Is Shaklee a Pyramid Scheme? My Take On It
If you are looking to become a Shaklee distributor there are a few things that you should know beforehand… things that you won’t hear from other distributors or the company… things that aren’t so great.
There is a lot of controversy surrounding the legitimacy of this company. Questions such as whether or not it is a scam and even is Shaklee a pyramid scheme are thrown around. In this short review I intend to clear a few things up and go over what you MUST know.
Disclosure: I am in no way affiliated with Shaklee. I’m just someone reviewing this company as a 3rd party. So this review is as unbiased as its going to get.
Shaklee Business Opportunity Review
- Company: Shaklee
- Website: shaklee.com
- Recommended?: For some, more on this
Shaklee is a health and nutrition company that sells all sorts of health related products. They use a direct sales business model which means that anyone can sign up to become a distributor and make money selling their products.
They are also what you call a mlm business. This means that distributors can also get paid in the form of commissions for bringing new distributors into the business. And this is the part of it all that has people calling the whole thing a pyramid scheme.
How It Works
In order to become a Shaklee distributor you first have to purchase a starter pack. These starter packs include some of their best products to start out selling, a personal website to sell on, and guidance on getting your business started. They are basically packs to give you a kickstart.
When you are signing up you will be pushed to purchase one of the more expensive packs. These featured packs range from $349 to $1049. And just to give you an example of what you are looking at, their one pack, the Gold Pak, is shown below…
After you purchase a pack you are a distributor and you are ready to get going and can now start making money.
As I mentioned above, you will be selling these Shaklee products to make money. You will be able to purchase them at wholesale prices and then will sell them at a markup, keeping the difference.
Distributors will be able to sell the products at their own discretion. They provide suggested retail prices, but you can sell them how you feel fit.
Making money selling Shaklee products is great in all, but this isn’t where the real money is at. Every person that is making good money as a distributor knows darn well that the key is in recruitment, which brings me to the controversial mlm compensation structure.
The MLM Side of Shaklee
MLM stands for multi-level marketing. And what this means is that there is a hierarchy type structure where distributors can recruit in other distributors beneath them and they can then make money off of what those recruits do.
Making money is all about moving up the ranks. And moving up the ranks is all about increasing your PV or “point value”, which is a value that is attributed to every product there is. Commissions are paid on the PV of the total volume of sale. So in other words… its all about your PV.
And increasing your PV is all about recruiting more distributors that will contribute to your “teams” PV.
I’m not going to be covering the entire compensation plan here because quite frankly its confusing as all heck and it would take me forever to explain it all. But I will be going over some of its key features.
The first thing you need to know is that you can get “Gold Bonuses” instantly when you recruit new distributors into the business. But you only get these bonuses if you get these new recruits to purchase the Gold Paks starter packs, one of which I showed above. You can earn anywhere from $50 to $150 instantly from this depending on the PV of the starter pack that they purchase.
If you reach the rank of Senior Director you then qualify for Generation Bonuses. These can be a big money maker and you can earn commissions down 6 generations.
How it works is like this. When someone in your “team”, which is basically the people that were recruited beneath you, makes it to the rank of Senior Director they “break off” your team and form their own team which is then called your 1st Generation. Then if someone breaks off their team they form your 2nd Generation, and so on. You can make commissions from the PV of these entire generations up to 6 generations down.
When you hit the rank of Senior Director you also qualify for what is called an Infinity Bonus. This is possibly the biggest money maker of all because you can earn 8% commissions based on the PV of your total downline, meaning everyone that was recruited beneath you.
Isn’t This a Pyramid Scheme?
To be honest, this mlm is a bit on the shady side and calling it a pyramid scheme may be appropriate.
In order for this to be considered a product based pyramid scheme its revenue would have to be overly reliant on recruitment rather than retail sales to the general public. But since everything in the MLM is based on PV, which comes from from selling products, or getting your recruits to sell products…. this doesn’t seem like it would be a pyramid scheme.
It seems that the revenue comes all from selling products.
The counter argument to this would be that much of the PV comes from recruiting other distributors and getting them to purchase Gold Paks. This does directly effect your PV and you could actually move up the ranks from recruitment and getting them to buy Gold Paks alone. This is why you could call it a pyramid scheme.
Final Thoughts & What I Recommend
Ok… so while Shaklee can’t be considered a full-blown pyramid scheme, their business model does lean awfully close to being one. The incentive to go out and recruit like crazy is definitely there and this is how the real money is made. Because of this some distributors resort to deceptive means in order to get recruits in the door. That is why this business opportunity is often misrepresented.
While many people might tell you that becoming a distributor is a great idea, there is the chance that they are just trying to make money off of you. I have reviewed many mlm’s and I can tell you that with a compensation structure like this it is going to be very difficult to make good money.
I’ve said it a couple times and I’ll say it again… making good money here is all about recruitment. If you can recruit a lot of people under you and build up your downline, you can make good money, if not you are more than likely going to fail.
So if you are someone that thinks they have what it takes to talk people into this business opportunity and you like the Shaklee products, then go for it. But if you are hesitant and not sure if this is for you, then it probably is not.
Personally, I don’t have anything even close to a salesperson type personality and there is no way I would make it in this mlm business. I just wouldn’t be any good at recruiting. If you are like me then I would recommend you take a peek at how I make money online.
I make a living working for myself online, which I think is a pretty awesome job. You can learn more about it by clicking the link below that will take you to a post I wrote.
In the post I wrote I explain what it is that I do, how it all works, and how others can do the same.
Comments, questions, concerns??? Leave them below in the comment section and I’ll get back to you soon 🙂