Nu Skin and the billions made in skincare

Nu Skin is a vintage skincare MLM that is still relevant in the competitive space (see the top skincare MLMs here).

These guys are huge. The New York Times has an entire section dedicated to their business. Even Mitt Romney openly supported it. Nu Skin is all that and more.

So have I been involved?

This video explains:

 

All good? Let’s continue…

Overview

Nu Skin has been around since Girls Just Want to Have Fun was the hit song, in 1984.

What they’ve managed to achieve in more than thirty years is nothing short of MLM genius.  Among the top ten direct selling companies in the world (1), this company is considered a permanent fixture on the skin care scene as well as the occasional headline-maker.

From eHow articles to coverage on the national news, Nu Skin is one MLM the general public might have heard of.

Sure, Jeunesse is the new skin care darling, but Nu Skin is the seasoned veteran.

Outside Avon, Tupperware, Mary Kay and Amway, most people find it hard to come up with the names of companies who use the direct selling approach.

But with support from the likes of Mitt Romney, Nu Skin is well on its way to becoming a household word.  What’s this company all about, and how good are the skin care products, really?

You may be wondering why big politicians like Mitt Romney would have anything to do with a wrinkle cream company. But think again: what drives politicians?

Here’s a hint: Nu Skin is valued at over $3 billion dollars. A publicly-traded company, their stock weighs in with a 5-year annual dividend growth rate of around 25%.  Their revenue in 2014 was $2,569,000,000, a figure so large it’s better read in shorthand: $2.57 billion (2).

When Salt Lake City was attempting to become site of the 2002 Winter Olympic Games back in 1999, Nu Skin wanted to become a sponsor.

Based in Provo, Utah, Nu Skin found resistance in its bid to become a sponsor simply because they were a supplement company (their Pharmanex division is all supplements).  This was a sensitive matter because at that time the International Olympic Committee was very interested in warning athletes to avoid supplements since they could contain banned substances.

But Mitt Romney came to Nu Skin’s defense and even made an appearance at a Nu Skin convention in 1999 (3).  Nu Skin donates to a super-PAC that backed Romney for president, and one of the co-founders of Nu Skin chaired Romney’s campaign finance committee.  Money seeks money and Nu Skin didn’t come to the table to make tiny bets.

Let’s see how they got there.

Products

There are over 200 products developed and sold by Nu Skin.  They have skincare and dietary supplement products…all designed to make people look younger and feel younger.

The supplement division is the result of a mid-90s acquisition of Pharmanex.  They also acquired LifeGen Technologies (in 2009), meaning they are now in the business of genomics.  The anti-aging line of products stems from the genomics work and is called ageLOC®.

Nu Skin has its own labs for conducting studies on the ingredients in its products, so science-backed claims are no problem for them.  There are not one but three global research centers regularly pumping out studies.  They also collaborate with outside research institutions.  This is not white label branding situation here: Nu Skin develops and manufactures its own proprietary products.

As for the Pharmanex brand, scientific integrity is also what sets them apart from their competitors.  In these two extremely competitive industries (skin care and supplements), it takes a lot of good science behind your products to be a major competitor.  Nu Skin has this.

A random sampling of Nu Skin products reveals a pleasing array of products that people want.  Scientific principles are worked into marketing materials in acceptable, bite-sized chunks, making you feel as if the products will truly produce miracles on your skin. Very convincing.

Compensation Plan

Nu Skin is sold all over the world.  There are hundreds of thousands of independent distributors selling Nu Skin products.

The Nu Skin compensation plan has been churning profits for distributors working from home for thirty years now so they must be doing something right.  But much of that business is overseas.  In fact,  87% of Nu Skin revenue is from outside the US, and most of that is from China (4).

But the plan seems fair and square, even to western standards. Take a look at the highlights:

  • earn up to 25% or 30% profit on retail sales
  • products are not cheap: $36 for facial cleanser for example
  • 5% commission on level 1
  • buy-in: purchase a product package and sign up for Auto-Ship
  • product packages range from $475 USD to $1519 USD
  • Auto-Ship of 250 PGSV* is required to remain active

*PGST is Personal Group Sales Volume: personal sales + level 1 customer and distributor sales volume.  To give you an idea of points to dollars: $375 USD ($431 CAD) is worth 200 PSV (Personal Sales Volume).  It is not a one-to-one ratio.

Recap

Nu Skin is big, but not immune to market forces, global events, and new anti-mlm legislation.  Just this past February, quarterly profits fell 63% because the Chinese stopped loving their products, according to an article cited earlier.

Of course it doesn’t help international sales figures when the dollar is strong, but that’s not the whole story of Nu Skin in China. Chinese regulators have found Nu Skin guilty of illegal sales and misleading marketing.  Nu Skin was fined and forced to stop recruiting for 3 months.

That’s worrisome, and it’s also happening in the US. MLM regulation is clamping down on many companies they feel are pyramid schemes.

Nu Skin has the smarts and the power to adjust their practices, if need be, to comply with industry best practices.

They’re already a member of the Direct Selling Association, and have accreditation with the Better Business Bureau where they have an A+ rating. These things, combined with the solid line of products and important backers mean Nu Skin should look forward to at least another 30 years.

But, that doesn’t mean it’s the best way to make money.

After all, pitching your family, friends or church members is old-fashioned and scuzzy. Not a good look.

There are more effective ways to be an entrepreneur. My 30k months come from a non-MLM source, building businesses that I can pass on to my future kids.

Here’s your doctor-recommended treatment for your MLM addiction: click here.

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Jeremy Page

Jeremy Page created Multiple Streams for ballers, big thinkers and online business owners. You can follow him on Instagram here.

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