What Is The Herbalife Business Opportunity – Is It A Scam?

When you see the name Herbalife what comes to mind? Nutrition and a healthy lifestyle? Perhaps a company you can make money with? It has been around since 1980 hence it’s name should be familiar. What is the Herbalife Business Opportunity? Is it a scam. Are you considering trying the products? Or even joining the company as a distributor to create your own MLM business?

Before I proceed here is a disclaimer provided by Herbalife on statements made on their nutritional products and foods.

“These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease.”

I’ve done some detailed research on Herbalife that will help you make an informed decision to buy their products, to become a Distributor or to do something else. Let’s discuss the following 10 areas:

1. The Company Details
2. What is the business about?
3. What are the cost of the products?
4. What is the cost to become a distributor?
5. How does their MLM program work?
6. Can you make money selling the Herbalife products?
7. Pros & Cons
8. Is it a scam?
9. My conclusion on this company
10. My #1 Recommendation

The Company’s Details

• Herbalife was founded my Mark Hughes in 1980
• It’s headquarters is in the Los Angeles area of California and incorporated in the Cayman Islands
• John O. Agwunobi is the Chairman and CEO – Served in the US Government as Assistant Secretary of Health
• Herbalife is Publicly listed on the New York Stock Exchange
• As of June 29, 2020, its stock price was selling for $44.22 a share
• Herbalife is operational in 94 countries
• It has over 4.5 million independent distributors and members
• In 2019 product sales were $4.87 Billion and net profit was $311 Million
• Sales are generated using the Multilevel Marketing model

What Is The Business About

Herbalife produces and markets nutritional products such as protein shakes, protein bars, energy drinks, nutritional supplements and personal care products among others. The intent is to promote a healthy lifestyle.

It’s original protein shake, a soy-based meal replacement product is still the most popular and accounts for about 30% of its total sales. It uses the Multilevel Marketing model where distributors use the products themselves and sell the products directly and also build a team who they train to do the same.

The 4.5 million distributors and members in 94 countries tells the story about how large the company has grown.

Herbalife has manufacturing facilities in the US as well as China. It uses strict quality control in all stages of production. However, it also uses third party partners who operate independently.

Product Summary

The following chart is from Herbalife’s 2019 Annual Report. It summarizes the major category of products by percentages of sales for 2019, 2018 and 2017.

The core products consists of Formula 1 Nutritional Shake Mix, followed by a Formula 2 Multivitamin Complex and a Cell Activation product. One can add optimizers to this base, tailored for one’s specific life situation.

Herbalife produces specific products targeted for women, children and men. A balanced diet is also a major part of their daily eating plan as follows:

You can check out their full range of products sold in the US through this Catalog Link. Note that there many products designed to satisfy the needs of their target markets.

Target Market

Individuals and families who wish to lead a more healthy lifestyle than average can find not only nutritional products and meal replacements but also healthy recipes to fit many tastes. Note that Herbalife currently does not offer products that meet Vegan standards.and this is spelled out in this No Vegan page.

The following is a list of some of the customer needs that Herbalife targets with specialized products:

• Achieving and Maintaining a Healthy Body Weight
  • Programs
  • Enhancers
  • Formulas
  • Snacks

• Specialized Nutrition for the following needs:
  • Men’s women’s and children’s health
  • Healthy aging
  • Boosting immune systems and digestive health
  • Stress management

• Energy & Fitness

• Skin & Hair Care

• Bath & Body Care

Herbalife also offers sample packs for those who want to make sure that the products are to their liking.

What Is The Cost Of Their Products

I’d like to share what items I could find in their catalog that represented a range of price points, from lowest to the highest. My selection is based on individual products and not those sold in combination with others for a specific program. Also, I do not include sample packs, which are generally sold at lower prices. You can make up your own mind if these are good value or not. I may provide my own opinion as a guide.

Low Priced Products

Roasted Soy Nuts

Herbalife positions this as a nutritious salty and crunchy snack packed in single serve portions for on the go cravings. Each portion contains 100 calories and 9 grams of protein. The retail price is $14.95 for a 12 packet box.

 

 

N-R-G Nature’s Raw Guarana Tea

 

The product with the lowest cost is the Herbalife N-R-G Nature’s Raw Guarana Tea. It is available in 2.12 oz plastic bottle in powder form for a retail price of $19.25. Rather than describing it myself let me paraphrase what is in their catalog

“Get recharged with this uplifting tea blend of guarana, orange pekoe and lemon peel. Caffeine increases mental alertness and provides a gentle pick-me-up. For optimum experience, mix a little less than ½ teaspoon with 8 ounces of water. It’s key benefits provides a gentle boost and reduces fatigue It’s an instant tea mix with 0 calories”

My calculations indicated one bottle will provide 48 cups of tea each with 8 oz capacity. This works out to about 40 cents a cup.

Medium Priced Products

Formula 1 Nutritional Shake Mix

One of Herbalife’s most popular offerings over the years has been their Formula 1 Healthy Meal Niutritional Shake Mix. When I read the flavors it is offered in I was not surprised. Let me list them below:

• Pralines and Cream
• Banana Caramel
• French Vanilla
• Dulce de Leche
• Orange Cream
• Mint Chocolate
• Dutch Chocolate
• Wild Berry
• Cookies ‘n Cream
• Pina Colada
• Cafe Late

They each come with 21 essential vitamins and minerals. Combined with protein and fiber they help support metabolic function at the cellular level. They come in powdered form in 26.4 oz (750 g) containers. It takes 25 g to make a single 8 oz shake. Hence, one container will provide 30 shake meals. At a retail price of $42.85 one drink costs $1.43.

SKIN Colagen Beauty Booster

Herbalife SKIN Colagen Beauty Booster falls within the range of skin care and anti-aging products. It is formulated to enhance skin elasticity and reduce wrinkles. At first this may be thought of as a cream to be applied on the skin. Those are available. But this product is meant to benefit the skin from within. It is a drink! I was surprised when I found that out.

This comes in a 6.03 oz canister. One scoop a day in water or one’s favorite drink is all that is needed to benefit the skin. The canister is priced at $49.40 retail.

High Priced Products

Niteworks

This product is a dietary supplement formulated with L-arginine and L-citrulline that help the body create more life-supporting Nitric Oxide. Its intent is to enhance the functioning of the vascular system of the body and brain and heart systems. It appears that a great deal of research went into the development of this product and is one of Herbalife’s heavy hitters.

It comes in powdered form in 10.6 oz containers. Daily recommended intake is two scoops in cold water or an 8 oz glass of sparkling water. If preferred, it can be mixed with one’s favorite juice.

One can is priced at $112.05 retail.

Summary

Several of the products are sold in combination to help achieve specific health and weight loss goals. The terms used are the Lean and Fit Program, Quick Start Program and Advanced Program. The products described above and all the others can be checked out in the Herbalife Product Catalog. This link is for the US version.

When the prices are broken down into cost per portion, they may appear reasonable. Except the prices are more expensive compared to what you would pay at a health food store. Even at the Preferred Member Discount of 25%. Herbalife charges a fee of $34.95 to become a Preferred Member.

 

What Is The Cost To Become A Distributor?

Herbalife offers anyone the opportunity to become a Distributor and build a business through marketing their products. Their requirements to become a Distributor is to fill out an application and purchase one of two business packs.

1. International Business Pack for $94.10
   1. Three 3-Day Product Sampler Packs
   2. Distributor Guide
   3. Guide to Training Online
   4. Business Tools
   5. 1st 90 Day Guide
   6. Additional Resources Booklets
   7. Carry Bag
   8. Buttons
2. International Business Pack – Super Starter for $124.10
   1. International Business Pack
   2. Herbal Tea Concentrate
   3. 16 Formula 1 Sample Shake Packs
3. A Preferred Member who paid a fee of $34.95 can also become a Distributor for an additional fee of $59.95

How Does Herbalife’s MLM Program Work?

As a Herbalife Distributor you can earn money in three fundamental ways:

1. Buy products at wholesale and sell at retail, keeping the profits
2. Build a team through recruiting and earn overrides from their purchases and sales
3. As your team increases its sales you can participate in special bonuses

Between these methods there are other options to boost earnings. For example, as your team sales rises you can purchase the products at higher discounts up to a maximum of 50%. The 50% level is earned when your annual sales volume is 4000 points or higher. This is equivalent to about $3000 in sales. You are then promoted to the rank of Supervisor.

There is no limit to the number of distributors you can recruit into your front line. And the same applies to them. However, in order to rise in the ranks further, you will need three of your front line distributors qualify as Supervisors just like you did. There are 4 levels in rank to rise to the level of Supervisor.

The following graphic shows all the ranks in the Compensation Plan system. You rise to these levels when your team sales rises. The larger your downlin, the more products are sold and you move higher up the ladder.

How easy is it to move up and earn enough residual income to live the high life that the company promotes? Read on to find out.

A brief video of the Herbalife Sales and Marketing Plan can be viewed by clicking the graphic below:

Can You Make Money With Herbalife?

The following numbers are based on Herbalife records in 2018.

1st Year Distributors

• After 6 months, 50% of the first year US Distributors, 10,000, earned nothing,
• The remaining 50% earned at least $170.
• Out of these, the top 10%, 2.000, earned at least $900.
• Only the top 1%, 195, earned more than $2,940. .

Distributor Earnings After 1st Year

• After 8 months, 50%, about 21,000, earned nothing.
• The remaining 50% earned at least, $265.
• Out of these, the top 10%, about 4.200, earned at least $900.
• Only the top 1%, about 420 earned more than $14,270.

To give Herbalife its due, it qualified the earnings of the Top 1% of experienced Distributors as follows:

“The Top 1% of Distributors are typically President’s Team members. The time it took them to reach President’s Team typically ranges between 5 and 11 years. Requires skill, consistent work and dedication.”

About 0.3% of the Distributors earn over $250,000 annually. Only the top 13 Distributors in the Presidents Team have earned annually from $1.2 Million to $4.7 Million.

The overriding message all Distributors are fed is with hard work and persistence, they can build a team that will pay them residual income. Since very little retail sales occur, recruiting is the primary means used to make sales.

There are actually two answers to the question, Can You Make Money With Herbalife.

1. Yes you can. If you are willing and able to do what the top 10% of the company’s Distributors by income do.
2. No you can’t. Statistically the odds are stacked against you. By the time you discover that fact, you will have spent a lot of money buying expensive products and in business expenses.

What do you think? If you are a Distributor reading this, how long have you been with Herbalife? How much income are you consistently earning? I mean on a weekly or even a monthly basis. If your income is sporadic, are you happy with that?

If you are a Distributor who is earning say, $500 a week consistently, I applaud you. You are the exception. Not the rule. And how many hours a week do you work your business to earn that income? I doubt’t that it is residual yet.

Let’s assume you spend 40 hours a week, your hourly rate is $12.50. Sounds like minimum wage to me. Of course, you are told that if you keep working the business and do not give up, you will move up the ranks to those levels where you can earn over $1000 a week.

But look at the stats. Only the top 1% of the company earned more than $274 a week. And only the top 0.3% of the Distributors earned $4800 a week. Why isn’t that number higher? If you worked 80 hours a week even, do you feel you could reach that level?

Here is the crux of the challenge. You cannot earn that amount of income by your efforts alone. You need to have a team under you. A very large team. And they have to be trained to recruit others and show them how to do likewise. Then, they all have to buy the products. Until sales are generated, nobody gets paid.

Since this is so tough to do, the attrition rate is very high. And that means a never ending recruiting cycle.

So why do it? Read on and I will show you a different form of marketing products where you can use the power of the internet to make sales all on your own.

Attrition Rate

90% of new Distributors drop out after their first year! It is so difficult to sell the products at retail to make a profit because they are so expensive. Since that is the first option to earn an income where there are no other preconditions, it is so discouraging for new members.

How are sales generated? When you become a Distributor, you purchase products as part of your Business Packs. Every compensation plans video makes it clear that to be a product of the product it makes sense to keep purchasing products every month. At least $100. After all, wasn’t one of the reasons you joined Herbalife to live a healthy lifestyle?

The whole compensation plan system will fail if products are not sold. And the best customer happens to be the Distributor.

When Distributors realize that they will not be earning any income soon, they get jaded and quit. Hence, the high attrition rate.

The answer to the question is it is almost impossible to earn money consistently in Herbalife to create a regular income stream in order to stay on. When a Distributor starts to earn something, they feel they are making progress and stay on.

Eventually they realize that their earnings are actually less than what they are spending and give up.

Only those few leaders who have built a large sales organization earn reasonable incomes. This result is not unique to Herbalife. It applies to ALL MLM companies. But in Heblife’s case, the odds are stacked against Distributors because of the high price of the products.

This makes it a Pyramid Scheme. If the distributors stopped buying products, the organization would implode.

Pros & Cons

Pros

1. Herbalife produces high quality products
2. They offer a very wide range in the personal care and health and wellness industry
3. If you really like the products you can become a Preferred Member and buy them at a 25% discount
4. Herbalife will buy back your Distributor kit at the full purchase price if you quit within one year

Cons

1. The products are so high priced they are difficult to sell at full retail
2. The only way to make serious money is to continually recruit paying Distributors and train them to do the same
3. Over 50% of Distributors earn nothing
4. Less than 1% earn any serious money in the company
5. When you earn nothing, any expense for the business becomes a loss
6. Over 90% quit within one year, forcing even more recruitment

Is It A Scam

Herbalife is not a scam because they make and sell real products. However, it is on the border line of being a pyramid scheme. That is one of the reasons why over the years there have been so many lawsuits against Herbalife where they settled for many millions of dollars out of court.

My Conclusion On Herbalife

When I researched Herbalife I came across red flags everywhere. Although they have been in business since 1980, and sales have grown, this appears to be the case because the number of Distributors and Preferred Members have grown. Since retail sales are conducted at the Distributor level where they first buy the products at wholesale and resell them at retail, there are no records kept of pure retail sales. Only products purchased at discount by the Distributors and Preferred Members.

I do not recommend becoming a Distributor of Herbalife. You may wonder why did I make all the effort to share the company details in this post. The answer is simple. I respect what Herbalife is doing to enhance the health and well being of individuals and families. They offer a wide spectrum of products that appeal to me.

I have three problems with the company that I highlighted in the CONS area above.

1. Their products are fat too expensive which handicaps their Distributors in making retail sales
2. In order for a Distributor to make any money they are pressured to recruit other Distributors
3. Only a very small percentage of the Distributors make a decent income

My #1 Recommendation

Normally I would recommend using your own website to market the products through the Internet. I wrote an article called:

MLM Online Secrets – Your Upline Doesn’t Want You To Know!

Here I go into detail why most people in MLM fail. I also show how you can use the Internet to sell enough products all by yourself to earn a decent income. However, since the Herbalife products are not competitive, I don’t recommend going that route. If you are a Herbalife Distributor and wish to use the Internet anyway, you can learn a great deal on how to do that in several posts in this website.

Instead, my number one recommendation is to learn more about affiliate marketing and how to create a business as an affiliate for many well-known companies where they do not charge you anything.

As an affiliate, you, called the publisher in the above diagram, can market their products on your own website and get paid commissions when a sale is made. Are you interested in learning how all of this works?

My Home Page will give you an excellent summary. Click the link and your mind will be opened to a whole new world of creating your own business online.

No need to bug family and friends like you are taught to do at all MLM companies that includes Herbalife.

If you happen to be a Herbalife Distributor and wish to add more information about the business that I may not be familiar with, and should know, please make your comments below. I would much appreciate it. My intent was not to disparage Herbalife Distributors. Just to insure they are building their business with their eyes wide open.

If you are reading this because you are considering becoming a Herbalife Distributor, my advice it don’t. Evaluate my #1 recommendation first and see if that makes sense to you.

Let me leave you with the thought. Being forewarned is to be forearmed.

I wish you much success in whatever business you end up doing.

Cheers.

Edwin