ViSalus going through rough times, stays alive with expansion

ViSalus is another nutrition multi-level-marketing company.

Maybe it started with the infamous Ice Bucket Challenge. The fitness and weight loss industries are deep amidst a trend right now: the challenge.

If you want to sell something in this market, phrase it as a challenge and people will line up to be part of it.

Amiright?

But remember, your friends aren’t trying to see you half-naked on their Facebook timelines.

Enough already. Living healthy is cool, but there is a better way to pay your bills.

This video explains:

 

All good? Let’s continue…

Overview

I like what Visalus is doing here. They’re slyly combining lifestyle goals with their products. From modest weight loss goals to year-long life transformations, their challenges always involve consuming ViSalus products.

ViSalus is a contender in a familiar, over-crowded triple-faceted market:

  1. energy drinks
  2. nutritional products
  3. dietary supplements

Products are bundled and sold in “kits”:

  • Transformation Kit.  For maximum weight loss.
  • Core Kit.  Conditions your body from the inside out.
  • Shape Kit. Lose a little weight, gain a little muscle.
  • Balance Kit.  For overall health and well-being.
  • Fit Kit.  For athletic performance and endurance.

Each kit includes its own permutation of ViSalus products.  These would be items like meal replacement shakes, energy shakes, Flavor Mix-Ins, and various other nutritional add-in products.

Kits run anywhere from $61 (Balance) to $124 (Transformation) to $250 (Core) for a month’s supply, although right now on Amazon the Transformation Kit is selling at a 29% discount and Balance is selling at a 28% discount (1).  The Fit Kit runs $369 for a two-month supply.

As for ingredients, they are for the most part what you’d expect: low fat, low sodium, low sugar and low carb.  They’re also lactose-free, gluten-free, and as a bonus: Certified Kosher.  What separates ViSalus products from its competitors?  Their website cites the fact that their shakes are not gritty and do not leave an unpleasant aftertaste, as other brands do.  They also mix easily and provide all kinds of health benefits.

Taking into account the pricing (which isn’t actually over the top, considering the Transformation Kit covers 2 meals per day), there is some value here.  However, there doesn’t seem to be a strong case for unique value.

Enter the challenge.  If you can’t sell your products, sell a vision.

It’s never been more important for ViSalus to get their marketing department in order and really sell their challenges.  You see, ViSalus was at the top of their game just three years ago.  Based in LA and in Troy, Michigan, they saw upwards of $623 million in sales in 2012 (2).

In the state of Michigan, their direct selling growth was topped only by Amway, which is also based in that state.

420 people had jobs in Troy with ViSalus and they were so hot big corporations wanted in on the profits.  In fact, that year they were acquired by Blyth, Inc. who also owns direct sales company PartyLite.

Things were going well but that’s no longer the case.  2013 was a bad year For ViSalus, who saw sales drop 44% that year.  They also got hit with an espionage lawsuit the same year.

In that lawsuit ViSalus founders Nick Samicola and Blake Mallen are accused of corporate espionage, computer hacking, and actual theft.  Who’s the victim?  Ocean Avenue, whose leaders Fred Ninow and Ken Dunn brought the lawsuit to court in October 2013.

Turns out ViSalus filed a total of NINE lawsuits against Ocean Avenue in 2012.  Both sides refuse to acknowledge the seriousness of any of the lawsuits and it’s all only visible by viewing archived web pages that aren’t even live on the internet any more (neither is Ocean Avenue) (3).

Let’s just say a lot of hanky panky was going on back then.

ViSalus has much more serious issues to contend with right now.

Then Blyth Inc. finally said enough is enough and announced it would set ViSalus free.  This occurred September 2014, after which Blyth stock immediately rose sharply (4).

(Blyth Inc. still owns 10% of ViSalus).

ViSalus is once again a privately owned company celebrating its tenth anniversary in business.  They hope their new products and plans for expansion overseas will put new life into the company.

I’m sure you could have guessed what the trends spike looks like.

In the same article cited earlier, ViSalus CEO and cofounder Ryan Blair pins hopes on new sales incentives which would free up money for the overseas expansion.  ViSalus most recently opened up in the UK, Germany, and Austria.

He and his colleagues at ViSalus had better hope that serves to boost morale with their network of independent distributors.  Seems the reason Blyth Inc wanted ViSalus off its books was the shocking flight of ViSalus distributors from the company starting after the summer of 2012.  That year they had 114,000 and by the end of 2013 there were just 37,500 left still promoting the products.

Opportunity

Called the “Incentives Program”, ViSalus’s compensation plan is a little tough to maintain.  Distributors must keep up a hefty minimum of 125 PQV  Auto-Ship or 200 PQV in retail sales per month to remain “Active”.  125 PQV is equal to $125.

And that’s after having paid for the buy-in: a Basic  ($49), Executive ($499), or Star ($999) Promoter System.

Team commissions are paid at a flat 5% rate down to 8 levels if you qualify for the highest rank.  At base level of Associate, you get paid on 2 levels of downlines.  To become an Associate, one must be simply be active.

Another tough hurdle: in order to earn commissions on your own retail activity, you have to first hit $201 in sales.

Then and only then do you get the pretty low 10% commission. You have to sell $501 in order to make a 15% commission.

Oh but selling that high-priced Star Kit must be lucrative, right?  Nope: for bringing in $999 you get 50 bucks.

That’s the Fast Start Bonus.  It’s the same whether you sell a $49, $499, or $999 promo kit. Rough go.

Look, I’m not here to bash companies, I’ve reviewed over 50 of them, but this seems one of the cheaper deals for the distributors. Just being real. Might as well go work retail.

Recap

I guess they sort of have to have a modest compensation plan.  After all, there are reports of their revenues spiraling downward. They were cast off from Blyth Inc.

They’ve lost two-thirds of their sales force.  They operate in one of the most competitive online sales environments.
It sounds like people love their products, but just like most MLMs, there’s highs and lows. ViSalus is trying to pull it together.

Will they make it? Time will tell.

In summary, if you love the products, that’s great. If you’re marketing ViSalus for the opportunity, there’s a better way to quit your day job.