Nutrition industry network-marketing companies had to overcome a softened global economy and weakened U.S. dollar in 2009 while also navigating the increasingly scrutinized international regulatory environment. The year brought its own unique challenges relating to consumer confidence as there were negative headlines abound in the United States regarding contaminated supplements and consumer exploitation by direct sellers. The convergence of those external factors, along with a highly publicized link to super fruits, made for a trying year for two U.S. multilevel marketers (MLMs).
“We feel like no one has been hurt more by all of the acai scams than MonaVie,” said Devin Thorpe, chief financial officers for MonaVie, a leading nutrition industry MLM known for its acai supplements. Thorpe was referring to the rise in consumer complaints associated with auto-bill programs, most notably the well-publicized lawsuits filed by Oprah and Dr. Mehmet Oz that were brought against more than 50 companies and subsidiaries marketing acai supplements. “Oprah sued some people over this, but our damages were far greater than hers,” Thorpe told Nutrition Business Journal. “No one really thought less of Oprah because of these scams, we feel somewhat victimized by this.” Still, Thorpe hopes that consumers will recognize that the acai supplement scams seem to be isolated problems. “The good thing is the vast majority of fraud efforts have been internet companies, not network-marketing companies. I don’t think [consumers] associate that behavior with network marketing. Most consumers see the difference between being invited to try juice from a trusted friend versus a banner ad on the internet,” said Thorpe. “Very few people are really confused. To the extent that they are, it’s we who suffers.”
Despite ongoing criticisms of the product category and the sales channel, Thorpe said the company is proud to be part of the direct-selling community. “The successful companies are all quality honorable companies with fair-to-generous business practices. Companies like USANA, Nu Skin and Herbalife are all great companies with long track records that stand up to regulatory scrutiny.”
Fellow super fruit-specialist and Utah-based MLM Xango also stakes its reputation on the benefits of super fruits and doesn’t like to see the category exploited. “There is no question that there are bad apples in any industry and there are some in our industry that are exploiting or overusing different types of marketing tools,” said President and CEO, Robert Conlee. “We will provide the tool of an auto-delivery program, but we will self-regulate and don’t believe it’s something to be overused.”
“When you come right down to it, it’s really the values that we have to provide that allow for a very safe, reputable environment for distributors to come in and operate their own companies. One of the reason we attract the talent we do is that they see we’re not trying to grab the short term gain. We think long term, we act long term.”
NBJ Bottom Line
You’ll need thick skin if you’re planning on operating a high-profile network-marketing company in the nutrition industry—especially if super fruits make up the bulk of your product portfolio. Direct-sellers have been working for years to overcome negative perceptions about pyramid schemes and fraudulent marketing. More recently, nutrition industry MLMs specializing in super fruits have been scrutinized for offering overpriced juices that don’t live up to their billing. There is no shortage of consumer skepticism for these companies to overcome. It’s up to companies like MonaVie and Xango to continue to push the envelope in terms of backing up their claims with innovative research and top-notch business ethics. Conlee noted that Xango recently conducted a pilot human clinical study on its flagship mangosteen products that lowered inflammation markers. Along with their ongoing activity in industry trade associations like the Direct Selling Association, the companies will benefit from increased levels of research and transparency.
To read more about MonaVie and Xango’s 2009 performance, along with a complete rundown of the MLM sales channel, be sure to check out NBJ’s April issue on network-marketers and healthcare practitioners.
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