What’s Working for Melaleuca? How This American Wellness Company Became a $2 Billion Success Story

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    What’s Working for Melaleuca? How This American Wellness Company Became a $2 Billion Success Story

    In 1985, Wayne Gretzky led the Edmonton Oilers to the Stanley Cup, Bruce Springsteen topped the charts with “Born in the U.S.A.,” and families gathered around drawing pads to play the new board game Pictionary. That same year, a health products manufacturer named Melaleuca opened its doors.

    Headquartered just a few hours south of the Idaho/British Columbia border, Melaleuca: The Wellness Company entered the consumer goods market with just seven employees and eight products. Originally, all of those products were formulated around the natural power of Melaleuca alternifolia oil, also known as tea tree oil.

    Creating products inspired by nature and proven by science became the privately held company’s focus, and the Idaho upstart steadily began developing exclusive high-quality wellness products. Nearly four decades later, Melaleuca manufactures and sells over 400 products, such as vitamins, sports nutrition products, home cleaners, laundry detergents, soaps, lotions, and cosmetics, all developed with innovative, original natural formulas.

    What began as a small business has now become the largest online wellness shopping club in North America, operating in 20 countries and territories with annual revenues of more than $2 billion worldwide. With more than 2 million customers shopping every month, Melaleuca says it’s helping its customers live healthier, more vibrant lives.

    Why did Melaleuca, Inc., flourish in Canada?

    By the mid-1990s, Canada had already become one of the most eco-friendly countries in the world. Recycling was a national practice. The Canadian market was especially receptive to a company offering naturally derived, environmentally responsible, biodegradable ingredients in their home and health products. For example, instead of formulating its cleaning products with caustic chemicals, like ammonia or chlorine bleach, as the major manufacturers have done, Melaleuca used citric acid and pure essential oils because they are gentler on the environment, safer and effective.

    These alternative ingredients allowed Canadian shoppers to see that Melaleuca, Inc. was a different kind of company. It wasn’t what they were finding in their local grocery store or drugstore or through the mail. This brand with nature-inspired products resonated with their values, especially when they became aware of the harsh chemicals that Clorox, Colgate-Palmolive and Procter & Gamble were using in their products. 

    Melaleuca products: better for health, home and environment

    Perhaps even more so than US shoppers, Canadian consumers were seeking products that were better for their health, their home and the environment without sacrificing performance. Once Canadian families learned about Melaleuca’s niche in the marketplace, orders began to flow.

    Many of Melaleuca’s first Canadian customers appreciated that Melaleuca had pioneered product concentration, a strategy that saves plastic, fuel and emissions waste. The Melaleuca EcoSense home cleaning line in particular embodied a commitment to environmental wellness. By choosing these ultraconcentrated products, Melaleuca shoppers have saved the environment from 292 million pounds of plastic waste, 181 million litres of fuel consumption and 1.53 billion pounds of harmful gas emissions worldwide.

    Growing Melaleuca’s Customer Base

    Melaleuca develops, manufactures and ships its wellness products directly to the doors of its customers. Managing the entire process allows Melaleuca to control quality and provide an exceptional customer experience while avoiding the costs traditional businesses must pay for, like retail space, brokers, middlemen and mass advertising.

    Without advertising or shelf presence at grocery, drug and department stores, Melaleuca has looked to its satisfied customers to spread the word through person-to-person referrals.

    Those early adopters of Melaleuca products in the Canadian market focused their messages on the advantages of Melaleuca’s proprietary products. They learned from experience to examine the scientific substance and research behind the formulations. Product education and communication were the key to growth.

    Melaleuca’s history of innovation

    Ever since the company was founded, Melaleuca’s Research & Development team has been set on developing products that are superior to what consumers already use. Their standard is to create products better than anything else on the market, which ultimately encourages Melaleuca customers to naturally share the products they love with their friends.

    Many customers point out that Melaleuca has a track record of developing household products that outperform the national brands. Instead of using cheap fillers and ingredients to create higher margins that reward stockholders like many of the national brands do, Melaleuca takes an opposite approach.

    The company invests heavily in research to push product innovation forward. One way they accomplish this is by using higher-quality, better-performing ingredients despite the higher cost. Plus, they claim they won’t release a new product until consumer testing shows that it either outperforms the market leader or offers a better value. They explain the science behind their products to educate their customers rather than rely on publicity stunts, TV ads and social media influencers like competitors do. They’ve seen that educated consumers become their most loyal shoppers.

    Why Melaleuca customers stay loyal

    Over the years, Melaleuca’s consistent growth and customer retention in Canada and the US underscore Melaleuca’s philosophy that “the company with the best products wins.” On April 8, 2020, Melaleuca CEO Frank VanderSloot tweeted: “97.7% of our customers who ordered Melaleuca products in February ordered again in March. 97.7%! That’s a new record! For 3 decades we bragged about a 95% reorder rate. Other companies could not believe it. Then it became 96%! And, now, last month…97.7?!? That’s unheard of!”

    With no signs of slowing down, Melaleuca recently bought a new 47,000 m2 distribution center in Missouri to serve its North American customers. This massive facility complements its Idaho and Tennessee warehouses, ensuring that the vast majority of US and Canadian packages arrive at customers’ doorsteps within 48 hours of their orders being placed on Melaleuca.com.

    Melaleuca aims to create exceptional wellness products, relying on their unique properties to be worth sharing. A small percentage of people who love Melaleuca products choose to refer customers.

    Is Melaleuca an MLM?

    No, Melaleuca is definitely not a multi-level marketing (MLM) company. Since the referral side of the business has caused some to wonder if Melaleuca is an MLM, several experts in the legal, business, legislative and regulatory industries have weighed in. As they researched the question, they concluded that Melaleuca’s operations, incentives and culture are unlike anything in the MLM industry.

    Here are a few of the differences: A traditional MLM business model consists of distributors who buy and resell products to their network. This means that MLM distributors purchase products, usually front-loading with large amounts of inventory, and then try to sell that inventory to friends and family. This type of marketing—from one purchase level to another purchase level—frequently leaves distributors with more product than they can sell, stuck with outdated inventory they can’t fiscally recoup.

    Instead of purchasing, selling, and distributing products, Melaleuca marketing executives share their product knowledge with potential shoppers and help them set up a shopping account. Once that person orders, the company ships products directly to the new customer and cuts a check to the marketing executive as a thank-you for the referred customer. There is no inventory (which means no front-loading), no distribution of product and no personal risk. In fact, Melaleuca’s company policy prohibits the resale of products.

    These differences, along with others in Melaleuca’s Consumer Direct Marketing model, had never been attempted before 1985. And Melaleuca says that nobody else in Canada or the world at large operates like they do.

    Melaleuca Foundation: Built to Last

    Melaleuca, Inc., has flourished since its expansion into Canada, showing that it has been built on a foundation that will last. Melaleuca founder Frank VanderSloot, who now serves as Executive Chairman of the board of directors, foresees a bright future.

    “Melaleuca’s growth continues to astound me,” VanderSloot said. “We have grown into an operation that enhances lives all over the world. The opportunity we provide for the little guy to get ahead financially and for those individuals and families that are now living healthier, more vibrant lives because of Melaleuca’s products is what it is all about.”

     

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