Melaleuca (company)

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This article is about the direct-consumer company; for the genus of plants, see Melaleuca

Melaleuca, The Wellness Company

Type	Private
Founded	1985
Headquarters	Idaho Falls, Idaho
Industry	Health
Revenue	Melaleuca Sales Graph From 1985 to 2005. (2005 = $702 Million in annual sales)
Employees	2,500
Website	www.Melaleuca.com

Melaleuca, The Wellness Company , often called simply "Melaleuca", is a consumer-direct company founded in 1985 and headquartered in Idaho Falls, Idaho, USA. The company produces and sells a broad array of nutritional, cosmetic, and personal care products.

Melaleuca was listed on the Inc. 500 list of fastest-growing companies in 1990, 1991, 1992, 1993, and 1994. ^[1] Melaleuca CEO Frank L. VanderSloot appeared on the Forbes 400 list of 400 richest Americans for the year 2004. ^[2] Melaleuca also earned the Blue Chip Enterprise award which is given out by the United States Chamber of Commerce.

1 History
2 Products and business model
3 Criticism
4 References
5 External links

[edit] History

The company began under the name "Melaleuca Oil" with the offering of a single product called "T36-C5 Melaleuca Oil" which was formulated from extract of the melaleuca tree, commonly known as 'tea tree oil' or the more accurate terms 'Melaleuca Oil' and 'Melaleuca Tea tree oil'. A previous Melaleuca-based company operated as a standard multi-level marketing company whose literature made health claims the FDA would not approve. The company sold products whose uses and benefits were not verifiably documented. There were also exaggerated claims of the efficacy of the active ingredient, tea tree oil, and claims that the company was a sole source of the same, creating an impression of privileged access to a unique product.^[3]

In 1985, the company was taken over by Frank L. VanderSloot who disolved the previous company, created a new markeing plan to support consumers, immediately launched an initiative to bring the company's product line into compliance with FDA regulations, and rechristened the company "Melaleuca, Inc.". He made the compensation plan more favorable to Marketing Executives, by establishing Consumer Direct Marketing. Their Independent Representitives were no longer required to sell products but instead became membership enrollment facilitators. Since VanderSloot has taken the helm, Melaleuca has experienced consistently increasing sales and revenues and expanded internationally.^[3] Melaleuca now has over 2,500 employees as well as sales offices in Hong Kong, Japan, and Australia, Taiwan, New Zealand, and United Kingdom and grossed US $702,000,000 in sales in 2005.^[4]

[edit] Products and business model

While initially based predominantly on the researched health benefits of melaleuca plant extracts, the product line has since expanded beyond this initial focus. Melaleuca now markets over 350 items such as household cleaners, personal care items, pharmaceuticals and nutritional supplements. The company markets itself as being earth-friendly, and many of their products are certified organic. They also launched a cosmetics line in partnership with fashion designer Nicole Miller in January 2003.

Melaleuca has been outspoken against the abuses inherent to multi-level marketing and the damage they can cause. By contrast, Melaleuca does not allow inventory loading (a practice used by many multi-level markeing companies encouraging them to purchase up to thousands of dollars worth of inventory), limits the marketing chain to 7 generations, and prohibits "breakaways" (another practice commonly found in multi-level marketing). According to the company, another way it is less exploitive than MLM's is that it does not require its marketing executives to maintain an inventory. However, in order to receive commissions from one's customers, marketing executives must produce a minimal number of 29 product points per month (the equivalent of about $40 each month) to remain an active Marketing Executive. The products being purchased are every day neccessities that one would be purchasing anyway (i.e. shampoo, hairspray, cleaning supplies, etc.) and, the level is compatible with typical household or personal use.

[edit] Criticism

Like other companies selling naturally based products, Melaleuca has drawn criticism from others. An old article dated over 12 years ago questioned the effectiveness of certain Melaleuca vitamins and fat conversion bars.^[5] Melaleuca once had a lawsuit in which distributors and affiliates accused the company of misrepresenting retention rates of customers, which is crucial to marketing executives receiving a satisfactory revenue stream^[6] Melaleuca won the lawsuit. ^[7]

Melaleuca has carried a long-term "satisfactory" rating with the local Better Business Bureau, the highest rating given by the BBB. To achieve a "satisfactory" rating a company has to properly and promptly address matters referred to it by the Bureau, and be free from an unusual volume or pattern of complaints and law enforcement action involving its marketplace conduct. In addition, the Bureau must have a clear understanding of the company's business and no concerns about its industry. .^[8]