Chances are you’re here because you’re considering signing up to be a Shaklee Distributor and dipping your toe into the world of multivitamins and network marketing.
It sounds great – who wouldn’t want to make some extra cash, while getting healthy at the same time?
However, you’re a little hesitant.
Maybe you think that everything sounds too good to be true, or you’ve heard people saying things like ‘Shaklee is a pyramid scheme!’ and ‘Shaklee is a scam!’ and you want to figure out whether Shaklee is legit before diving in headfirst.
In this article, we are going to dive into the Shaklee opportunity and find out what’s really involved in the job, and whether Shaklee is legit or just another pyramid scheme in disguise.
Is Shaklee a Pyramid Scheme or a Legit Business Opportunity?
What is MLM?
In case you were wondering, Shaklee is an MLM company.
MLM stands for multi-level marketing, and MLM companies are also referred to as network marketing companies or social selling companies.
MLMs have been around for years, and popular MLMs include Primerica, Monat, Pampered Chef, and even Avon!
You don’t receive a salary in a multi-level marketing company.
Instead, you earn money from selling products to people you know and recruiting others into the business.
When you recruit a new person and that person begins earning money, you will earn commission from the sales and recruits generated by THAT person.
This continues down in multiple levels (hence multi-level).
Imagine a triangle.
If the person at the very top of the triangle recruits 10 people, and every one of those 10 people recruit another 10 people, and each one of those people recruit another 10 people, you’ll be making commissions from EVERYBODY within the triangle because they’re all in your direct downline (the people underneath you in an MLM are referred to as your ‘downline’ and you’re their ‘upline’).
All you had to do was recruit 10 people and you make money from 1100.
While MLM companies like Shaklee also give you the chance to make money from selling their supplements and other wellness products, most people in MLMs prefer to recruit others because they stand to make a lifelong passive income from that person, whereas if they sell a product they’re just going to receive a one-off commission.
The ultimate aim of somebody in an MLM then, is to have as many people in their ‘downline’ as possible, enabling them to form large amounts of passive income for little work.
What is Shaklee?
The Shaklee Corporation was founded in 1956 by Forrest C. Shaklee, an American chiropractic doctor and nutritionist from Iowa.
Some years before, in 1915, Forrest had created the first ever multivitamin in the United States, calling it ‘Shaklee’s Vitalized Minerals,’ and together with his two sons, he began the Shaklee Corporation in order to manufacture nutritional supplements.
An interesting fact about Shaklee is that during NASA’s shuttle programme, Shaklee provided customised rehydration sachets to astronauts!
Today, Shaklee sells nutritional supplements, weight loss products, cleaning products, skincare products, and even supplements for kids.
Although Shaklee is based in California, they have a global presence, with operations in Canada, Japan, Indonesia, Taiwan, Malaysia, and China.
Since 2004, Shaklee has been owned by Roger Barnett.
Shaklee offers a wide range of wellness and nutritional products.
Shaklee products include:
- Vitamins for adults
- Prenatal vitamins
- Vitamins for kids
- Protein shakes
- Meal replacement shakes
- Weight loss products
- Body lotions, serums, scrubs etc.
- Anti-aging skincare
- Men’s grooming products
- Water filters
- Laundry detergent
As you can see, Shaklee produces quite a wide range of products, meaning you can pick and choose which areas you focus on if you decide to become a Shaklee Distributor.
Inside the Shaklee MLM Opportunity
How do Shaklee Distributors make money?
In order to find out how to make money in Shaklee, I took a look at the Shaklee compensation plan, which they call the Shaklee Dream Plan.
According to the Dream Plan, you will have 9 income streams as a Shaklee Distributor:
- GOLD Bonuses: For every GOLD Plus PAK you sell ($599), you will earn $100. For every GOLD PAK you sell ($299), you will earn $50. These GOLD PAKs are sold to ‘Gold Ambassadors,’ meaning people who are already Shaklee members, but are not currently Distributors.
- Power Bonuses: Whenever you recruit someone into your downline, you will receive ‘points,’ which can later be converted into cash bonuses. You will also receive points for selling the GOLD PAKs to Gold Ambassadors.
- Price Differential: Retail profit. You must buy Shaklee products at a discounted price and resell them, keeping the difference.
- Personal Group Bonuses: Bonuses depending on the overall sales volume of your downline, or ‘Personal Group.’
- FastTRACK Bonuses: Extra bonuses that are awarded when you progress through the ranks in the company.
- Incentives: When you collect ‘points,’ you can use them towards luxury trips sponsored by Shaklee (technically not an income stream but it appears as one nonetheless). You are given points for buying Shaklee products.
- Car Bonus: As you progress through the ranks, you may qualify for the monthly Shaklee car bonus. For a more thorough explanation of MLM car bonuses, read my article about MLM cars.
- Leadership Bonuses: Awarded when your downline ‘ranks up’ in the company.
- Infinity Bonuses: More bonuses as a result of people in your downline making sales/recruiting others.
Now, let’s take a closer look at these so-called ‘income streams.’
Right away, we can see that 2 of them are not ‘income streams,’ but ‘points’ that can be used to pay for Shaklee trips, and a car bonus (which must be used on a car).
Because these ‘income streams’ don’t result in having actual money in your pocket to spend on whatever you like, I won’t be counting them as legitimate income streams.
So then, from the 7 income streams we have left, only 1 of them involves actual retail profit from selling Shaklee products to customers (customers not already in your downline, that is).
Every other ‘income stream’ revolves around recruiting other people, selling Shaklee products to Shaklee Distributors, and moving up within the company (which you can only do by recruiting people).
Put a pin in this, because we’ll be coming back to it.
For now, just remember that most of the ways you make money in Shaklee involve recruiting others into the business.
How much do you make with Shaklee?
In order to see how much money Shaklee Distributors are making, it is necessary to see their Income Disclosure Statement.
An Income Disclosure Statement is a document that allows us to see exactly how many people are earning money with an MLM company, and how much of it they’re making.
I took a look at the Shaklee Average Earnings Statement from 2022 to see what I could learn.
I discovered the following:
- 73% of Shaklee’s ‘people’ are customers (3%) and Members (30%), who are not pursuing the ‘business opportunity.’ On their Income Disclosure Statement, only the remaining 27% is taken into account.
- There are 13 levels in Shaklee.
- Of those 13 levels, 74.4% of Shaklee Distributors are in the bottom 2. These people earned between $750 – $1350 in 2022.
- 14.6% of Shaklee Distributors earned an average of $12,466 in 2022.
- Senior Directors (2% of Shaklee Distributors) earned an average of $13,954 in 2022.
So far, we can see that 91% of Shaklee Distributors earned less than $14,000, and the vast majority of those people earned less than $1500.
It’s also important to note that every single one of these distributors were actively trying to make money – after all, the IDS only takes into consideration the 27% who were trying to build their Shaklee businesses, not those who just signed up for loyalty points and discounts.
Of the remaining 9%:
- 3.8% earned an average of $24,516
- 2.4% earned an average of $37,199
- 0.6% earned an average of $49,695
- 0.8% earned an average of $69,867
- 0.6% earned an average of $97,019
- 0.2% earned an average of $131,609
- 0.5% earned an average of $206,338
- 0.1% earned an average of $245,543
- 0.1% earned an average of $574,205
To put that into perspective, only 2.3% of Shaklee Distributors are earning more than $50,000 a year.
How much does it cost to join Shaklee and be a Shaklee Distributor?
To join Shaklee, you must purchase a Business Starter Kit, which costs $49.95.
Shaklee recommend that you also purchase a Ready Set Wellness Bundle to get you started, which costs $179.
$179 + $49.95 = $228.95
And that’s not all.
In order to remain an active seller and qualify for your Shaklee commissions, you will need to maintain a monthly sales volume of 100 PV, which equates to about $150.
This means that if your retail sales don’t total $150, you will have to purchase Shaklee products yourself in order to hit this target and earn commissions on the products you have sold.
If you don’t want to be constantly worrying about hitting your target, Shaklee gives you the option to purchase a monthly autoship of their products, meaning you’re always guaranteed to hit your 100 PV target.
It will cost you $150 per month.
So, let’s say you purchase the Ready Set Wellness Bundle, along with your Business Starter Kit, and opt-in for the monthly autoship.
You’ll be paying:
$288.95 ($179 + $49.95) + $1800 ($150 x 12) = $2,088.95
Remember that almost 75% of Shaklee Distributors did not earn more than $1350, meaning that the vast majority of Shaklee Distributors are losing money rather than making it.
Is Shaklee a pyramid scheme?
In order to see whether Shaklee is a pyramid scheme in disguise, we must first outline what a pyramid scheme is.
What is a pyramid scheme?
Pyramid schemes are very similar to MLMs, but the main difference is that MLM distributors are supposed to make more of their money from product sales rather than recruitment.
A traditional pyramid scheme takes an initial investment from each member and promises to pay them for enroling others into the scheme, meaning that people are buying into an ‘opportunity’ to get rich.
However, as members increase, recruiting quickly becomes impossible and so most members are unable to profit or even make their initial investment back.
The Wikipedia diagram below illustrates just how unsustainable this business model is – after 13 levels of recruitment, the scheme would have recruited everybody in the world and there would be no-one left to recruit!
Remember when we discovered earlier that there are 13 levels in Shaklee?
Because it’s impossible for most people to make any money in a pyramid scheme, pyramid schemes are illegal.
However, most pyramid schemes have got wise to the fact that they have to offer a product in order to appear legit, but even though a business may have products, the focus will always be on recruitment rather than product sales.
Because there are so many of these ‘pyramid schemes with products,’ around, the FTC hasn’t quite caught up yet, and so many people believe that just because a company hasn’t been shut down yet, it can’t possibly be a pyramid scheme, which simply isn’t true.
In order to see whether Shaklee is a pyramid scheme, we must attempt to answer 3 questions.
1. Are most people unable to profit?
Earlier in the article, I showed that around 75% of people join Shaklee are likely losing money, and that only 9% of Shaklee Distributors earn more than $14,000 per year.
This means that over 90% of Shaklee Distributors are earning less than the US federal minimum wage ($7.25 per hour, or $15,000 annually).
It’s clear to see that most people in Shaklee are unable to earn a living from their Shaklee business.
2. Do you have to ‘pay to play?’
Not only is there a cost to join Shaklee, but there is also pressure to spend money on Shaklee products every month in order to qualify for commission (we can see that from the Income Disclosure Statement that most Shaklee Distributors are not selling enough products to not be spending their own money on Shaklee).
3. Is there a heavy focus on recruitment?
Like all MLMs, Shaklee has a very aggressive approach to recruiting, with 6 out of 7 income streams involving the recruitment of other people into the business.
It is impossible to progress in the company unless you recruit other people, and the reality is that most Shaklee Distributors are not making money purely by selling Shaklee products.
Is Shaklee a Pyramid Scheme? | Final Thoughts
Most MLMs closely resemble pyramid schemes and Shaklee is no different.
With a huge emphasis on recruitment, a ‘pay to play’ model and the fact that barely anyone in the company is making money, Shaklee definitely appears to be functioning like a pyramid scheme in disguise.
If it wasn’t already clear, Not Your Boss Babe does not recommend joining Shaklee, or any other MLM!
Alternatives to Shaklee
If you’re looking for a side hustle or a work from home job, you may find these articles helpful:
Advantages and Disadvantages of Blogging
Easy Freelance Jobs for Beginners
Best Side Hustles for Single Moms
How to Sell Feet Pics Online
Secrets to Selling on Poshmark
Profitable Digital Products to Sell on Etsy
How to Become a Micro Influencer
That’s about it for today, but as always, if you have any questions then don’t hesitate to leave them in the comments section below and I will get back to you!
Until next time,