Arbonne is a multi-level marketing (MLM) business that has been around for quite some time. It sells a variety of products in the health and beauty space from skincare to makeup to nutrition supplements. Following what seems to be a recurring theme among MLM’s, Arbonne has been hit with lawsuits and investigations throughout its lifetime. These relate both to the safety of their products as well as their business structure. Arbonne has survived through it all and continues to produce revenues of over half a billion dollars annually.
Arbonne Company Overview
History of Arbonne
Arbonne was founded in 1980 by a Norwegian businessman named Petter Mørck. Mørck was a veteran of the Norwegian skin care industry, but he began to feel that the products they were selling were potentially harmful to their customers. He moved to Arbon, Switzerland and began to develop his own line of more natural products. His vision was to include no petroleum or animal-based ingredients in his products.
This led to Mørck founding Arbonne in 1980 in Orem, Utah. The company moved his headquarters to Irvine, CA just four years later. Throughout its early years, the company experienced somewhat slow growth and avoided any major scandals during that time. However, in the early 2000’s, things began to take off, and trouble wasn’t far behind.
Arbonne Company Investigations
Arbonne has seen its fair share of investigations and lawsuits as a result of both its products and its operating practices. Most of these allegations have come very recently, occurring in 2009 or after. In 2017 a Texas couple filed a lawsuit against Arbonne in Federal court claiming that the company is “a pyramid scheme masquerading as a direct seller of health and beauty products.” The suit went on to claim that the couple spent nearly $3,000 on products and fees with the company and only received $30 in payments.
The case mentioned above became a class action lawsuit pulling other distributors into the mix who claim to have lost money with the company. The plaintiffs allege that the company does not make money from selling products but only by scamming distributors out of their money. Allegations in the suit state that the only people making money in this pyramid scheme were the 5 people at the top of the pyramid who were named as defendants. Ultimately, the case was dismissed in 2018 and the claims against the company were never proven.
In addition to allegations about their business practices, Arbonne has also had some trouble with their actual products. Since 2009 they have issued at least 6 recalls of their products due to high levels of different types of bacteria found in the product. In some cases, these recalls were mandated by government regulatory agencies. These issues with their products have left some with a negative impression, but sales do not seem to have been greatly affected.
Arbonne Current Company Structure
The original founder Petter Mørck was actively involved in the company up until his death in 2008. His son, Stian Mørck is still a part of the company today serving as Brand Ambassador. With the company, and MLM’s in general, growing rapidly in the mid-2000’s revenues and the number of consultants quickly grew. However, things peaked around 2008. Numbers began to fall, and Arbonne’s parent company Natural Products Group LLC filed for bankruptcy in 2010.
Today the company is owned by a combination of banks and private equity firms. Revenues have been growing slightly over the past few years, and the company saw revenues of $544 million in 2017. Today the company has approximately 265,000 independent consultants, which is down from their peak of over 1 million in 2007.
Arbonne Product Lines
Arbonne is focused on health and beauty products, but they sell a wide range of items in that space. One of their big selling points is that their products are made without any animal products, parabens, and other ingredients that are deemed unsafe by many in the industry. The three main categories of their products are makeup, skincare, and nutrition.
Arbonne has quite an array of makeup products. They range from individual items like lipstick and mascara to entire kits that include many items and a carrying bag. Their skincare line is their original product offering and still some of their best sellers. They offer many different skincare regimens such as brightening kits and lifting kits.
The company has recently entered the nutrition arena as well. They offer products such as protein shake mix, herbal tea, and energy powder. Overall, customers seem to like their products and have given the products good reviews. However, most of their nutrition products are expensive compared to other nutrition supplements.
Company Marketing Practices
Arbonne is a self-proclaimed “word of mouth” business. Being successful requires reaching out and booking appointments and meetings with many people. One of their first steps in getting started is advising their consultants to create a 100 Person list. This is essentially a list of 100 people that you can talk to who may be a potential customer or who may know someone who could be a customer.
This type of marketing approach is generally not very popular and often leads to consultants irritating their friends and family. Pushy salespeople are usually disliked, and that is what it takes to be successful selling these products. Most people also frown upon the company’s marketing techniques for recruiting new consultants as well. There is a general feeling that the company overstates potential earnings and tricks people into signing up with false hope of a large income.
Making Money with Arbonne
There are many claims about the company enticing people to sign up as new distributors with false hopes of earning a high income. But what are the chances that someone will actually make a good income as a distributor? In reality, those chances are extremely slim.
Arbonne’s Income Disclosure Statement is a little bit misleading at first glance. It appears that the average consultant makes just over $800 per year. However, their averages are calculated based only on active consultants. Only 17% of their consultants did enough business to remain in active status, which means that 83% of their consultants earned zero dollars in 2018. People making over 6 figures annually with the company in the US equate to less than one quarter of one percent of their 175,000 consultants.
How to Enroll
Like most MLM’s, enrollment as an independent consultant is easy. Just navigate to the Arbonne website and you can sign up from there. The initial enrollment fee is $79 plus an annual renewal of $30. Upon initial enrollment, you also need to purchase a starter kit which varies in price. You’ll use your starter kit to begin demonstrating the products and get your first customers.
The basics of the compensation plan are pretty simple. You earn a 35% commission on normal retail orders and a 15% commission on Preferred Customer orders. Things start to get complicated when you factor in bonuses and sales volume from your downline.
Depending on your current status, you can earn bonuses on the sales of your downline up to six levels deep. You can also earn cash awards through their Mercedes-Benz Cash Rewards Program that are designed to allow you to purchase a new car. Very few people ever achieve this status.
Sales and Marketing Techniques
Having a large network of friends and acquaintances is one of the easiest ways to get started in this business. The more people you can talk to about the products, the more likely you are to make sales and sign up other consultants. A large social media following is also a great way to introduce people to the products and encourage them to buy from you.
Comparison to Other MLM’s
Arbonne’s compensation plan is similar to that of other MLM’s; however, your odds of making a profit seem lower than average. Given that roughly 83% of their U.S. consultants have zero earnings, your odds of success are quite low. Their products are a bit on the expensive side, although they have generally received good reviews.
The company has a fairly diverse product line which does provide more opportunities for sales. Generally, Arbonne does not have the same brand recognition that many of the larger MLM’s have, so that tends to make selling a little more difficult.
Conclusions For Arbonne
Arbonne is a legitimate MLM business that has been around for nearly 40 years. They have multiple products in the health and beauty industry, and their products are generally well liked. Making money with Arbonne is quite the task, however. Very few consultants make any money, even as compared to other MLM’s. If your goal is to make a full-time income in this business, you should consider exploring other direct selling opportunities.