USANA Health Sciences, Inc. (NYSE:USNA) releases their first quarter 2013 financial earnings after the market closes today. Through my research over the years I have found the
following statistics about USANA which I believe are pretty accurate and should be considered while reviewing USANA's quarterly result:
Over the last 21 years of USANA's
existance, they have recruited about 1.5 million associates.
Over 99% of USANA's associates never
made a profit, and instead lost money.
At the beginning of the quarter, USANA had about 247,000
associates who have purchased product during the previous three months.
This means 83% of USANA's associates have stopped doing business with
USANA when considering the total ever recruited.
Roughly one third of USANA associates,
or 82,000 are “active associates” as defined by their policies
and procedures (having personally purchased over $100 worth of
product during a four week period in order to qualify for
commissions). This contradicts their 247,000 active associates as
defined and reported in their SEC filings (having simply purchased a
USANA product).
USANA recruited about 60,000 new associates during the first quarter of 2013. In order for new
associates to begin, they must activate atleast one business center
which requires over $200 worth of products to be personally purchased
by the associate on top of a $29.95 startup fee. This amounts to about $13.8 million just for these 60,000 new associates to get started.
The majority of USANA associates are
not permitted to resell product to retail customers because they are classified as "non-distributing" associate. These same
associates are still required to personally purchase product over
$100 worth of product every four weeks as part of their obligation
toward USANA if they want to be eligible to collect a commission as
well as grow and keep their downline and/or preferred customer
purchase volume points. This is a blatant case of inventory loading as these
associates are stuck with product they are not allowed to sell.
USANA classifies a “full-time”
associate as one who has reached the leadership rank of “Gold
Director” and up. After 21 years in business, USANA has about 2900
full-time associates which is only 0.8% of their active associates as defined by their SEC filings.
The majority of distributor incentives paid to their distributors goes to this top 0.8% which are Gold Directors and up. Two thirds of USANA associates never received a single penny in commissions.
There aren't enough preferred customers
to cover the 5 customer rule (anti-pyramiding rule) to justify paying
commissions to the majority of those associates who collected a
commission. Most associates who collected a commission are still
losing money.
I believe there are more Chinese
Nationals who are USANA associates (illegally participating in
Multi-Level Marketing) than there are Chinese Nationals who are
Babycare Associates (legally participating in Single-Level
Marketing). I believe Chinese Nationals joining USANA account for the
majority of USANA's growth in both sales and distributorships as the
recruiting in mainland China into USANA's MLM has been in overdrive.
I believe these Chinese Nationals are counted toward growth in many
of USANA's MLM territories.
USANA should disclose during their
first quarter earnings conference call:
- the number of associates that received a commission during the quarter and of those how many are non-distributing associates. Dividing the number of reported Preferred Customers by 5 will give you the maximum number of non-distributing associates USANA can pay a commission to.
- Number of newly recruited associates during the quarter.
- Number of full-time associates currently active with USANA.
- The percentage of distributor incentives paid to these full-time associates.
- The number of active associates as defined by their policies and procedures.
- The actual associate turnover rate (instead of simply stating that it is high).
- The percentage of net sales that was the direct result of associates activating or keeping active their business centers.
- The amount of sales USANA received as a result of new associates purchasing a $1250 professional enrollment package.
- Number of associates that cancelled their distributorship.
- Number of USANA distributors (not Babycare) living in mainland China.
- Number of associates who share the same home address as two or more other associates (possible Chinese Nationals using an address from Hong Kong or other USANA territories).
Keep up the good work and please continue your research!
ReplyDeleteI have been a USANA distributor for over 7 years and a very successful one too. you say you signed up for 4 weeks, is that the only experience you have gained? You didnt even give it a chance...... now you go on and research what you really have not gained much knowledge about?
ReplyDeletekeep up the good work. although I personally wouldn't waste my time on saving stupid people who have egos too big for their own good. that's why I admire you.
ReplyDeletewow, the way you have miscontrued certain aspects of Usana's compensation plan is truly amazing.
ReplyDelete"Two thirds of USANA associates never received a single penny in commissions." Question here is, what have they done, or haven't done to earn anything? Only a handful of people succeed into greater heights, not just in MLM, but in everything, because only a few people choose to never quit until they reach what they aim for. So then, since you feel that USANA or any MLM company out there is a scam, go sue rather than rant and rant rant.
Stupid people you say? Ok, I'll give it to you, you are the best out there, best there ever was, the best that ever will be. not.
You are a great example of the typical USANA personality.
DeleteThe 66% of USANA associates that don't receive a commission check were recruited and mentored by the top 1% who do make a profit. And those that made a profit only do so from the 99% of remaining associate who do not make a profit. If you want to get technical, the real failures are those 1% at the top who can't train or help their recruits. In a real business, it is they (the top 1%) who would be fired for not performing their duties.
If those 99% of associates who never made a profit didn't join in the first place, the top 1% of distributors who do profit would never have made a single commission or profited themselves. You should really think about that. Thus the whole premise of the pyramid scheme.
Since you think you know the compensation plan, answer me this: If I sign up 10,000 preferred customers but don't myself purchase over $100 worth of product every 4 weeks, how much money would I make at the end of the year?
I'll save the readers the time and answer it: I would make ZERO dollars. But wait, say I brought 10,000 customers to USANA, and spent 50 hours a week meeting with people, and 20 gallons of gas each week, and went to 100 USANA events, and stopped talking to my friends and family, and quit my regular job, and etc... Yet, I would make $0.00.
As for your "never quit" statement: You've drank the special USANA kool-aid haven't you. The pressure USANA leaders put on their recruits by drilling them on the "never quit" phrases is only to keep the associate in the pyramid scheme longer so they pay out more money which turns to commissions for the leaders. It's all a huge sick mind game.
I'm not sure what planet you are from, but in the United States, one cannot simply "sue" a company. I've never been a USANA associate. I haven't lost any money in USANA (because I never joined). So I have nothing I can sue for. So all I can do is educate others and hopefully the FTC takes proper action against USANA.
I think you are assuming a very strange scenario. Why would I recruit 10000 people but unwilling to buy $100 products every 4 weeks? It's like I run a company for business but not paying rent or other utilities. Not to mention $100 every four weeks is for my own health or family usage.
DeleteLet me do the math for you: assume every customer of 10000 you recruited buy the lowest point product which is toothpaste for 5 points. For 10000 people you get 50000 points. If place properly you get 25000 points on each side. Then you get commission of ($25000+$25000)x10%=$5000.
Let's say it's no perfect world so you misplace some points and you only get 50% which is $2500. If you do that in a year you pay $100x13=$1300.
If a person like you know you can get $2500 but unwilling to pay $1300, I would say there's something wrong with your brain.
One can always find a reason to attack something he dislikes or hates, but it doesn't stop other people gain wonderful results from it.
You missed the point.
DeleteIt doesn't matter if someone has customers or not, USANA forces the associate to personally purchase over $1300 a year in order for that associate to collect commission from their group sales volume. If USANA did not require this purchase, then the company would go out of business in just a few months. All the associates would drop out after a few months and executives of USANA would go and form another MLM.
Anon mentioned:
Delete"...Question here is, what have they done, or haven't done to earn anything? Only a handful of people succeed into greater heights, not just in MLM, but in everything, because only a few people choose to never quit until they reach what they aim for...."
Never quit to what? To recruit countless number of people? These are one of the VAGUE statements I hear from USANA Associates like you.
And to add:
"...Why would I recruit 10000 people but unwilling to buy $100 products every 4 weeks?..."
"...Not to mention $100 every four weeks is for my own health or family usage...."
These statements just prove further that the binary compensation plan is nothing more but a mere "customer referral program" wherein a percentage of the money from their purchase goes to those who recruit them... And the only way to earn is by recruiting more.
If they can't find anyone else to recruit anymore, then they start losing money.
Difference is, associates hard-sells the products. It takes A LOT to convince people to become preferred customers or associates due to the products' very hefty price. This is why the Watchdog calls it a pyramid scheme.
If so, what makes being a USANA associate a "businessman" or "entrepreneur" then?
If the products are really worth it, then maybe USANA should prove that the demand is MOSTLY from the preferred customers or retail sales, and not from the associates themselves.
By the way. I use the Essentials. I use Proflavanol and sometimes, BiOmega. But I am not a preferred customer, and most of the time these are FORCED PURCHASES from a relative. Because if so, I'll only be stocking more USANA products in my cupboard unless I take more than what I needed.
I joined Usana early this year and I was lucky enough to have earned back half of the money I spent when I signed up. I was recruited by my roomate who happened to be one of my close friend. One of the Directors was her cousin and was earning a huge amount of money every month, she made it sound so easy. The Director personally invited me for a short presentation, she showed me her monthly income and I too want an income like hers! She shared her experience and hardwork and I thought I too can do it. My close friend was a bit pushy but in a very discreet way, she even offered to let me borrow money for the start up kit. I was too hesistant because I felt she was too eager to make me sign up. She told me I was her close friend and she badly wanted to help me and I should not tell anybody especially her cousin that she let me borrow because its against the so called rules of their team. I was grateful for the act but something is holding me up so I did some research and I saw this blog actually it was the first result! I read each and every comment in this blog. Some from avid Usana members and some were from ex Usana members. I was so confused that I don't know who to believe to, I couldn't back out because my close friend already offered me the money. I thought I should be the one to judge Usana, so I gave it a shot.
ReplyDeleteI work in an alternating shift and my work requires prolong hours of standing and walking. When I get off work I would still go to Usana office to attend trainings and meetings as well as presentations. It went on for months and I got tired. I got tired of their SHIT! I should have listened to my gut telling me not to join Usana. I spoke with my close friend who happened to be my upline, she encouraged me to continue. So I continued buying the products I need to buy just to keep my points from not being forfeited. They told me that it was a teamwork, they would recruit people and put them as my downline. They recruited people and placed them in my Left Business Center. I didn't earn any weekly commission because I don't have anybody in my Right Business Center but they encouraged me to continue to try to recruit people. I was lucky to have had recruited 3 but the rule of the team was to place all the recruits in one Business Center so the the recruit would move and try to recruit to earn weekly commission.
I decided to stop because I am the type of person who doesn't like small talks especially to strangers. I had to talk to all the strangers I happen to meet because I need to have fresh leads to recruit. I became friendly but I wasnt sincere in the friendship I offer. I only talk to people to check if they can be recruited or not. If they don't want to join then I don't consider them as friends anymore. I had one prospect who had the most horrible attitude! I dont personally like her and I would normally won't hang around with people like her(given a choice) but I had to because I need to be able to recruit people. My products were piling up and my friends were annoyed because I keep on pestering them with Usana. I realized it was not me anymore, I am becoming someone I hate the most! I realized if I go on and if ever I would get rich, I won't be happy because along the way I burned bridges and had totally altered myself.
I stopped and my close friend who recruited me doesn't talk to me anymore. I guess I got crossed out from her life because I am useless, I am not generating any income for her. I am happy I stopped, I may not be earning a lot like her cousin or maybe her someday but I have peace of mind and clear conscience. We can't bring money when we die and money can't buy everything.
ex-silver director 2009
DeleteThat is the story of thousands on people. Most of the people recruited joined because of someone they trusted. So the best way to push packages is to recruit someone and get that one person to run and beg all their friends to join.
Your story is all true but the part where you said the director earning a lot of money isn't. I was considered one of the top earners for my position before and let me tell you. I was still in debt because of the culture of Usana. They want you to dress in suits, pay hotel meetings, travel miles and miles for presentations, buy products, create all these situations for recruitment potentials. A lot of business expense (that you can not claim on your tax refund, I tried) ... so even though I was making 300-600 a week in usana (that is big.. equivalent to 4 propacks a week in points, 2 pro packs in each leg worth of points is ridiculously hard to do weekly. I promise you that director that was your upline didn't make that money. It's really hard to make money in usana. I want to emphasize this because this is the main reason people join. If it was easy to make $... why would a top income earner silver director like me quit...
well #1 reason is those points are not going to come easy every week... and the best way to get massive points quick is to recruit pro packs... selling products can NEVER pay the bills... its all from packages.. that runs out and when it does you're desperate to play mind games and make new friends... friends only to be down line and that is just a sick way to live... you can make millions but you become a scammer...
tell me if Dr. Wentz was a good person.... how can he cause this pain to people's pockets? just another UTAH scam religion to me. well I guess you do lose weight from the reset but so does starving yourself and that's what you have to do with the reset anyways..
Congrats on reaching silver director, even though it's an "ex-" title. Nobody said this business was going to be easy. You earn exactly what you deserve.
DeleteIf you think that you can earn money quick after starting a business, you don't know entrepreneurship.
Here's an example:
You open a supermarket. You bought the land, hired a management team and other workers, and stocked the inventories. Did you really think that by finding 30 - 40 customers can help you start gaining profits? No, this does not happen. You have to first pay off the bank loans you've made. You have to subtract out the expenses you've committed to running this company. How do you overcome this problem? You need more people to shop at your store.
If you wish your USANA business to be highly successful...as to earning $2000 a week, you'd need to work much harder. If you're looking to earn some extra bucks with an additional income stream, then $300 - 600 a week is really decent. I mean, you still have your full-time job to go with this right? If you quit your job already for this $300-600/week, you better have expected that you'd need to work extra hard to find more Preferred Customers or Associates to expand your business.
Honestly, silver director is like the highest of the lows. You don't have to ask your friends to be your downline if you feel awkward. Meet new people and tell them about it. My belief is to not force this on people. People rarely believe any words coming out of a non-health professional's mouth about health. Heck, some people might not even take the doctor's advice. I've seen this regularly when patients told me that they disregard doctor's concern about their high blood pressure condition. They said they don't feel anything so they stop taking their meds. This is after they got a reading of 150/90 at our pharmacy.
DeleteUSANA is not a miracle drug. It does not guarantee curing cancer. It does not guarantee curing diabetes and improving blood pressure readings. USANA is a state-of-the-art nutritional supplement that delivers what it promises. It WILL make your body feel more energetic over time by letting the cells grow and divide properly with proper nutrition. There are cases where patients become stronger; strong enough to go through a successful surgery in which they were unable to withstand and greatly improve their recovery state. Put it this way. Imagine USANA has a bullet for you to go to war. If you don't have a gun or if your head is blown off, what is your chance of winning the war? If you have cancer (touch wood), USANA will give you an extra bullet for you to fight it. USANA will give your cells a chance to properly grow and your immune system to better fight the cancer cells. Does it guarantee that you'll overcome cancer? That depends on your body. Like I said, without your head or your arm, how're you going to use that extra bullet? But it's still good to have to use as fire power when you get a gun.
Starving yourself does make you lose weight but in the meantime, your body is deteriorating due to a lack of nutrition. Your body has to divert its glucose storage to the vital organs to keep them going, thus make you very tired. Sure, there are fats that the body can utilize but it takes 16hrs - 2 days to let the brain and the body to get used to this change. This process also makes the blood more acidic.
Yes, this business does take time to build but once you reach that inflection point, everything would become smooth. Where is it? How long does it take? I don't know. I don't even know when mine will appear. My belief to keep myself going is that aside from this possible financial freedom, my health has a better guarantee with USANA than any products out there. I may spend $100 each month but at least I will be saving thousands of healthcare cost I will have to pay to get meds, get tests, and feel like a zombie just because I didn't take care of my body well enough. Come on. THis is our own health we're talking about. If we don't put more commitments into it, nobody will.
Much of what you wrote are illegal health claims and subject to fines by the FDA. You as a USANA distributor are prohibited to make such claims. You can't make these claims because they are not true. If what you state about USANA were true, then USANA would be a $50 billion company and wouldn't need to scam over a million people with a phoney business opportunity where only 1% of participates make a profit because they have thousands of associates in their downline all purchasing product because it is a required purchase to participate.
DeleteI really like to hear how these people were scammed in details. Can you bring up some hard evidence in what way these people were scammed? Were they tricked into this business? I reckoned everybody had to sign a contract that clearly stated about the autoship rule. If they didn't like it, they could've went for the full refund.
DeleteWhat is this phoney business opportunity you speak of? Only 1% of the participant makes a profit because only that 1% worked to the point where they gained a profit. When you say "only 1% of participates make a profit", why are you omitting the people who are already earning pay cheques (probably $130/month) who are in the midst of getting to making a profit. Where did you even come up with "million of people" to scam? I don't believe that USANA makes money simply from the autoship...it's impossible to reach the company's revenue simply with just autoship.
I don't know if you understood my example up top about entrepreneurship...so here it is again....
You open a supermarket. You bought the land, hired a management team and other workers, and stocked the inventories. Did you really think that by finding 30 - 40 customers can help you start gaining profits? No, this does not happen. You have to first pay off the bank loans you've made. You have to subtract out the expenses you've committed to running this company. How do you overcome this problem? You need more people to shop at your store.
How many people is enough to pay for your autoship? Depends what they buy. If, at your supermarket, they only come in to buy $1 candies, good luck with relying on this man's purchase to make you a profit.
I think a lot of people are misunderstanding that USANA is a cake-walk business. It can be but it isn't always one. If you join USANA and sit there playing computer games all day, chances are that your USANA business will not blossom.
The effects of vitamins on health can be found on google scholar papers, if you haven't read one before.
The only non-scientifically proven claim I have mentioned is the part about how USANA will help your body withstand a surgery. It was a anecdote of one of the USANA preferred customer turned associate.
In regards of the starving portion, those are knowledge found in textbooks and encyclopedia. If you need to, please look it up on Wikipedia if you consider that a safe source.
A lot of people are not adapted to this new thinking of the need of vitamins...You may not work at a medical field and watch patients suffer from the inabilities of medicines to actually make them better rather than alleviate their symptoms...I've witnessed vitamins play their roles in recovery
To the anon above,
DeleteIf I can just get a video recording of their "presentation" and explain whatever they are saying, you might understand.
But in that presentation, these "leaders" simply say that "you don't need to follow that autoship to be able to earn." "what you will get from your autoship is enough for what you need." Seriously? That's how they lure their next victims.
But it seems that you're not reading enough, and you've been saying the same thing, so I don't think the Watchdog owes you an explanation. And even how long my explanation would be, your response will be the same, regurgitated response a USANA associate gives to us "negatives".
Whoop-a-dee-doo-dah.
One of my college friends sent a msg to me in FB asking if I want a part time job, so since I'm not so busy with my work, I got interested but I find it quite suspicious since he's not telling me what is the work all about so I meet him personally yesterday. I'm quite shocked when at that moment he told me to talk to one of his colleagues and director so since I'm interested with the part time job and he mentioned that it is online, I said yes. But I never thought that I would have to do whatever the director said one would "just" do to earn "that" amount of money on a weekly basis. The directors are good salesmen but thanks to my background that I was on my guard all the while of the conversation. One thing I've noticed is they are like blinding you with riches and "luxury" and yet inside my mind I wanted to ask him "you're already a director then why are you still doing this?" They are just targeting one aspect of a person's needs which is the physiological needs (ref Maslow' Hierarchy of Needs). And another thing, from those two directors that I've talked to yesterday, they are earning that much and yet when you look directly to the eye you would not see even a hint of happiness. Yes you've read it right. To my impression and from my experience that I always communicate to different people, the higher director, is not happy (I mean that heartly happiness) and it appears to me that he is hiding his "dirty little secrets". He even mentioned that he worked harder today because he already had a child. In the back of my mind I was like "you've been there for 3 years and yet today you're working harder because you have a child?"
ReplyDeleteGuys, I think it's good to talk to these people as well for you to learn and to appreciate what you already have. My colleague said he already quitted his job but as for me I cannot get the fulfillment I need and want in USANA. The USANA people just want you to feel little because they are focusing on what you don't have and they want you, as they promised, to have it in that "hassle free" way. But guys, mind you, we are not purely economic people (means who strive just for money for riches), a spaghetti is better and healthier than an instant noodles.
Ive personally experienced the Usana culture. I was dating this girl for a while and things did not work out, ended quite badly actially and I never thought I would speak to her again. We were together for three years and it just came out of the blue when she ended it and I found out she was with someone else... Hey, it happens..
ReplyDeleteAnyway long story short a couple of years later I get a cryptic phone call from guess who... It was as if nothing happened she was talking to me like we used to and she asked to have dinner. Intrigued, I agree...
Sure enough it was about Usana (how low can you get???) and she gave me the whole presentation... I didnt understand MLMs back then and I am a bit of a fitness nut so I agree to buy the vitamins...They were expensive as hell but I thought it meant they were top notch...
So it goes on for a while she kept calling and inviting me to join the business side with her and her new boyfriend (surprise, surprise). I decided to research Usana and came across this blog. I also came across another blog about MLMs which pretty much told me about the unsustainability of the business model (doesnt take a genuis to realise it).
I purposely kept dragging my committment on to join the business as a social experiment. She kept calling as if she was my best friend. One day She called and I decided to test it out. The conversation started great, her tone was friendly and all. I then told her I wasnt interested in the business as I believe it is not viable. Suddenly guess what? Her tone suddenly changes. I tried to keep the conversation going but she just gave me one worded answers.
She ends the conversation by saying she was at work and she was really busy (at 8pm??? whatever!!!). So we end the conversation and I have not even heard a single peep from her since. Nothing. Its mow a year and a bit passed, not a single word...
Of course I stopped getting the vitamins and now buy retail sold brands. They do the same thing. I even think all vitamins (if youre reasonably healthy) are not necessary but I like the discipline of drinking them regularly... Mind you, I havent been ill and when I get the flu it only lasts one or two days...
The bottom line is I met all the people from the Usana 'crew' in Sydney. They all have the same demeanor, all similar age ( it seems 25-35 year olds are extremely gullible) all similar shallow personalities. I just do not get it.
I believe Usana is a scam. The business is built on high turnovers of associates. Otherwise the top 1% will stop making money. Theres only so many people in a town, state and country. Do the maths.
Anyone considering this should really beware. Educate yourself properly and make your own decisions. Not one of those idiots in a suit were even remotely intelligent. For God's sake, theyre selling vitamins in a suit!!!! C'mon....
That was very educating. You got to experience USANA associates in their desperate and sleazy way of recruiting. The associates will act like your new best friends until you stop funding their commission checks.
DeleteYou want to really piss the upline off? Have USANA refund your purchases. This refund causes your upline to have negative volume, which is like taking their commissions back away from them. With a negative volume, if they left USANA, they would have to pay USANA for the negative volume. Most people don't ask for refunds because of threats and pressure from their upline not to. Upline Leaders number one argument goes something like this - It's your fault you failed at this business opportunity, so don't make the rest of us pay for your failure.
Are you sure they have to repay USANA if they leave or is the negative volume just offset by future volume (if possible). Have you ever heard of anyone receiving a bill for negative volume?
DeleteI think recollecting commissions based on returns would require a clawback provision in the distributor agreement, have you ever seen anything like that? Even with a clawback provision, I don't think a repayment would be legally enforceable.
DeleteHow do they get pressured into not quitting? If i get pressured, I'd quit right away. Whether it's my fault or not that htis business isn't going smoothly, that doesn't sound like a supportive upline. Without any proper upline support, I'd be too uncomfortable to stay in this business anyways. Besides, it's 100% refund minus the shipping. You get to finish the whole bottle first before sending it in for refund too. Why the heck would I not refund as a revenge to my upline?
DeleteIt is common amongst all MLM companies that the upline pressures the downline to keep purchasing product and not leave the business opportunity. Many top USANA associates claim that "only quitters quit". The psychological pressure and damage USANA does to people is staggering. It operates as a cult.
DeleteYou stated "Besides, it's 100% refund minus the shipping. You get to finish the whole bottle first before sending it in for refund too."
False. You can only refund unopened items. And its only a 100% refund for the first 30 days of joining. After that it is 90%. USANA states you have 1 year to return product, but that is not true in most cases. You only get 3 months after a "reformulation" occurs on a product. USANA reformulates their product almost every year (guess it was never the right formulation). Also, when you reorder through autoship, you are basically signing a waiver that states you consumed or resold at least 70% of the products (part of the 70% rule). So I don't think USANA will let associates return product after they repurchase more product.
If you put as much effort into USANA as this, you would be a millionaire. I appreciate that you want to help people. I joined USANA for the opportunity to save lives and help people earn time freedom. I know many people who's lives have been changed for the better for its products. One of my friends Uncle had Type 2 Disbetes, high cholestrol, sleep apnea, needed an oxygen tank to sleep, was over-weight, and taking tons of meds. A year later he lost 73 lbs, is no longer diabetic, off his meds,can sleep peacefully, and all thanks to USANA.
ReplyDeleteI personally believe that you have not got enough personal experience with USANA to formulate unbiased opinions. But whether you're wrong or right, I support your freedom of speech. May happiness and prosperity follow you for all the days of your life.
http://www.theatlantic.com/health/archive/2013/07/the-vitamin-myth/277947/
Delete