Arbonne Pyramid Scheme: Is It a Legitimate MLM Scheme?
The Arbonne pyramid scheme is in news for a variety of reasons.
A wellness and cosmetics major, this company has been in business close to 50 years.
Competition is very tight in this space.
But, they have held their place despite that.
Obviously, they have surely done something right to continue for this long.
However, I will not say that is the only reason why you should join Arbonne.
We all know a multi-level marketing firm can be an easy source of additional funds.
But, the lack of a credible product can be one of the biggest risks.
So, the primary question is, does it make sense to put money in this MLM or pyramid scheme?
For that, it is important to understand the business model of the company.
Well, we all know that they have a multi-level marketing set up.
But, that apart, it is crucial to understand what drives this MLM.
More importantly, you need to watch out for the revenue flowchart.
Does product sale their primary mode of earning revenues?
Well, they do have wide product range though they are priced steeply.
These are nature inspired beauty offerings.
The company markets these as high-end boutique offerings.
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An In-Depth Study of Arbonne Business Model
Arbonne is a Norway based company.
The company&8217;s founder Petter Morck did not like chemicals in beauty products.
He was earlier the division head of a skin care company.
So, he decided to create something that is green and good for your skin.
He wanted to create some pure and safe alternatives.
Beauty doesn&8217;t necessarily have to be painful.
Today, that concept has expanded into a massive corporation.
They have a total of 200,000 consultants.
The Arbonne products are sold across a wide range of markets.
It has spread its wings from the United States To Australia.
Arbonne has a significant presence in Canada, UK and Poland.
The company is working to expand extensively.
Mary Kay, Thirty-One and Perfectly Posh are some of its closest competitors.
So, the company has to constantly work towards maintaining their niche.
As of now, they have more than 200 products.
Despite the long years, their sales are only about $35 million annually.
As a result, they are not seen as serious competition for Mary Kay or Avon.
While they sell it as a niche product, the question is, does it still have an appeal?
The reason I am asking this is that retail dynamics have changed completely.
What had a novelty appeal in the 1980s, isn&8217;t so attractive now.
Many companies sell nature inspired herbal cosmetics.
Sourcing them is also quite simple after the spike in online retail sales.
So why would anyone pay a premium price to get it from a consultant?
Yes, that is the million dollar question surrounding the Arbonne model.
So in that situation does it make sense to join the Arbonne pyramid scheme?
Can you extract value at all?
Very Expensive Pricing
Premium pricing is one of the biggest problems for Arbonne.
Let&8217;s revisit a pyramid scheme model.
It maintains the revenue flow only through more recruits.
The Arbonne pyramid scheme is no different.
But Arbonne&8217;s products are very expensive.
Let&8217;s look at its RE9 range.
The RE9 Extra Moisture set is priced well above $300.
Now that means it is out of reach for average women.
Only a select niche of consumers will be able to afford it.
Then as a consultant, how will you be convincing more members to sell it?
After all, the target customers are very limited.
Not just that, the beauty industry is very dynamic.
If we just think of these anti-aging solutions, almost every brand has their own range.
They are available across a very wide price range.
Now if I am that desperate looking for an option, I could buy any of these.
There are very few who would be loyal to the brand.
That means even amongst those willing to pay, competition is tough.
As a result, generating the desired amount of sales is difficult.
Even more difficult is getting people to sell it to them.
So the outlook for your earnings fro Arbonne Pyramid Scheme looks bleak.
Initial Investment in Arbonne Pyramid Scheme
This is another very important factor to watch.
If you consider an investment, it is important to gauge the rate of return.
In case of a pyramid scheme, your return is based on the initial fee.
So how much money do you need to join Arbonne?
Your relative earnings are dependent on it.
According to last updated details, the 12-month registration fee is $79.
After these 12 months, you need to pay $30 for renewal.
For those who managed sales above $100, can get a 35% discount.
In case you are a preferred client, you can pay $59 and become a consultant.
Consultants can offer about 20% discount to their customers.
This means you can woo customers with a discount.
But that also means that you will be earning that much less every month.
So all in all you are either paying the registration charges or buying products worth $500.
Either way, it is a win-win situation for Arbonne.
They can pocket profits close to $500.
The person who convinced you signing will try to convince you hard.
Well, don&8217;t just think that&8217;s a friendly gesture.
They have every reason to make you shell out that amount.
They will earn a 6% return on the initial sale.
Remember this is also primarily how they can win back their returns.
Just like you, someone convinced them to join too.
Now the only way they can get back the money is via making more people sign.
In most cases, consultants assume they have to spend that much.
Many also look at it as seed capital.
The problem is more in recovering interest from there.
How Will You Earn from Arbonne?
Things get a little more complicated as you probe compensation details.
The revenue flow in Arbonne pyramid scheme is similar to many other MLMs.
You earn the money in two principal ways.
First of all, you earn a commission from the sales.
You will also earn money from the fees collected from new recruits under you.
So a consultant will get a cash bonus of $100.
But this bonus is applicable only if they manage 2500 qualifying volume.
They would also need to sign up two new consultants.
These consultants would have to spend at least $150.
So as a beginner, you will be under tremendous pressure.
A lot of people&8217;s earnings is directly dependent on you.
So many people will egg you to do well and sell more.
The first important designation is that of a district manager.
The Executive District Manager and area manager are the next positions.
If you are extremely successful in signing people, you become Executive Area Manager.
The regional vice president is the next rank.
These RVPs get $800 a month for leasing a Mercedez.
The train of titles continues even after this.
It goes on till National Vice President after regional designations.
At this point, they are not selling products.
Mostly they are earning from commissions for new recruits.
They also get a cut from the sale of those who signed under them.
Therefore your earnings are directly dependent on those below you.
If those you have recruited don&8217;t perform well, your earnings suffer.
This means that recruiting is important, but that alone cannot assure gains.
You have to follow up with associates below you.
You need to push them and keep the pressure on.
Only then you can get a reasonable amount of earnings.
You Need to Spend Your Personal Savings
So what happens if you are not able to generate enough sales from them.
Moreover, you can only interact with your direct recruits.
But there are many others who you have no interaction with.
Would you want to leave it to fate?
Every rank in Arbonne has a minimum PQV and recruitment limit.
It is important to maintain these limits.
That&8217;s the only way that consultants can maintain their rank.
So what happens when those below you falter?
Well, you have to pitch in.
Most times consultants end up paying for the PQV they need to maintain rank.
So despite your rank, you don&8217;t have any freedom.
You remain as pressured a consultant as those right at the bottom.
That also means this can&8217;t be your ultimate source of income.
You will never earn enough to support you or your family.
Therefore, the Arbonne pyramid scheme can&8217;t be a dependable source of income.
If you don&8217;t have a reasonable pool of funds, you can&8217;t even continue for long.
So instead of you getting support, you need to support.
So why would you want this as an income source?
There is no dependability, no security, rather it is a liability.
Another problem with the Arbonne Pyramid scheme is the lack of transparency.
The website posted the complete earnings statement of its consultants.
The presentations would convince you that this is the best opportunity.
But the reality is very different.
According to 2015 details, they had more than 182,000 consultants.
But only 13% of them, nearly 24000 received earnings from the company.
As a result, they are termed as active consultants.
The rest 87% did not earn a single penny.
As a result, the income statement is made only on the basis of earnings by active consultants.
So it completely overshadows the spending by the consultants.
That, therefore, camouflages a huge blip in the overall statistics.
From a newcomer, the facts are completely skewed.
They get an inappropriate representation.
As a result, they are not able to draw a proper conclusion.
Instead, they get the wrong picture and have high expectation.
The result, they get stuck within the pyramid scheme.
If you are not ready to forego the initial investment, you would have to continue for a long time.
Also, the consultants are almost groping in the dark when they first enter.
As the picture unfolds gradually, they find themselves completely helpless.
With the passage of time, the warm markets also begin to shrink.
This further exacerbates the problem.
A Genuine Product on Sale
The only factor that is positive is that there is a genuine product.
The Arbonne products are definitely top quality and effective.
There is also a genuine market for the product.
So if you are good with marketing products, you can actually look for potential buyers.
But let us just check the categories they service.
- Skin care
- Bath products
Perhaps 40 years ago green option in this segment had a novelty factor.
You now have hundreds of companies offering a wide range of all these variants.
They are quite easily available in regular stores.
Why would you then want to look for consultants and buy from them?
Despite that, if you found a reasonable number of loyalists, the question still remains.
Arbonne products are all available on the website.
Then why would you look up for a consultant and buy from them?
Moreover, you don&8217;t get any help in spotting targeted leads.
Let&8217;s face, it is not easy to spot customers ready to buy them.
These are quite expensive products.
With their easy availability on sites like Arbonne, the market size is shrinking as well.
Despite genuine products, the Arbonne pyramid scheme is not dependable.
A lot of the income is through the sale of these items at every level of the pyramid.
Almost all the sub-chains suffer if any one person slips.
Therefore, it proves just a genuine product cannot support a legit organization.
The pyramid scheme needs to be viable too.
That alone will ensure that consultants make the profit from these.
Limitation for Consultants
The Arbonne consultants face a series of limitations.
It is needless to mention that it surely impacts the reselling attempts.
This affects the entire chain of consultants across Arbonne.
The sale of each and every product has a bearing on the overall earnings.
Moreover, the hefty cost also limits relative exposure to these products.
Arbonne consultants have to follow strict orders for marketing their products.
They cannot use a custom designed website to sell this product.
Therefore, expanding their reach becomes quite difficult.
Arbonne insists on face to face sale, but sometimes it is just not possible.
The relative earnings suffer as a result.
This is detrimental to the overall growth potential.
A detailed study of the Arbonne pyramid scheme reveals another key problem.
Many consultants promise $200 worth free gifts if they buy $200 products.
Most probably they make these promises to woo customers.
So customers get nothing despite spending $200.
The Arbonne representatives coolly say they have to spend $250 to get these gifts.
This further exacerbates the lack of transparency.
It also erodes significant goodwill from the brand.
Moreover, the steep pricing also makes looking for clients a tough ask.
Studies have indicated that the failure rate amongst beginners is almost 99%.
This also increases the possibility of more people withdrawing from this scheme.
Arbonne Is a Better Business Bureau Registered Company
According to BBB, Arbonne International LLC has received 4.12 out of 5 stars based on 6 Customer Reviews and a BBB Rating of A+ so far.
Additionally, 19 complaints have been filed against Arbonne and its MLM or pyramid scheme that have been resolved.
However, unlike Younique that had a good number of positive reviews, 67% of the Arbonne reviews have been negative so far.
However, almost all of the complaints are focused on the resellers and customers disputes.
They are mainly because of the lazy sale representatives who don&8217;t take care of the customers after selling a product.
Overall, it seems Arbonne is taking care of the customers and their complaints through filing replies on the BBB site.
Whether Arbonne pyramid scheme makes money for the members or not, is the matter of lack of proper training.
It is because majority just join the programs but do nothing, and so they make no money.
The fact that Arbonne has been around for decades and is also registered with BBB means that they are legal and legitimate.
What they have done so far, although looks like an aggressive multi-level marketing or maybe even a pyramid scheme, hasn&8217;t been against any law in USA.
Is It Worth to Join Arbonne?
Now the important question is whether the Arbonne pyramid scheme is a worthwhile investment?
Does it make sense to invest your money in it?
Well, if at all you use Arbonne products, you could consider joining.
Apart from that, it does not make sense at all.
There is a genuine product in place, but the pyramid scheme is not worth the effort.
It has been conceptualized to maximize profit for the creators.
That means as a genuine and honest player, there isn&8217;t much meat for you.
It needs a lot of effort, and you have to put in many hours a day.
However, the returns may not justify the effort.
Any kind of MLM network needs consistency and persistence.
But the challenges are even greater in this case.
You can&8217;t be very sure about the income flow either.
Even if you think you can handle, Arbonne poses few more challenges.
The products are priced very steeply.
It is difficult to find a continuous flow of ready to buy them.
Some people may use it for once and then forget all about it.
With so many cheaper variants available, it is difficult to find loyal customers.
Therefore, for average individuals, this is not a worthwhile proposal.
If you want to earn money, there are many other ways.
You can always look for better opportunities with high-income potential.
For most, investing in Arbonne pyramid scheme will be a waste of time and money.