Frank Vandersloot at convention
EastIdahoNews.com | By Tim Lewis |
Consumer direct marketing company Melaleuca, announced annual revenues of $1.13-billion for calendar year 2012. This is a 9.2 % increase over the previous year. As one of the country’s most consistent growth companies, Melaleuca has grown in 26 of the last 27 years.
Prior to 1985, companies that offered home-based business opportunities traditionally used a Multi-level marketing (MLM) business model. The Multi-level Marketing model has multiple levels of distribution where distributors purchase products from the company and then try to make a profit by reselling those products to other distributors or to customers. A criticism of Multi-level Marketing is that those who cannot resell inventory they purchase end up losing money and are stuck with boxes of product in their possession.
In 1985, Melaleuca launched a new business model called “Consumer-direct marketing,” which operates substantially differently than Multi-level Marketing. In Melaleuca’s Consumer-direct marketing model, there are no distributors who purchase and resell products and there are no multiple levels of distribution. Instead, marketing executives refer customers directly to the company. Customers then purchase product directly from the company instead of from a distributor. This means no one makes any investment in inventory and there is no way for anyone to lose money, making operating a Melaleuca business essentially a risk-free venture. Prior to 1985, this concept had never been tried.
When Melaleuca first announced it was going to use a Consumer-direct marketing model rather than Multi-level Marketing, many industry experts forecasted that the company would fail. (It was assumed that unless a company sold case lots of products or large quantities in each transaction amounting to at least $100 or more per transaction no company could survive.) In the beginning, Melaleuca anticipated sales of approximately $30 per month per household – not even close to the $100 minimum threshold. Experts in the direct selling industry thought that the cost per sale would exceed the profits from such a tiny transaction and therefore, they forecasted Melaleuca’s rapid demise. But, after 27 years of success, Melaleuca claims it has proven the experts wrong. That claim may be valid as Melaleuca’s sales in the U.S. have now exceeded the annual sales of MLM companies such Amway, NuSkin, Shaklee and Herbalife.
In spite of an economy that has caused competitors to slide backwards or maintain the status quo, Melaleuca continues to flourish. The majority of the company’s growth in 2012 came from the U.S. and Canada, and the balance came from 14 other countries.
Melaleuca CEO Frank VanderSloot stated, “Melaleuca’s growth is a tribute to our unique marketing strategy. When we decided to dump the Multi-level Marketing model and switch to Consumer-direct marketing in 1985, we were told the Consumer-direct model would not work and we would go broke trying to make it work. I think our 27-year history of consistent growth proves that theory wrong. The Consumer-direct marketing model has proven to be far superior to Multi-level Marketing.”
There continues to be strong consumer demand for Melaleuca’s health and wellness products. Melaleuca touts its high-quality natural ingredients which make up over 350 proprietary and patented formulas.
It was just last December when VanderSloot announced plans for a new headquarters for the company to be located south of Idaho Falls. The new 40-plus acre campus will cost an estimated $50-million dollars and will consolidate all of the companies departments bringing them all under one roof. Construction on that facility is set to begin sometime later this Spring.