Herbalife Distributors Upset About Recent Company Change

Michael Johnson,Herbalife,CEO


A handful of Herbalife’s Internet distributors are rebelling against the company’s move to corral them and exert greater control over their sales and marketing.

The weight-loss products company started earlier this month requiring distributors to move their far-flung retail sites to a new corporate-controlled hub, goherbalife.com.

Herbalife portrayed the policy, which went into effect Nov. 15, as an effort to curb bad behavior and prevent independent distributors from making false product claims.

But a few holdouts, including shoptoshape.com, herbal5.co.uk, and herbalhappy.com, had yet to move to the new destination and were still operating stand-alone sites as of Friday.

Some operators of these sites believe Herbalife’s real aim is to keep them from selling products at discounts, which undercuts the company’s recruiting efforts, sources said.

The retailers, which only sell discounted products and do not recruit, have been allowed by Herbalife to sell through their own Web sites and advertising for 15 years, sources said.

The change is just the latest of several that have made it difficult for them to compete, causing the number of independent sites to decline from about 300 in 2012 to about 40 earlier this year, according to sources.

Typically, independent sites advertise Herbalife products at anywhere from 25 percent to 45 percent off the list price, but they can’t post those lower prices on the new Herbalife hub.

The goherbalife.com subscription agreement states “the on-line ordering functionality included in GoHerbalife.com quotes Herbalife’s suggested retail price for all products.”

This means the only way a consumer can get the instant 25 percent discount is to sign up to be an Herba­life distributor, which costs $60 and carries more stringent return policies.

The change comes at a time when both Herbalife’s sales and distributor ranks in the US are declining as a result of the controversy swirling around the company since activist Bill Ackman took a $1 billion bet against it almost two years ago.

Ackman has accused Herbalife of being a pyramid scheme in which salespeople make the bulk of their income by bringing in new recruits rather than selling products to consumers.

Herbalife, which is under investigation by several regulators including the Federal Trade Commission, vehemently denies the allegations.

The company, which declined comment on this story, provided a different rationale when the Web change was announced earlier this year.

“The websites are designed to be in compliance with applicable requirements about product claims and they provide a consistent brand image for Herbalife products,” the company said in an advisory, adding the goal is to “promote a level playing field for all members.”

Reported Originally By: NY Post

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