-rich-quick scheme that exists.

There is another way… it does require work on your part. But, depending on how much time you put into it. You can start to show some success in a fairly reasonable time. Remember, a normal brick-and-mortar business takes a number of years to show a profit. The alternative to Herbalife is not much different. I say this in all the MLM reviews I do. But, I will get to it before you leave this review. Herbalife does not show much promise in this respect.

Who Can Do It?

Anyone can sell Herbalife… but not anyone can be successful attempting to do it. There is a lot of sales pressure to buy products and the marketing plan is confusing. You will end up spending more on the product and not making any money with it. Who wants to do that? Now, if you were showing a profit, it would be a whole other topic.

So, you want to ask yourself… Is it worth it to me or not. I can give you my answer… just scroll down a little further and you will see what I rate it at.

Worth the Time and Money?

Well, here we are. Is it worth the time and money? I usually give two simple ratings then average them together… so here we go. Time-wise, I give it a time rating of 3. Not real good is it. I am feeling pretty strongly about this.

Now let’s see how I feel about the $ money $ rating. It IS relatively inexpensive when you get right down to it. But, for what you are actually getting your hands on… not so much. My money rating is 3 as well.

Hmm, that puts me at an overall rating of 3 then. That was easy to figure out. I am not well pleased with Herbalife so there you have it.

So, now you have to consider the main point I mentioned earlier. Is Herbalife a legit business opportunity?
I am not so sure of that now. I wish I could confidently say it was. I am not a big fan of MLMs, to begin with. But there are some, not many, that are reasonable and I can get behind their product… Amway is one of them. They have a good product… even if it is overpriced.

I have placed blue strips throughout this review and it’ll take you immediately to Wealthy Affiliate click here and go check out my WA review to get an idea of what they have to offer.

I appreciate you taking the time to read this and I hope it was helpful to you and you found the information you were looking for.

I wish you the best,

Bob Margroff