Today's... example, Vemma. Their 2013 income disclosure can be access here:
1) The two graphs have DIFFERENT scales
2) The two graphs both use exponential scale instead of linear, thus de-emphasized the difference in bar heights.
In fact, if you regraph the same numbers, using a linear scale, it looks like this (go ahead, do this in Google Sheets yourself)
The red line has the SAME numbers as the Vemma graph, but using a LINEAR scale, combined into a single graph. The blue line is the percentage of all affiliates.
Roughly translated: vast majority of the company make peanuts, while a selected few made much much more... one made like 2.5 million in 2013.
Now here's the important numbers:
In 2013, 246,388 active customers enjoyed the brands that make up the Vemma family of wellness products
These active** Affiliates totaling 105,251 in 2013
**Active, means an Affiliate has a minimum of 60 reward points every month. Platinum and above Affiliates are considered active if they have 120 reward points every month.
Here's something they didn't say, but you need to know... Affiliates who are not "active" are considered to be customers.
But how much did they sell? According to Vemma's own press release:
Vemma makes the move to affiliate marketing – Worldwide sales close 2013 at $221 million, up 89%.
221 million, divided by 105251 affiliates... comes about to be 2100 per affiliate, or roughly 175 per month.
But monthly reorder is $120+ S&H per month. Affiliates are purchasing BARELY more than what's needed to stay qualified.
Which implies that Vemma is only expanding by ADDING affiliates, NOT by selling MORE from existing affiliates.
Which implies that Vemma is only expanding by ADDING affiliates, NOT by selling MORE from existing affiliates.
Also keep in mind thatVemma does NOT have a "preferred customer" class where people who have no intention of retail can join just for "wholesale prices". Thus, there is a heavy suspicion that so-called "active customers" are just "inactive affiliates". If we count them... We get...
221000000/(246388+105251)/12 = 52.4 monthly.
Remember, Platinum and above needs to reorder 120 per month, and any one below needs to reorder 60 per month. This suggests that most affiliates are not retailing much, but ordering just enough to keep them "active".
But let's consider the BETTER case... People are actually order 175 a month... maybe.
However, keep in mind that Vemma minimum qualify at platinum is 120 PV, which is a "two-pack", which costs $136 (or higher) plus shipping and handling. Following is a summary from a Vemma "training" site.
The short of it is
Vemma: Kid, give me $500 (Silver Pack)
Kid: Okay
Vemma: And $150 or so every month there after (2pk auto ship, $136 + S&H)
Kid: Uh, okay. What do I get?
Vemma: I'm not done. Go out and find me more people who will also give me $500 and $150 a month
(enroll more people who will pay for Silver Pack or 2pk)
Kid: But... what do... I get?
Vemma: You get 2 cases of Verve shipped to your door every month, a website to order more, and if you keep enrolling people, maybe I'll pay your monthly lease on a BMW.
Kid: Yes... master....
The problem is BMW lease monthly payment can be as low as $238 a month. Mini Coopers are even cheaper.
Furthermore, consider the follow verbiage from the car bonus agreement official rules from Vemma:
If in any month you do not qualify for the Vemma Platinum Club Car Bonus, you are still responsible for making the car payment and fulfilling your contractual obligations. You are also responsible for all insurance, maintenance and repairs on the car.
Considering that mostly kids (under 25) are the recipients for these car bonuses, the insurance payments may be as high as the car payment itself.
So basically you could have paid for that BMW yourself if you stay off Vemma and find a part time job, or if you buy an older car (one that's more than 5 years old) and have no need to hawk overpriced energy drinks onto your friends and get them to pay Vemma $500 and $150 a month.
In fact, here's a beautiful older BMW for a mere $5000. With ZERO down, and outrageous rate of 10% a month, your monthly payment is less than $125 if you go for a 4 year loan. If you apply that $500 you would have given to Vemma toward the down payment, your monthly drops to $115. And your insurance rate would be MUCH lower due to low price of the vehicle.
Now let's consider what is a 2pk. It's basically 2 sets of 2 dozen cans of Verve, i.e. 48 cans, size of Red Bull cans.
136/48 = $2.83 per can.
How much do you think you can sell them for? Esp. when you have to give SOME of them away, i.e. 'some to share'? When Red Bull can be shipped to your door by Amazon for $1.60 per can, NO MINIMUM and FREE SHIPPING?
And what exactly does "some to share" any way? let's refer back to the verbiage:
You are $150 a month for a 2pk, and you are drinking some and giving away some (share). You are not making money from selling the stuff at all.
YOU ARE THE CUSTOMER.
So how do you make money? Recruit other people just like these people who want to recruit you. You are indeed looking for customers... by misleading them to join, just like others lied to you about this being a business AND they're making money OFF OF YOU.
You're not in a business for yourself. You are the CUSTOMER in this business living a lie.
There are only two ways you can get out
a) Find someone UNDER YOU you can step on so they are the customer for you, just as your upline is sucking your wallet, you're sucking THEIR wallets
b) Quit playing their game.
There are only two ways you can get out
a) Find someone UNDER YOU you can step on so they are the customer for you, just as your upline is sucking your wallet, you're sucking THEIR wallets
b) Quit playing their game.
Conclusion
No, I don't like Vemma, but I have shown you reasons why I don't.
If you want to argue, present FACTS or point out flaws in my logic.
If you don't bother presenting facts, I may let your comment through and make fun of you. Once.
Go ahead. Do your own due diligence.
The Vemma dweebs also seem to forget that the Vemma "formula" doesn't actually do anything either.
ReplyDeleteMangosteen bs has been dead scientifically for over a decade.
The car bonus also requires you to purchase a new or used vehicle no older than 3 model years (and the vehicle cannot get older than 5 model years) that is valued at time of sale before taxes at $30,000.
ReplyDeleteSo that lease for a BMW you could get for $250 or less? Forget it. You'll need to figure out how to lay down a massive down payment just to be considered worthy of driving off the lot with it, which would be somewhere in the $4000 - $6000 range.
Not only are these hacks dishonest, they're setting up their minions for financial irresponsibility for first time buyers of cars. I'm not complaining though, I who actually can afford a mild luxury sedan has no problem taking it off their hands... for a reduction in $12,000 of worth (it'll probably have less than 15k miles on it too!)
Thanks
DeleteAny business makes a profit off of the consumer. The difference between an MLM and a typical sales company like for example, a car dealership/car salesman where the car salesman does most of the work and earn a commission by selling cars, if car sales were MLM-like, if there was a car salesman that knew how to sell cars really well, he can teach another person how to do the same and he would actually earn a piece of his student's commission.
ReplyDeleteNow, when you walk into a supermarket and your friend works there, would you complain to your friend that part of your grocery purchase goes towards paying his hourly wages?
Comparing Red Bull to Verve is like comparing a Hyundai to a BMW. Clinical studies performed by a third-party laboratory has proven the effectiveness of the Vemma formula AND Verve.
And your lease payments that are $238 for a BMW, that's with excellent credit and usually a down payment of some sorts and base model. Vemma actually gives you an option to receive a cash payment of $400/month for 6 months if you want to use it to save up for a down payment and on top of that because Vemma will pay up to $400, you can lower the down payment and just raise the monthly lease payment. Plus, if you use it for business purposes you may be eligible to deduct the payments as a tax deduction (and everything is cheaper with a tax deduction).
The potential problem is when the "employee" is expecting to do ALL his shopping at that "supermarket" at inflated prices if he wants to get paid.
DeleteYour so-called "clinical studies" is composed of less than 100 people done in China on middle-aged or older people and university students on SELF-REPORTED effectiveness of Vemma. You may want to actually *read* the studies themselves instead of citing the PR spin.
And thanks for the clarification on the lease payment, but doesn't really change the point much, does it?
oh, and if you create a graph of a typical fortune 500 company where the employees at the bottom make pennies compared to the CEO and COO and top executives, you'll get a similar graph.
ReplyDeleteExcept employees don't PAY the company and expect to be paid back. Bogus comparison.
DeleteHello,
ReplyDeleteThank you very much for putting together all this info! I truly appreciate your time and effort to research and clearly show how these companies work.
The BMW example made me think of the Arbonne MLM scam, because they promise a white Mercedes-Benz to their "Regional VPs" and "National VPs". The arguments and scheme are very similar. In the end these VPs have to cover a huge debt, unless they keep recruiting people to feed their downline.
Keep up the good work!