USANA's Business Opportunity
About 1 or 2 years ago maybe 3, I was told one of the best supplement manufacturer in USA is coming to town with their product called Essentials, a very good combination of multi vitamins and minerals combined in 2 bottles. This company called USANA was a public listed company with about a market capitalization of approximately US$100 plus millions just a few years ago but not sure what it is now.
I thought maybe this is the company to look at since they are one of the few companies that popularize the Binary Compensation plan, ie 2 legs, you get paid wheneever there is a right balance of volume on both your right and left legs. I know of people who forsake quite a huge payout as a result of Elephant leg, ie one leg getting much stronger than the other.
I think I must have gone to at least Business Opportunity meetings, one at the Officer Club and the other at one of the current top distributor's house who himself was once a top insurance agent himself, came over from another company...name is Melvin or something.
Anyway there is no question about the high quality of USANA products. But I did come across another company called Xtend Life who claims to have a better product than USANA. I have requested for the spreadsheet for comparison as I am very much into taking health supplements myself.
Anyway the following is the article....gary is a customer, and Warren is the founder of Xtend Life.
Question: from Gary
Hi Warren My wife and kids have been using your products for a few months now (Total Balance, Omega 3 capsules) and recently we have been given some Usana products to trial (Essentials, BiOmenga3). We were quite impressed with their product range and apparent quality, and also the fact that you can develop an income stream by building a network marketing business.
I am happy with the Xtend Life products, but we are seriously considering the USANA range as we like the idea of selling the same products we are using. Can you give me your thoughts on the USANA range, their network marketing approach, and whether Xtend Life is considering this type of business model?
Answer: from Warren
USANA do produce good products compared to most others on the market and their quality is good. They are not however in the same category of our products. In comparison they are very expensive and quite basic.
We prepared a spreadsheet some years ago which shows just how basic they are compared to Total Balance. I have attached that spreadsheet... This was comparing an older generation of Total Balance...before we included the L-Glutathione. I must arrange for it to be updated again.
With regard to the business opportunity with USANA I would suggest that you look at this very carefully. Only a very small percentage of people actually make any money selling USANA products, or any MLM product for that matter. To assess that for yourself ask for a copy of a breakdown of their distributor earnings which I think that they are required to publish.
I think that you will find that the old 80:20 rule doesn?t apply here, but rather it is more like the 95:5 rule meaning that 5% of the distributors make 95% of the money.
I know that the average distributor earnings in 2004 was only $851.
Their business model is such that it focuses on encouraging distributors to recruit other distributors and get an override commission on their sales. Of course all distributors have to commit to a monthly order of product. This is the secret of the financial success for shareholders of MLM Companies.
The biggest users of the products are not the public but the distributors themselves.
To be successful in MLM you have to be very aggressive and very persistent. The overwhelming majority of distributors don't make enough out of it to even offset the cost of their own supplement purchases.
Also, because there is a lot of reliance on recruiting friends it can lead to friction with friends and family and sometimes even loss of friendships.
Have we considered this type of business model?
Yes, indeed we did about 7 years ago. There are several reasons why we did not adopt it.
1. When we researched the top MLM Companies we found that very few distributors actually made any money. Those distributors who were involved in the beginning did pretty well, but those hardworking distributors who came along later pursuing a ?dream? rarely reaped any real financial reward.
We did not want a similar situation in which we sold the 'dream' of financial independence knowing that only a very small minority could make it become reality.
2. This research supported my own experience with MLM supplement companies. I have had friends who have joined these organizations and it 'changed' many of them. They became so obsessed with the products that they would use all sorts of opportunities to try and get me to become a distributor. They were driven by blind faith rather than sound logic. At the end of the day they were not financially successful and they alienated a lot of their friends on the way.
I?m not saying that this always happens, but it is more the rule than the exception.
3. Pricing: If we had adopted the MLM model we would have had to significantly 'dumb down' our products. This is because the profit margins would not be enough based on our current cost of producing the products due to their complexity and the manufacturing processes that we employ.
A general rule for an MLM company is that the manufactured price of the product after a manufacturing profit has to be such that it can be multiplied by a factor of seven to arrive at a retail price. This is far, far greater than the margins we operate on.
If we did that with our products the price would be so high that they would be out of reach for the overwhelming majority of consumers.
I don't know what factor USANA apply to their products, but I can say that MLM companies require bigger margins than other distribution structures. Yes, I know that MLM companies argue that their method of distribution costs less than others...but the reality is quite different...
I have tried to be objective about this Gary. I am not saying that it won't work for you...just suggesting that you be very diligent in doing your homework.
Good luck,
Warren
I thought maybe this is the company to look at since they are one of the few companies that popularize the Binary Compensation plan, ie 2 legs, you get paid wheneever there is a right balance of volume on both your right and left legs. I know of people who forsake quite a huge payout as a result of Elephant leg, ie one leg getting much stronger than the other.
I think I must have gone to at least Business Opportunity meetings, one at the Officer Club and the other at one of the current top distributor's house who himself was once a top insurance agent himself, came over from another company...name is Melvin or something.
Anyway there is no question about the high quality of USANA products. But I did come across another company called Xtend Life who claims to have a better product than USANA. I have requested for the spreadsheet for comparison as I am very much into taking health supplements myself.
Anyway the following is the article....gary is a customer, and Warren is the founder of Xtend Life.
Question: from Gary
Hi Warren My wife and kids have been using your products for a few months now (Total Balance, Omega 3 capsules) and recently we have been given some Usana products to trial (Essentials, BiOmenga3). We were quite impressed with their product range and apparent quality, and also the fact that you can develop an income stream by building a network marketing business.
I am happy with the Xtend Life products, but we are seriously considering the USANA range as we like the idea of selling the same products we are using. Can you give me your thoughts on the USANA range, their network marketing approach, and whether Xtend Life is considering this type of business model?
Answer: from Warren
USANA do produce good products compared to most others on the market and their quality is good. They are not however in the same category of our products. In comparison they are very expensive and quite basic.
We prepared a spreadsheet some years ago which shows just how basic they are compared to Total Balance. I have attached that spreadsheet... This was comparing an older generation of Total Balance...before we included the L-Glutathione. I must arrange for it to be updated again.
With regard to the business opportunity with USANA I would suggest that you look at this very carefully. Only a very small percentage of people actually make any money selling USANA products, or any MLM product for that matter. To assess that for yourself ask for a copy of a breakdown of their distributor earnings which I think that they are required to publish.
I think that you will find that the old 80:20 rule doesn?t apply here, but rather it is more like the 95:5 rule meaning that 5% of the distributors make 95% of the money.
I know that the average distributor earnings in 2004 was only $851.
Their business model is such that it focuses on encouraging distributors to recruit other distributors and get an override commission on their sales. Of course all distributors have to commit to a monthly order of product. This is the secret of the financial success for shareholders of MLM Companies.
The biggest users of the products are not the public but the distributors themselves.
To be successful in MLM you have to be very aggressive and very persistent. The overwhelming majority of distributors don't make enough out of it to even offset the cost of their own supplement purchases.
Also, because there is a lot of reliance on recruiting friends it can lead to friction with friends and family and sometimes even loss of friendships.
Have we considered this type of business model?
Yes, indeed we did about 7 years ago. There are several reasons why we did not adopt it.
1. When we researched the top MLM Companies we found that very few distributors actually made any money. Those distributors who were involved in the beginning did pretty well, but those hardworking distributors who came along later pursuing a ?dream? rarely reaped any real financial reward.
We did not want a similar situation in which we sold the 'dream' of financial independence knowing that only a very small minority could make it become reality.
2. This research supported my own experience with MLM supplement companies. I have had friends who have joined these organizations and it 'changed' many of them. They became so obsessed with the products that they would use all sorts of opportunities to try and get me to become a distributor. They were driven by blind faith rather than sound logic. At the end of the day they were not financially successful and they alienated a lot of their friends on the way.
I?m not saying that this always happens, but it is more the rule than the exception.
3. Pricing: If we had adopted the MLM model we would have had to significantly 'dumb down' our products. This is because the profit margins would not be enough based on our current cost of producing the products due to their complexity and the manufacturing processes that we employ.
A general rule for an MLM company is that the manufactured price of the product after a manufacturing profit has to be such that it can be multiplied by a factor of seven to arrive at a retail price. This is far, far greater than the margins we operate on.
If we did that with our products the price would be so high that they would be out of reach for the overwhelming majority of consumers.
I don't know what factor USANA apply to their products, but I can say that MLM companies require bigger margins than other distribution structures. Yes, I know that MLM companies argue that their method of distribution costs less than others...but the reality is quite different...
I have tried to be objective about this Gary. I am not saying that it won't work for you...just suggesting that you be very diligent in doing your homework.
Good luck,
Warren
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3:38 PM
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