Since 2018, the multi-level marketing (MLM) industry has exhibited dynamic shifts globally, influenced by economic factors, public perceptions, regulatory scrutiny, and adaptations within the business models themselves.

The COVID-19 pandemic, spanning 2020 through the subsequent years, played a pivotal role in reshaping participation, revenues, and operational approaches in MLM companies worldwide.

At the industry-wide level, MLM businesses continued to emphasize recruiting new distributors as a principal strategy.

For example, data from Taiwan in 2020 demonstrate substantial activity with 3.5 million distributors generating a turnover of 98 billion yuan—an increase of 5% compared to 2019—even amid pandemic-related disruptions.

Approximately 1 million new distributors entered annually over five years, indicating steady recruitment despite economic uncertainty.

The MLM model’s reliance on recruitment, rather than product sales alone, is underscored by commissions constituting nearly half of the turnover, while only about 27% of distributors earn commissions, averaging 45,000 yuan.

Attrition remains high, with around 450,000 distributors departing annually, primarily due to disillusionment with the product’s value or operational cessation.

Nonetheless, the continuous influx of new members sustains MLM growth, with social and hierarchical relationships being exploited to drive recruitment and revenue generation.

The economic pressures and labor market instability caused by the pandemic spurred increased interest in MLM participation, particularly among new graduates and job seekers seeking alternative income streams.

Regionally, distinct market responses are notable.

In Russia, for instance, the exit of major foreign MLM players such as Amway in mid-2022—prompted by economic and operational challenges—has coincided with production and stability difficulties for Avon and Oriflame.

Analysts observe that local Russian direct sales companies have demonstrated remarkable crisis resilience and are expanding to fill gaps left by departing multinationals.

This suggests that despite geopolitical and economic pressures, certain domestic MLM-related markets continue to thrive due to favorable local conditions and political factors.

Examining individual companies highlights divergent fortunes within the MLM landscape.

Avon and Tupperware, once flagship direct selling companies often showcased as MLM exemplars, have faced prolonged declines over the past several years.

Avon’s shift around the year 2000 from a traditional direct selling model to a recruitment-heavy MLM approach precipitated declining revenues and stock values.

The company’s North American business was sold to South Korea’s LG Household & Health Care, and its global operations were acquired by the Brazilian MLM firm Natura.

Natura itself has experienced a 50% decline in stock value recently, reflective of broader challenges in the sector.

The average Avon Leadership Representative’s earnings remain low, with Canadian distributors making between $0 and $2,620 annually in commissions and bonuses in 2020, demonstrating limited profitability for the majority.

Tupperware, similarly, adopted an MLM-style product mix in health and beauty but encountered steep declines, with its stock plummeting over 90% in five years, accompanied by bankruptcy rumors.

Both companies publicly distanced themselves from the Direct Selling Association, citing conflicts related to ethical concerns and links to alleged pyramid scheme behaviors within the MLM domain.

Globally recognized MLM firms such as Herbalife, Nu Skin, and USANA have also faced market headwinds.

Herbalife’s stock price declined by 64% year-to-date, Nu Skin by 31%, and USANA by 49% in recent years, illustrating a contraction in investor confidence and operational challenges.

These companies operate predominantly in nutritional supplements—a sector valued globally at $152.3 billion in 2022 and projected to grow at an 8.5% CAGR to $269.5 billion by 2030—driven by rising health consciousness and preventive care trends.

Despite the growth opportunities in product categories, the MLM model’s emphasis on distributor recruitment over retail consumer sales has imposed structural challenges.

The regulatory environment, encompassing stricter compliance standards and scrutiny over direct selling practices, further complicates business operations.

LuLaRoe offers a cautionary case study illustrating risks inherent in the MLM framework.

Renowned for selling leggings primarily via social media platforms like Facebook and Instagram during the 2010s, LuLaRoe’s model rapidly expanded through recruitment pressure on distributors, framed as customer-retailers themselves.

This approach resulted in widespread retailer debt, inventory glut, and multiple allegations of psychological manipulation akin to cult dynamics.

The company faced legal actions and media exposés highlighting the fragile sustainability of such MLM structures predominately focused on recruitment rather than genuine product demand.

Conversely, Educational Development Corporation (EDUC), a U.S.-based MLM company specializing in educational children’s books, has bucked declining industry trends.

Since 2018, EDUC nearly doubled its active consultant base during the pandemic, benefiting from structural shifts such as remote work and increased home learning.

EDUC’s model notably reduces entry risk by not requiring upfront inventory purchases, a marked departure from conventional MLM practices.

Increased dividends, capital expenditures, and inventory buildup signal optimism for sustained growth, offering a blueprint for MLM firms adapting traditional models to modern consumer and distributor expectations.

Closures and strategic withdrawals mark another trend.

Amway’s exit from Russia reflects broader operational and geopolitical difficulties.

Avon and Oriflame exhibit signs of retreat or instability in the same market.

Larger companies increasingly question the viability of heavily recruitment-dependent MLMs in volatile environments.

In contrast, direct sales in their traditional form—selling directly to consumers without multi-level compensation structures—have diminished, often replaced by MLM schemes emphasizing recruitment.

The decline of legacy MLM firms like Avon and Tupperware, dramatic stock value drops for key players, and high distributor attrition rates reveal fundamental challenges.

Analysts attribute these trends to several interrelated factors: a shift in consumer skepticism towards MLM practices due to exposed unethical behaviors and legal battles; regulatory clampdowns aiming to curb pyramid scheme abuses; the rise of social media amplifying both MLM recruitment and critical scrutiny; and economic downturns, especially the COVID-19 pandemic’s profound impact on employment and disposable incomes.

While pandemic-related job market disruptions increased initial MLM interest, post-pandemic recovery and evolving labor markets may dampen sustained growth prospects.

Furthermore, the MLM structure inherently fosters a high churn rate, as commissions and income are disproportionately concentrated at top distributor levels, leaving most participants with little or negative financial return.

This dynamic encourages aggressive recruitment to replenish the distributor base, a practice increasingly criticized for exploiting social networks and personal relationships, raising accusations of commercial cult-like behavior.

Industry experts contend that future successes in MLM will rely on model innovations reducing reliance on recruitment-driven revenues and enhancing genuine customer sales.

Companies like EDUC demonstrate potential pathways.

Additionally, geopolitical factors may favor domestically oriented direct sales companies in specific markets, as seen in Russia.

However, longstanding criticisms and legal pressures suggest that the fundamental MLM business model faces ongoing existential challenges, risking further market contraction or transformation into simpler sales-based frameworks.

In sum, since 2018 the MLM industry has experienced a complex interplay of growth, decline, and transformation.

While some companies have thrived by adapting to new market realities, many iconic MLM firms have witnessed declining profits, stock values, and market relevance.

The COVID-19 pandemic temporarily increased participation but did not arrest underlying structural issues.

Emerging legal and ethical concerns, coupled with shifting consumer and distributor expectations, are prompting a reevaluation of the MLM model’s long-term viability.

Projections indicate that without substantive reform, the MLM sector will continue facing significant hurdles related to profitability, sustainability, and public trust.

Reviewers are invited to assess this report for completeness and clarity, and to recommend any areas requiring enhanced depth or further elaboration to fully encompass trends, company-specific nuances, or psychological implications relevant to the user’s research.

Since 2018, the multi-level marketing (MLM) industry has exhibited dynamic shifts globally, influenced by economic factors, public perceptions, regulatory scrutiny, and adaptations within the business models themselves.

Title:

Content: [Street Industry Watch] In the Year of the Pandemic, many people joined the "marketing" to pull down the line, but nearly half of the revenue was used to pay "multi-level" commissions.
Photo Credit: Central News Agency
What we want you to know is
At the same time, the body product channel and product spokesperson can further bring the "offline", which is the start of expanding the business and crossing the threshold of receiving commissions.
But this threshold seems easy, but not everyone can climb, because whether it is old or new distributors, most of them only contribute to the commission of the supporting role......
In the summer of 2020, it is supposed to be the graduation season of college students and the time when social newcomers are pouring out of the cage, but I saw a youthful face at a few lively junctions in the business district of Banqiao, and started the work of “listing people ” for housing construction.
Single-handed advertising placard, carrying a backpack leaning against the road light pole, the other holding a thin, seemingly split reference book, on the hot sun, earning the card holder's hard hourly salary, and paving the way for future job hunting.
When a PT (Part Time, Part-time, Part-time, Part-time) job that was originally labeled as a middle-aged, second-degree employment face, there were many young faces, can not help but make people shiver in the heat of the day!
The virus has hit households and disrupted the job market, affecting youth employment.
We have to admit that the epidemic has disrupted the pace of new people entering society and seeking jobs. Although it is at a time when the virus has not really invaded the door, the job market has been chaotic.
According to the Ministry of Labor ’ s “Youth Employment Status ” report, there are about 280,000 college graduates in 2020, a decrease of 5.4% compared to 2019. This reflects not only the decrease in the number of children and the decrease in the number of college students, but also the explosion of life extension in 2020. If further deduction is further deducted, the number of people who can work (including military service) is a low of nearly 5 years (223,000), a decrease of 12% compared to 2019. And...
As of the end of January 2021, only 68.3%, about 152,000 people, of the post-secondary students who graduated in 2020 and are working people, joined the ranks of labor / agriculture / public insurance, which is not only a low point in the past five years, but also a decrease of 24% compared with the previous year.
In other words, there are many college graduates, after more than half a year of job search, still have not successfully entered the workplace; the pressure of job search and living economy, so that they have to make very choices in this extraordinary period.
The job market is cold, and marketing continues to expand its organization, becoming a potential employment option for new people in society.
In 2021, the virus officially "invaded the door" in May, before graduating from college in the new year.
The alert of the epidemic, so that this year's job market has a cold wind, but also the unemployment rate in July this year (4.53%), blowing up the same period of high in the past decade, recently graduated social fresh people, inevitably have to face the fear of graduation, namely unemployment.
However, there is a saying in the workplace: Despite the economic downturn, business jobs such as insurance and distribution are always recruiting.
If this is not true, we can try to turn off or turn on the query function of the above industries on the job search platform to achieve a full personal experience.
However, in 2020, the number of people registered for the personal insurance business survey (85,000) increased by 5% compared to the previous year, and the number of new entrants to the marketing business is also a million people.
This is the type of occupation that people need to earn life, some people are joining is no retreat, but some people are carrying a dream forward, but the dream is very rich, the reality is very bones, when we dream in the winter, do not forget to pragmatically understand the mode of operation of the industry.
Today, let ’ s talk about selling!
Most people's stereotypes of marketing remain in the "brainwashing" of marketing conferences, constantly inculcating that this is a "personal business," getting rid of being hired as social animals, and directly attacking the freedom of wealth, and in addition, trying to give individuals the self-esteem and ability to think independently, suggesting that "thinking for themselves, not having to discuss with others."
Perhaps, some people have experienced this process of marketing to pull members off the line, some people join, some people feel that it is a "cult", but making money, quality of life, and self-empowerment (Self-empowerment) these material and psychological skills, is indeed for most people have a certain hypnotic effect.
However, most of our understanding of marketing is just the “recruitment ” discourse, and we do not have a deep understanding of how it works.
Perhaps, when we understand the logic of the industry, we can better understand why the so-called brainwashing conference is a starting point for marketing recruitment.
Multi-level marketing requires multiple distributors as sales and marketing channels
According to the Fair Trade Commission ’ s “Multi-level Marketing Business Development Survey ”, nearly 3.5 million distributors (each“ individual ” who joined members or purchased goods is an independent distributor) of 314 marketing entities (such as Anli, Ruxin, etc.) in 2020 generated a turnover of 98 billion yuan, a slight increase of 5% over the previous year. In contrast to the population over 20 years of age (more than 19.4 million people), about one in six people join the ranks of distributors.
Since all distributors replace all types of retail channels, they not only have the function of the channel, but also have the function of marketing, that is, word-of-mouth marketing, so whether they emphasize themselves as retail (sales) orientation, product recommendation (head-pulling) orientation, or emphasis on membership, they are ultimately based on "people" and "organizational hierarchy".
And the product channel and marketing costs saved by the marketing business are converted into the commission of the distributor.
Therefore, when we contact distributors and ask them why they are involved in the marketing industry, they will almost unanimously reply, "The product is great!"
Distributors continue to pay for new members by pulling down the line, expanding the organization and expanding the commission
That being said, it ’ s one thing to see how great a product is in the domain of a distributor, and constantly adding new blood is the highest goal for continuous marketing, expanding the organization, and increasing revenue and commission revenue.
Similarly, according to the Fair Trade Association report, the number of new entrants to the market in 2020 is about 1 million, and for the past five years, the number of new entrants has remained at around 1 million each year.
And in 314 marketing businesses, 96% of the joining system is to take "conditional join", of which, the most important is "order goods" (62%), "pay a deposit or membership fee" (59%), so "conditional join" is not only contributing to the marketing business and the top level of the sales (the one who pulls you in), but also contributing to the level of the commission.
In contrast, if someone joins, someone exits. The number of MLM merchants who quit in 2020 is about 450,000, and the number of exits in each of the past five years has been around 400,000 to 500,000.
The main reason for exiting is “non-renewal of contract ” (83%), which means no longer operating, no longer consuming, and the product is no longer considered“ great ”.
However, in this process, there will always be new blood distributors who will contribute to the expansion of the organization and the commission generated after the consumption of the product.
Whether old or new distributors, most are only supporting players who contribute commissions
As has been mentioned, the distributor at the same time with the product channel and product marketing (endorsement) people, their own recognition of the product, use, and purchase, to become a new member of the body and teaching.
Of course, once you can further bring in new members, new distributors, or offline, it is the beginning of expanding your business and crossing the threshold of receiving commissions.
It seems that the threshold is easy, but not everyone can climb it.
According to a survey conducted by the Fair Trade Association, 222 of the 314 marketing businesses (about 70%), and more than 60% of its distributors will make stable orders to the company; however, only 27% of all marketing companies (about 960,000 people) receive commissions, and the average commission per person is 45,000 yuan.
Therefore, most distributors who order goods either maintain their status as distributors by buying products, or sincerely recognize and continue to use the products; and by bringing in new distributors, order sales, and achieve a commission threshold, and can earn a stable salary or even become rich in this industry, not only are rare, but also the successful cases seen in various conferences or education and training survivors. "The Beautiful Misunderstanding We Have".
It doesn ’ t matter if the product is worth the price
In addition to the threshold, this kind of personal marketing and sales channels, to achieve the "multi-level" (that is, constantly expanding the organization down the line) of the business of distribution, not only eat personal interpersonal skills, "multi-level" commission distribution will indirectly increase product prices.
According to a survey conducted by the fair society, the import cost of the pyramid scheme business accounts for only 28% of the turnover, but the commission accounts for 44% of the turnover, in other words, the real cost of selling a commodity of $100 is only $28, $44 is used as the commission of the pyramid scheme business, and the remaining $28 is the administrative expenses and profits of the pyramid scheme. Whether the essence of a product is value for money is one thing, the marketing business will compress its own profits, expand its commission expenditure, and recruit and expand the organization with a strategy of large is beautiful, so that we can find: there are so many people who have joined the ranks of marketing!
Marketing has always been a very special industry, in which a small number of people have been able to earn their fair share of commissions, and become the mainstay of business operations, but the vast majority of people are only a supporting part of this multi-level marketing structure, and by paying membership fees, buying and using products, they become a part of the source of commissions.
Back to the intention of writing this article, no matter how difficult the job search for new people in society during the epidemic, I hope that by understanding the operation mode of an industry, I can assess whether to use the marketing industry as the first job to enter the society.
Through the Fair Commission report, we have gained a profound understanding, no matter how many of these people successfully earn high commissions and create successful careers, this data is hinting at us: if this industry is the main occupation, not only requires a certain degree of interpersonal relationships and skills, there may be a period of social novices can not understand life or career experience.
Source: Ministry of Labor “Youth Employment Status ”, Fair Trading Commission“ Multi-level Marketing Business Development Survey ”
Extended reading
Editorial responsibility: Ding Zhaojiu
Editor ： Weng Shihang
Tags:

The COVID-19 pandemic, spanning 2020 through the subsequent years, played a pivotal role in reshaping participation, revenues, and operational approaches in MLM companies worldwide.

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Beroe Inc.: Digital Marketing Market to be Valued at $460 Billion by 2022, Says Beroe Inc

The pandemic-induced curbs on traditional marketing avenues have fueled rapid growth in the digital marketing sector. The market size has reached $300-400 billion in 2021 and is slated to touch $460 billion by 2022.

RALEIGH, N.C., March 8, 2022 /PRNewswire/ -- The COVID-19 pandemic has brought a monumental shift from traditional marketing methods to digital marketing. The market is primarily driven by the FMCG, retail, and CPG segments. Once the pandemic situation comes under control, the meteoritic expansion in digital marketing may stabilize. Still, it is expected that there will be considerably higher growth in revenue-utilization in marketing in the digital space. Digital marketing trends will likely be dictated by larger agencies.

Automation, AI, NLP or Neuro Language Programming along with deep learning techniques will play a crucial role in enhancing operational efficiency, minimizing task redundancies, enhancing real-time analyses, marketing initiatives and SEO. Social media trends will continue to positively influence the consumer market, and brands have already made headway in generating user-generated media as a part of their core marketing strategy. Influencers are also expected to create trends and impact marketing strategies to a large extent. Virtual Reality (VR) and Augmented Reality (AR) tools are futuristic but seem to have created a niche with the burgeoning smartphone market and are slated to contribute about $75 billion to the internet marketing service sector.

Beroe, which is based in North Carolina, further stated that procurement experts can access this report on its recently launched market intelligence platform Beroe LiVE.Ai: https://www.beroeinc.com/beroe-live-ai/

"Short video content is undoubtedly the best performing segment of digital marketing. Brands have jumped on the bandwagon and have flooded the social media platforms with user-generated and influencer-created media. Trends show that NLP and Deep learning will rule the space," said Olive Cynthia, a Beroe analyst. "The rapid growth in the sector is a part of a tectonic shift in market preference as more and more marketing campaigns are targeted to user preference. VR and AR are here to stay and have already made significant forays in marketing strategy. With the waning of the pandemic, traditional marketing techniques will return to the fore, but seem unlikely to hamper the rapid digitalization of marketing campaigns and brand strategy."

Brands have seen a 20 percent increase in return viewers and a 90 percent growth in average time spent on advertisements in the social media space. The marketing spends have shifted to these platforms in a big way and will continue to do so in 2022. Social media initiatives have become an integral part of marketing strategy, and it is likely to rule the roost in digital marketing strategies.

Automated email marketing could very well be the future of internet marketing. Targeted emails and customer-targeted emails have found success in conversions. The future of small businesses is expected to flow from sales-oriented emails. Conversion-centric emails have shown promise in the e-Commerce segment and are a trend that is likely to grow in leaps and bounds.

"Digital marketing has achieved unprecedented success in the pandemic era. Content creation will be an integral part of the marketing strategy on digital media. The growth of the e-Commerce industry has the potential to catapult digital marketing services to a high growth trajectory," said Olive Cynthia, a Beroe analyst.

About Beroe

Beroe is a global SaaS-based procurement intelligence and analytics provider. We deliver intelligence, data, and insights that enable companies to make smarter sourcing decisions - leading to lower cost, reduced risk, and greater profits. Beroe has been a trusted source of intelligence for more than 15 years and presently partners with 10,000 companies worldwide, including 400 of the Fortune 500 companies. For more information about Beroe Inc., please visit https://www.beroeinc.com/.

Media Contact:

Debobrata Hembram
debobrata.hembram@beroe-inc.com

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At the industry-wide level, MLM businesses continued to emphasize recruiting new distributors as a principal strategy.

For example, data from Taiwan in 2020 demonstrate substantial activity with 3.5 million distributors generating a turnover of 98 billion yuan—an increase of 5% compared to 2019—even amid pandemic-related disruptions.

Approximately 1 million new distributors entered annually over five years, indicating steady recruitment despite economic uncertainty.

The MLM model’s reliance on recruitment, rather than product sales alone, is underscored by commissions constituting nearly half of the turnover, while only about 27% of distributors earn commissions, averaging 45,000 yuan.

Attrition remains high, with around 450,000 distributors departing annually, primarily due to disillusionment with the product’s value or operational cessation.

Nonetheless, the continuous influx of new members sustains MLM growth, with social and hierarchical relationships being exploited to drive recruitment and revenue generation.

The economic pressures and labor market instability caused by the pandemic spurred increased interest in MLM participation, particularly among new graduates and job seekers seeking alternative income streams.

Regionally, distinct market responses are notable.

Title:

Content: Dietary Supplements Market Size to Reach $269.5 Billion Globally by 2030: Latest Report by Vantage Market Research

Vantage Market Research

Dietary Supplements Market Size to Grow by $269.5 Bn | Revenue Forecast, Company Ranking, Competitive Landscape, Growth Factors, And Trends

WASHINGTON, D.C, DISTRICT OF COLUMBIA, UNITED STATES, July 1, 2024 /EINPresswire.com/ -- The Global Dietary Supplements Market Size was valued at USD 152.3 Billion in 2022, and it is expected to reach USD 269.5 Billion by 2030, growing at a CAGR of 8.5 % during the forecast period (2023-2030).

The Dietary Supplements Market has seen remarkable growth in recent years, driven by increasing health consciousness among consumers and a rising focus on preventive healthcare. These products, which include vitamins, minerals, herbs, amino acids, and enzymes, are used to augment daily dietary intake. Factors such as an aging population, higher disposable incomes, and a growing trend towards personalized nutrition have significantly contributed to the market's expansion. With consumers becoming more proactive about their health, the demand for dietary supplements is expected to continue its upward trajectory.

This report delves into the multifaceted landscape Dietary Supplements Market, exploring its dynamics, top trends, challenges, opportunities, key report findings, and a focused regional analysis on the burgeoning North America region.

Download a Sample Report Here: https://www.vantagemarketresearch.com/dietary-supplements-market-2031/request-sample

Market Dynamics

Several key dynamics are shaping the Dietary Supplements Market. One major factor is the rising incidence of lifestyle-related diseases such as diabetes, obesity, and cardiovascular disorders, which has spurred interest in health and wellness products. Additionally, the market is influenced by increasing consumer awareness about the benefits of dietary supplements in enhancing immune function and overall health. Regulatory changes and innovations in supplement formulations are also playing pivotal roles. However, the market faces challenges such as stringent regulatory requirements and the need for extensive clinical trials to prove product efficacy and safety. The growing trend of clean-label products and the surge in e-commerce platforms for supplement sales are other significant dynamics impacting the market.

Top Companies in Global Dietary Supplements Market

• Amway Corp (US)
• Abbot (US)
• Arkopharm (France)
• Bayer AG (Germany)
• Glanbia PLC (Ireland)
• Pfizer Inc. (US)
• ADM (US)
• The Nature’s Bounty (US)
• NU SKIN (US)
• Herbalife Nutrition of America Inc. (US)
• Nature’s Sunshine Products Inc. (US)
• Ayand (Pakistan)
• XanGo LLC (US)
• Nutracutics Corp (US)
• American Health (US)
• BPI Sport (US)
• Dymatize Enterprices LLC (US)
• Bionova (India)
• GlaxoSmithKline Inc. (UK)
• Himalaya Global Holdings Ltd. (India)

To Get a Customized List of Companies Please Click Here: https://www.vantagemarketresearch.com/dietary-supplements-market-2031/request-sample

Competitive Scenario

The competitive landscape of the Dietary Supplements Market is characterized by frequent mergers and acquisitions, strategic partnerships, and product innovations. Leading companies are continuously investing in research and development to introduce new products that cater to evolving consumer preferences. For instance, there has been a notable increase in the launch of plant-based and vegan supplements. Companies are also expanding their geographical footprint through acquisitions and collaborations. The market is highly fragmented, with numerous small and medium-sized players contributing to the overall growth. The competitive scenario section of the report will delve into these aspects, providing insights into key players, their market shares, recent developments, and strategic initiatives.

Top Trends

Several trends are currently shaping the Dietary Supplements Market. One significant trend is the shift towards personalized nutrition, where supplements are tailored to individual health needs based on genetic and lifestyle factors. Another trend is the increasing popularity of plant-based supplements, driven by a growing vegan population and concerns about sustainability. Additionally, there is a rising demand for supplements that support immune health, particularly in the wake of the COVID-19 pandemic. The use of technology, such as AI and blockchain, to enhance product traceability and authenticity is also gaining traction. These trends highlight the market's dynamic nature and its responsiveness to consumer needs.

Top Report Findings

• The Dietary Supplements Market is projected to grow at a significant rate over the next decade.
• Vitamins and minerals remain the most popular supplement categories.
• North America holds the largest market share, followed by Europe and Asia-Pacific.
• The rise in e-commerce is boosting the availability and accessibility of dietary supplements.
• There is a growing demand for clean-label and non-GMO supplements.
• Regulatory hurdles continue to challenge market players.
• Personalized nutrition is emerging as a key market segment.
• Plant-based supplements are gaining popularity among consumers.

Challenges

The Dietary Supplements Market faces several challenges that could impact its growth. Regulatory scrutiny is one of the major hurdles, as manufacturers must navigate complex approval processes and adhere to stringent guidelines. Ensuring product safety and efficacy through rigorous testing is both time-consuming and costly. Additionally, the market is highly competitive, with numerous players vying for market share, which can lead to price wars and reduced profit margins. Another challenge is the potential for negative publicity from cases of adulteration or false health claims, which can erode consumer trust.

Opportunities

Despite the challenges, the Dietary Supplements Market offers numerous opportunities for growth. The increasing consumer shift towards preventive healthcare presents a significant opportunity for manufacturers to expand their product portfolios. Innovations in supplement formulations, such as the incorporation of probiotics and prebiotics, can cater to the rising demand for gut health products. Additionally, the expansion of e-commerce platforms provides a wider reach for manufacturers, allowing them to tap into new markets. The trend towards personalized nutrition also offers a lucrative opportunity for companies to develop tailored supplement solutions based on individual health profiles.

Read Full Research Report with TOC: https://www.vantagemarketresearch.com/industry-report/dietary-supplements-market-2031

Key Questions Answered in the Dietary Supplements Market Report

 What are the key drivers of growth in the Dietary Supplements Market?
 Which regions hold the largest market share?
 What are the main challenges faced by market players?
 How is the trend of personalized nutrition impacting the market?
 What are the most popular categories of dietary supplements?
 How are regulatory changes affecting the market?
 What innovations are shaping the future of dietary supplements?
 Which companies are leading the market, and what are their strategies?

Get a Access To Dietary Supplements Industry Real-Time Data: https://www.vantagemarketresearch.com/vantage-point

Regional Analysis:

North America dominates the Dietary Supplements Market, driven by high consumer awareness and a strong focus on health and wellness. The region's robust healthcare infrastructure and the presence of leading market players contribute to its significant market share. The United States is the largest market within this region, with a well-established dietary supplement industry supported by favorable regulatory frameworks and high disposable incomes. Canada also shows substantial growth potential, with increasing adoption of supplements for preventive health. The North American market benefits from advanced distribution networks and a high prevalence of e-commerce, which enhances product accessibility. Moreover, the trend towards personalized nutrition is particularly strong in this region, with consumers increasingly seeking customized supplement solutions to meet their unique health needs.

Global Dietary Supplements Market Segmentation

By Types
• Botanicals
• Vitamins
• Minerals
• Amino Acids
• Enzymes
• Probiotics
• Other Dietary Supplements
By Functions
• Additional Supplements
• Medicinal Supplements
• Sports Nutrition
By Target Consumers
• Infant
• Children
• Pregnant Women
• Old Age Populations
By Applications
• Tablets
• Capsules
• Powders
• Liquids
• Soft Gels
• Gel Caps

Check Out More Research Reports:

 Brain Health Supplements Market: https://www.vantagemarketresearch.com/industry-report/brain-health-supplements-market-2488
 Digital Transformation in Healthcare Market: https://www.vantagemarketresearch.com/industry-report/digital-transformation-in-healthcare-market-2272
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 Hydrogen Fueling Station Market: https://www.linkedin.com/pulse/hydrogen-fueling-station-market-size-share-trends-analysis-hancock/
 3D Printer Market: https://www.linkedin.com/pulse/3d-printer-market-size-share-trends-analysis-report-2030-hancock/
 Flavors and Fragrances Market: https://www.linkedin.com/pulse/flavors-fragrances-market-size-share-trends-analysis-report-hancock/
 Automotive Seat Market: https://www.linkedin.com/pulse/automotive-seat-market-size-share-trends-analysis-report-hancock/

Eric Kunz
Vantage Market Research
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In Russia, for instance, the exit of major foreign MLM players such as Amway in mid-2022—prompted by economic and operational challenges—has coincided with production and stability difficulties for Avon and Oriflame.

Title:

Content: Russian Federation
Moscow
+ 21 °
Society27 July 2022 10: 40
Amway is leaving the Russian market.
Oriflame and Avon next?
The largest players in various fields continue to leave the domestic market.
Direct selling is no exception.
This opens wide horizons for domestic brands
Dmitry VASILIEV
Photo by Shutterstock
SNOW KOM
March 11, among the first who made a statement about the termination of work in Russia, was the American Herbalife.
62 sales centers stopped shipping their products.
Today, such news does not seem out of the ordinary – foreign companies continue to close.
Rumors that Amway (USA) is also about to join the ranks of “sinking ships ” went for four months and, finally, found confirmation.
At the end of June, the global board of directors announced the official decision: “We have reached a point where economic, technological, organizational and operational circumstances have made it impossible for us to continue our work. ”
Meanwhile, Amway is the number one direct selling company in the world and of course many companies follow it.
STORMITH!
It is known that two other foreign brand leaders – Avon (USA) and Oriflame (Sweden) – are also going through hard times today.
According to various sources, employees admit that they do not feel a sense of stability: “The decision to leave Russia is made by top management located abroad.
We are kept to the last in the dark, in limbo, ” admits an Avon employee, who wished to remain incognito in the framework of the publication. – Do my colleagues and I expect that the story of “Amway ” will repeat itself?
Yes, unfortunately, we are preparing for the worst. ”
According to the analysis of the sites, Avon and Oriflame products are in short supply, which may indirectly indicate problems with production.
And although neither Avon nor Oriflame made any official statements, their actions are in many ways reminiscent of Amway.
ALL YOUR OWN, MOTHERLY
As you know, a holy place is never empty.
The released niches are filled by domestic manufacturers: new Russian brands are actively developing, and already well-known market players are increasing their capacities.
The departure of foreign brands will definitely not cause a decline in the direct sales industry.
Moreover, business analysts indicate that Russian direct sales companies demonstrate high crisis resistance.
First of all, they will not be closed for political reasons.
Secondly, in the conditions of limited choice in the labor market, economic recession and rising prices, they offer people the opportunity to earn extra money, as well as the purchase of high-quality goods for personal use with a good discount.
Of course, the most affected are those who built a business in foreign companies and planned to transfer it to children.

Analysts observe that local Russian direct sales companies have demonstrated remarkable crisis resilience and are expanding to fill gaps left by departing multinationals.

This suggests that despite geopolitical and economic pressures, certain domestic MLM-related markets continue to thrive due to favorable local conditions and political factors.

Examining individual companies highlights divergent fortunes within the MLM landscape.

Title:

Content: 'Direct Selling' - Avon, Tupperware - Is Extinct

Nov. 18, 2022 11:25 AM ETHLF, MED, NTCO, NUS, PRI, TUP, USNA3 Comments
Robert FitzPatrick
394 Followers

Summary

  • Direct Selling became obsolete generations ago. So how is it that millions today get recruited for "income opportunity" in "direct selling" and billions are traded on "direct selling" stocks?
  • Avon and Tupperware are cited by "multi-level marketing," or MLM, promoters as "proof" that MLM, e.g., Amway, Herbalife, is "direct selling."
  • Usable data on actual income and churn rates of MLM "direct sellers," market saturation, and retail sales to actual customers are not provided.
  • In fact, Avon and Tupperware for years have been walking dinosaurs, still trying to do "person-to-person" sales to end-users with commodity products, while MLMs hype "unlimited" income.
  • The shrunken and devolved state of Avon and Tupperware today reveals that direct selling is extinct. MLM is not, and never was, direct selling.

It is generally accepted that "direct selling" was killed off generations ago by mass merchandising, big box stores, mail-order and then the internet, among other societal changes. The "Fuller Brush man" is long gone. No one's at home. No one wants or needs or has time for a "personal" salesperson. Everything's in stores or online. And, even when "direct selling" still lived, no one ever went into that tough line of work thinking they would get rich from it.

Yet, each year, millions are recruited, and pay thousands, for the "opportunity" to work as "direct sellers," with promises and expectations of "unlimited" income. The number involved today is many, many times greater than ever worked in that "extinct" field decades ago. Billions are being traded on Wall Street for shares of "direct selling" companies. How can this be?

In my book, Ponzinomics, the Untold Story of Multi-Level Marketing, I document the death of "direct selling" and the 1945 invention of "multi-level marketing," or MLM. I describe how "MLM" falsely assumed direct selling's revered old identity. I trace MLM from its Adam, a little California-based company called "Nutrilite," to today's "industry" led by Amway, Herbalife (HLF) down 64% YTD, Nuskin (NUS) down 31%, USANA Health Sciences (USNA) down 49%, Primerica, Inc. (PRI) down 13%, and Medifast (MED) down 45%. MLM's financial solicitations for consumers to become "direct sellers" have reached into – and led to losses for – virtually every household in America.

In the newly invented "MLM," the main source of revenue shifted from end-user customers to the salespeople themselves who are incentivized to "be their own customer" by buying their own products. Obviously, no one makes money purchasing their own inventory, but MLM offered a unique reason to do so – "unlimited" income potential.

No More Need to Knock on Doors

All MLM "direct sellers" can potentially gain "unlimited" income by recruiting an "endless" chain of other "direct sellers." No need to pound the pavement and get rudely rejected at front doors any more. Each "direct seller" on the chain has to meet a quota to "qualify" for future rewards from their recruits who, in turn, are their "own customers" and recruiters too, ad infinitum. The chain can grow without continuous personal effort. The qualifying quota can usually be met by just making a personal monthly purchase of inventory. "Commissions" on all these transactions, all the way down to the "last ones in," flow up the chain. In the MLM pay plan, most of the total commissions go to the top 1%. So, all new "direct sellers" try mightily to recruit (and buy) their way to those top ranks. Of course, only a tiny few can ever be at the top.

Some people argued this is a pyramid recruiting scheme, inherently unfair and deceptive, and a counterfeit of direct selling. In the design and the pay plan, bottom ranks – the vast majority – will inevitably lose. They said constantly adding salespeople in any area destroys profitable retail selling potential, if any exists to start with. They cited data on 90-99% loss rates and huge churn rates among new "recruits" and asked, where are the retail "customers"?

While offering no data on retail customers or salespeople losses or market saturation, MLM promoters offered "proof" that MLM is direct selling by pointing to two long-established and respected direct selling companies in their ranks, Avon and Tupperware (TUP). Both companies were members of the Direct Selling Association, DSA, and both were "direct selling" icons, Avon for its "ladies" and Tupperware for its "parties." To any pyramid scheme accusations, MLM promoters indignantly countered: "Are you calling Avon and Tupperware pyramid schemes?"

Walking Dinosaurs

The truth for both companies is very different from the MLM-spin. Avon and Tupperware used to have differentiated products and real consumer demand. Their salespeople made money from their own retail sales. But moving into the 21st Century, Avon and Tupperware became walking dinosaurs, vestiges of the extinct era of "direct selling." They were still trying to base their businesses on their historical brands and on person-to-person retail sales to real customers, as direct selling companies always used to do.

Despite MLM's citing Avon and Tupperware, and thereby bestowing legitimacy on the "MLM" members of the Direct Selling Association, deep differences between those icons of the old era and MLM burst into public view in 2013-14. The two companies publicly quit the Direct Selling Association, charging ethics violations and DSA-member connections to pyramid schemes.

Avon's Long Good-Bye

Avon had been a true direct seller for decades before MLM was invented. But as the door-to-door model faded, Avon began a long decline. In 2000, Avon began shifting its focus to "incentivizing" salespeople to recruit more salespeople and getting them to buy inventory, MLM-style. In 2009, during the Great Recession, Avon ran its most expensive ad in history, on television during the Super Bowl. The ad never mentioned any Avon products! It only solicited "salespeople." Still, global revenue dropped continuously over the next 10 years. Avon stock value fell from over $30 to just over $3.

Finally, Avon split off its faltering North American business and sold it to the Korean company, LG Household & Health Care. Avon claimed to have 250,000 sales representatives in North America. The remaining global business was later sold to the Brazilian MLM, Natura (NTCO) down 50% YTD, which also owns the retailer, Body Shop. Though Avon global was much larger, Avon shareholders traded 3 shares of Avon for just one in Natura.

The Korean-owned segment of Avon in North America is now classic MLM, selling the proverbial MLM "income opportunity" along with "health" supplements, make-up, jewelry, clothing, scented candles, even toothpaste.

On the Canadian Avon website, Avon promotes the "income opportunity," urging prospects in large bold black type: "Think big. Sell Avon part-time, full-time, you decide how much! It’s your business, your way!"

A disclosure (legally required in Canada, but not in the USA) appears midway down a long webpage in tiny, barely visible gray lettering: "The 2020 earnings of a typical Avon Leadership Representative was between $0 and $2,620 in commissions and bonuses." That's $0 to $50 a week, before subtracting all costs! And the "disclosure" does not break out how much of that tiny return comes from personal sales or the "downline."

Avon quietly rejoined the Direct Selling Association. The Brazilian company, Natura, which took over Avon's global business in 2020, has lost over 60% of its stock value in the last year.

Tupperware on the Brink

Tupperware was one of the first "party plan" companies, which are technically a small subset of MLM. They employ an "endless" recruiting chain, but are more rooted in retail sales transacted at "parties." Tupperware used to have a popular brand with innovative, differentiated products. But, as true direct selling began to disappear, Tupperware went into decline. It added MLM-type "health and beauty" commodities to bolster recruiting appeal but then deleted them. This year, it began also selling its products in Target department stores. Its kitchen-related goods are generally not distinct from other brands. A 10-months "Income disclosure" for Canada (not published in the USA) showed that half the "party planners" were classified "inactive," earning less than $30 for the period on average. 94% of the "active" ones reportedly received about $12 a week on average, before expenses.

In the last 5 years, the stock value of Tupperware has dropped over 90%. Its latest financials warned investors the company may violate loan agreements, setting off speculation Tupperware might declare bankruptcy.

The shrunken and devolved state of Avon and Tupperware, the most famous brand-icons of "direct selling," makes citing them as a defense of "multi-level marketing" as extinct as their old business model.

This article was written by

394 Followers
Robert L. FitzPatrick is the author of the new book, Ponzinomics, the Untold Story of Multi-Level Marketing (2020),the first comprehensive history and analysis of the "MLM" phenomenon, addressing its political influence, propaganda techniques and use of cult persuasion. FitzPatrick is an expert in examining and revealing deception and fraud in Ponzi schemes, pyramid schemes and bogus home-based businesses. He served as expert or consultant in more than 30 court cases involving pyramid schemes and multi-level marketing. He is co-author of False Profits (1997), an examination of the values and beliefs that support the delusions of pyramid schemes. He was featured on NBC Dateline, ABC World News, and CBS 60 Minutes, the documentary film, Betting on Zero and the podcast, The Dream.He has been quoted in many newspapers around the world, including the New York Times and Wall Street Journal. His booklet, Pyramid Nation, has been translated to Chinese and used by government regulators in writing China's first laws on pyramid schemes. His booklet, "The 10 Big Lies of Multi-Level Marketing", has been translated into four languages and posted on numerous websites. His White Paper, "The Main Street Bubble", which details the extensive influence-buying of the direct selling industry was featured in a CNBC Documentary, Selling the American Dream. In 2005, he delivered a seminar to in Colombo, Sri Lanka to central banking representatives from that country as well as India, Bangladesh, Bhutan, Maldives and Nepal. Robert FitzPatrick has developed informational resources for consumers, journalists, academics and regulators including a multi-media PowerPoint presentation and a statistical analysis of the losses suffered by participants in pyramid selling schemes. He also published a widely read booklet on the landmark federal case brought against the Amway Corporation. He is a expert network member of GLG Research, and Coleman Research Group, as well as other networks of experts who are referred to clients for consultation, speaking and report writing. In this capacity, he has provided expert consultation to financial many analysts who sought information about multi-level marketing companies and pyramid and Ponzi schemes. Robert FitzPatrick co-founded and serves as president of Pyramid Scheme Alert, the first international organization to expose and prevent pyramid scheme fraud. He personally responds to hundreds of consumer and news media inquiries each year. He has served as consultant and expert witness for Attorney General or State Attorney offices in four states, the US Dept. of Justice, and in numerous cases involving distributor fraud and pyramid schemes. Robert FitzPatrick is not an investor in multi-level marketing companies. He has never owned and never plans to own stocks of multi-level marketing companies. He has never been compensated based on any stock's performance. He does not offer investment advice and he is not an attorney.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This article is for educational purposes only. It discusses fundamentals of the "direct selling" business model and the evolution of "multi-level marketing."

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Avon and Tupperware, once flagship direct selling companies often showcased as MLM exemplars, have faced prolonged declines over the past several years.

Avon’s shift around the year 2000 from a traditional direct selling model to a recruitment-heavy MLM approach precipitated declining revenues and stock values.

The company’s North American business was sold to South Korea’s LG Household & Health Care, and its global operations were acquired by the Brazilian MLM firm Natura.

Natura itself has experienced a 50% decline in stock value recently, reflective of broader challenges in the sector.

The average Avon Leadership Representative’s earnings remain low, with Canadian distributors making between $0 and $2,620 annually in commissions and bonuses in 2020, demonstrating limited profitability for the majority.

Tupperware, similarly, adopted an MLM-style product mix in health and beauty but encountered steep declines, with its stock plummeting over 90% in five years, accompanied by bankruptcy rumors.

Both companies publicly distanced themselves from the Direct Selling Association, citing conflicts related to ethical concerns and links to alleged pyramid scheme behaviors within the MLM domain.

Globally recognized MLM firms such as Herbalife, Nu Skin, and USANA have also faced market headwinds.

Herbalife’s stock price declined by 64% year-to-date, Nu Skin by 31%, and USANA by 49% in recent years, illustrating a contraction in investor confidence and operational challenges.

These companies operate predominantly in nutritional supplements—a sector valued globally at $152.3 billion in 2022 and projected to grow at an 8.5% CAGR to $269.5 billion by 2030—driven by rising health consciousness and preventive care trends.

Despite the growth opportunities in product categories, the MLM model’s emphasis on distributor recruitment over retail consumer sales has imposed structural challenges.

Title:

Content: Educational Development Corp.: Growth Risk Might Be Overblown

Moat Investing
1.46K Followers

Summary

  • EDUC is the exclusive US co-publisher of educational children's books produced by famous Usborne Publishing by leveraging multilevel marketing (MLM) strategy.
  • It has strong fundamentals, fair valuation, and a compelling growth story that is being ignored by the market.
  • We arrived at a target price of $12.4 to $14.6 without incorporating any future growth and expansion in operating margins.

Investment Idea

Educational Development Corporation (NASDAQ:EDUC) has an attractive value proposition, strong financials, and optionality of significant growth ahead due to structural changes caused by COVID. On top of that, the valuation is reasonable, and management has skin in the game (owns 23% of shares outstanding). For these reasons, we remain bullish.

Business Overview

EDUC is the exclusive US co-publisher of educational children's books produced in the UK by Usborne Publishing, and EDUC also exclusively publishes books through their ownership of Kane Miller.

The business operates in two segments:

Home Business Division (Usborne Books & More or "UBAM") -(95% of revenues) - This segment sells books through consultants directly to consumers using a multilevel marketing model (MLM). Consultants sell books by hosting home parties, social media, and hosting book fairs with schools and public libraries.

Publishing Division – (5% of revenues) - Sells books to bookstores, toy stores, and other retail outlets.

If you would like to get the gist of our thesis, you can watch our YouTube video below.

Value Proposition

The children's books market is very competitive and fragmented. There are more than 135 publishers of children's books in the US. EDUC is competing with Scholastic and Pearson, which have extensive resources to run marketing campaigns and are well-positioned in both online and offline distribution channels. Although EDUC has a little moat, they have some strengths to their business model that will allow long-term value creation.

They have an exclusive and long-term relationship with Usborne. Therefore, clients of the Usborne in the US must acquire their books via EDUC. Also, there is a consensus that Usborne books are high quality and among the industry's best.

Their sales are a function of the number of active sales consultants. Commissions paid to consultants are a variable cost, and they are only paid when sales are made. Although this makes SG&A grow as the top line grows, since it's not a fixed cost to the business, it allows EDUC to achieve significant operating leverage. Also, it allows them to scale quickly and have flexibility.

Direct sales strategies like multilevel marketing are commonly referred to as pyramid and Ponzi schemes. However, the table below shows that it does work sustainably and increases revenue growth over the long run despite the negative press.

Source: S&P Capital IQ

Why might EDUC be mispriced?

There are multiple factors. Firstly, it's a micro-cap. This usually means there is limited analyst coverage, and due to the stock's illiquidity, there is low institutional interest. These factors, coupled with others, leave the company under the market radar despite its business is doing well and has promising perspectives.

Second, there is negative press around the MLM business models. The MLM model deployed by EDUC is vastly different from dodgy tactics used by other players. For example, many MLM models require the seller to purchase the inventory from the company before selling. However, this reduces the risk for the company and puts extra pressure on the seller, which can be left with expensive inventory that cannot be sold or returned. In the case of EDUC, there is no requirement to hold inventory.

Third, markets might be believing that the business's tailwinds are temporary due to COVID. Amidst Covid, schools were closed, and parents were working from home; this drove home-based learning and benefited EDUC. Additionally, unemployment rates soared, and many were left looking for work. This allowed EDUC almost to double its consultant count from 33 to 60 thousand. We believe the post-pandemic work from home trend will persist, supporting their sales. Furthermore, the active consultant might not fall back to the pre-pandemic level as these roles are usually part-time work which fits nicely with the trending gig economy.

The evidence speaks louder than words

There are also some clues from the management that revenue generated amidst pandemics might be sticky.

Management increased its dividend per share from $0.20 to $0.32. A dividend increase should be seen as a signal that a business is in solid financial shape and management is confident about its future.

Management increased capital expenditures to $4.15 million from $0.64 in 2020. This expenditure was primarily associated with equipment purchases to increase daily shipping capacity. These are some early signs that management is expecting positive growth going ahead. Additionally, this also improves their margins as amidst Covid they paid a premium for extra shifts.

EDUC has increased its inventory; the inventory build-up is approximately 60% of its total assets. This has been in anticipation of an increase in the sales, as it takes a four to six-month lead-time to have a title printed and delivered to them.

Source: Koyfin

Value Investing Approach: Asset Value

To calculate the actual asset value of the company, we tried to replicate the business from scratch. Therefore, below you will find the last reported balance sheet, where we have made some adjustments.

The value of the land recorded on books was $4.1 million. They own a 40-acre complex at 5402 South 122nd East Ave, Tulsa, with 400,000 square feet of office and warehouse space. They also own a facility located at 10302 East 55th Place, Tulsa, that has 105,000 square feet of usable space. According to our channel checks with realtors, the average price per square foot of their land lies between the range of $100 to $115. To remain conservative, we took the average price square feet to be $85. Therefore, we estimate the value of its land to be $42.9 million.

They also have a network of around 55,000 active consultants. To construct such a network from scratch is both costly and time-consuming. We estimate the replication cost of this network to be around $27.5 million ($500 per consultant). This is also roughly five months of sales commission cost incurred by EDUC in the fiscal year 2021.

The rest of the items are taken on book value.

Based on the above adjustment, we arrive at the total asset value of 106.7, and the fair value per share to be $12.4

Source: Moat Investing

Value Investing Approach: Earnings Power Value

This approach allows us to value EDUC without incorporating any growth. Here, we consider the business's historical figures (last five years) to get the normalized earnings and operating margin. To calculate the sustainable earnings, we smoothed out the company revenues for the previous five years to $131 million and then calculated the firm's average operating margin (6.5%) to arrive at the sustainable Operating Income of $8.5 million.

We add back the expenses typically spent on growth, and we estimate around 4.5% of sales is spent on growth marketing, i.e., promotion, advertisement, and discounts. Hence, we add this back as this expense is not required if the firm was not aiming to achieve growth.

We assume the normalized tax rate to be 26% and the estimated cost of equity at 9%. Therefore, we estimate Earning Power Value of the operating business to be $134 million. To that, we add the non-operational cash ($1.8 million), and we subtract long-term debt (10.8); we arrive at an implied market cap of $125.6 million or $14.6 price per share, with 12.3% upside potential, without incorporating any growth or expansion in operating margins.

Source: Moat Investing

Risks to Our Investment Case

  • Stringent regulation regarding MLM companies. For instance, the requirement to treat consultants as employees. This could have implication when it comes to taxation, wages paid and welfare concerns for workers. This could, in turn, shrink the bottom line or, worse, business model tatters.
  • The most straightforward risk is consultants quitting or switching to find other employment as the US economy improves. However, within our valuation model, we have smoothed the growth of revenue in the last five years, which is a function of l consultants recruited. Even if there is some mean reversion in terms of consultants working with EDUC due to the COVID base effect, our thesis would be less impacted.
  • As highlighted earlier EDUC’s inventory level is a significant portion of its asset. Whatever reason they become unsalable (i.e., change in taste or controversy in terms of published content) could impact our valuation.
  • Oil prices have increased significantly since last year (see below). Shipping costs are amongst the most significant component of its COGS; further rise in oil prices (consequently increasing shipping cost) could make it difficult for EDUC to remain profitable.

Source: Trading Economics

Conclusion

EDUC has an attractive value proposition, strong financials, and optionality of significant growth ahead due to structural changes caused by COVID. On top of that, the valuation is reasonable, management has skin in the game (owns 23% of shares outstanding), and investors are not even paying for any future growth at current prices. For these reasons, we remain bullish.

This article was written by

1.46K Followers
We are a group of experienced investors that like to dig deeper into stocks to find growth stories at a reasonable price with strong economic moats. We also aim to conduct high-quality analysis by deep diving into valuations, key business drivers, risk/reward, and different future scenarios.
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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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The regulatory environment, encompassing stricter compliance standards and scrutiny over direct selling practices, further complicates business operations.

LuLaRoe offers a cautionary case study illustrating risks inherent in the MLM framework.

Renowned for selling leggings primarily via social media platforms like Facebook and Instagram during the 2010s, LuLaRoe’s model rapidly expanded through recruitment pressure on distributors, framed as customer-retailers themselves.

Title:

Content: W TV CLUB

LuLaRich is Not Your Average Fashion Documentary

Cult allegations, manipulation, and debt—LuLaRich is not just a documentary about some basic leggings sold by an MLM company.

Courtesy of Amazon

Welcome to W TV Club, in which W magazine’s editors choose a television show they’d recommend you binge-watch. Our November picks will be a selection of docuseries. This week, culture editor Brooke Marine recommends Amazon Prime’s LuLaRich, which is more than just a documentary about leggings.

This year, it seems like there has been quite an uptick in the number of docuseries produced and distributed by the various streaming platforms that rule my life. Admittedly, I have slept on a few. One of those docuseries is LuLaRich, the four-part investigation into the legging brand LuLaRoe, and how its multilevel marketing business model wreaked havoc on the lives of its salespeople and customers.

LuLaRoe started as a maxi skirt company before dipping into leggings territory. I had never seen any of these skirts or leggings on my feed, though in the documentary—which includes interviews with the company’s founders DeAnne and Mark Stidham as well as former LuLaRoe retailers—it’s explained that the company became quite popular in the 2010s, particularly on Facebook and Instagram.

“We’re not in the clothing business,” co-founder Mark Stidham says, “We’re in the people business.” Sure—that becomes abundantly clear once the series outlines how his company’s MLM model not only scammed the company’s retailers into debt, but also how the founders were accused of starting a cult. Yes, a cult.

Multilevel marketing is technically legal, in case you were wondering. As explained in the documentary, the business model began decades ago with a company called Nutrilite (a food supplement) which paved the way for Amway, a company that made the salesperson into the customer. In the MLM model, a company generates revenue by multiplying the number of sales people, who buy into the company with fees. It doesn’t matter what the product is—it could be beauty products, “wellness” supplements, or even, as demonstrated in the HBO docuseries The Vow, which chronicled the explosion of the NXIVM cult in North America, a “self-help” seminar. In LuLaRich, it’s the leggings. You could sell a concept as part of an MLM, and as long as you have enough levels of loyal salespeople willing to be both customer and recruiter, the people or person at the top will have a stream of revenue.

That’s all explained in the first episode of the four-part series; LuLaRoe seemed to have legitimate origins. But then weird stuff started happening. The legging designs seemed to suggest sexual innuendos. The inventory wasn’t matching up with what was being sold. In the first episode alone—and I am not even joking, yet I truly wish I were—there are sound bites from former LuLaRoe retailers saying, “The whole house smelled like the dead-fart leggings.”

There are also a few strange anecdotes from the LuLa Roe founders, the Stidhams, who are proud members of the Church of Jesus Christ of Latter-day Saints (the Mormon church, in other words). A few of the LulaRoe founders’ 14 children are adopted, and one of those adopted kids is married to one of the founders’ biological daughters, though the parents ham-handedly assure the viewer they have zero blood relation and never grew up in the same house together. And what’s even wilder is that DeAnne Stidham’s maiden name was Startup. It’s stranger than fiction, really.

LuLaRich, directed by Jenner Furst and Julia Willoughby Nason, can at times feel like a parody of an MLM scheme, not a truthful report of actual events. While watching, I had to remind myself a couple of times that this is not a Search Party subplot. It really happened, and as outlined in the docuseries, legal action was later taken against the company. But I won’t spoil the ending for you—this series must be seen to be believed.

This approach resulted in widespread retailer debt, inventory glut, and multiple allegations of psychological manipulation akin to cult dynamics.

The company faced legal actions and media exposés highlighting the fragile sustainability of such MLM structures predominately focused on recruitment rather than genuine product demand.

Conversely, Educational Development Corporation (EDUC), a U.S.-based MLM company specializing in educational children’s books, has bucked declining industry trends.

Since 2018, EDUC nearly doubled its active consultant base during the pandemic, benefiting from structural shifts such as remote work and increased home learning.

EDUC’s model notably reduces entry risk by not requiring upfront inventory purchases, a marked departure from conventional MLM practices.

Increased dividends, capital expenditures, and inventory buildup signal optimism for sustained growth, offering a blueprint for MLM firms adapting traditional models to modern consumer and distributor expectations.

Closures and strategic withdrawals mark another trend.

Title:

Content: GP-led secondaries activity will drive deal volumes in 2024

Dealmaking is due for a comeback this year with the return of financial sponsors and more demand for liquidity, according to a panel at IPEM Cannes.

Dealmaking will most certainly pick up in 2024, driven by customisable and flexible capital, according to panellists at IPEM Cannes on Wednesday.

Continuation funds, co-control and structured equity-type investments have been more common these days as GPs find a middle ground between debt and equity, according to Stephane Etroy, partner and head of European private equity at Ares Management.

“The key word this year is ‘flexible capital’. I don’t want to sell, but as a sponsor and owner, I need capital either to deleverage or for M&A or because I need DPI for my investors, or because I’m stuck with the asset and I still need to create equity value for my investors and I need capital and I don’t want to get a full dilution,” Etroy said.

“We’re going to see a lot more of these deals again throughout 2024. There are a number of elections. The geopolitical market is uncertain. It’s a great time for private equity because you can structure very good deals, but investors are definitely [pickier].”

Against a more volatile market backdrop, Mark McDonald, managing director and co-head of Brookfield Asset Management‘s sponsor solutions business, noted that the co-investment, credit and buyout markets are “converging at certain intersections on certain transactions”.

“We are getting a lot of inbounds from GPs looking to do M&A, looking to take some DPI off the table, maybe a small recap to give DPI, but hold the asset another couple of years, or even do a continuation fund for a full exit. We are seeing that play a lot into the secondaries market.”

He noted, however, that the market is undercapitalised. “For every GP-led deal that is launched, only one of them gets through the market… which I think underwrites massive growth in the direct secondaries market over the next three to five years. You’re going to see an explosion of activity in GP-leds over the next years.”

Michael Elio, a partner at StepStone Group, agreed that the supply will only get bigger. “The GP continuation vehicle market in its current form began in covid, when GPs were all locked at home looking at their best assets and saying, ‘Let’s wrap this thing up and run with it.’ At the beginning they were all, ‘Great.’ That’s not the case anymore.”

LPs are looking at the GP continuation vehicle market like any other market now, and asset selection matters, according to Elio.

“There are three times as many continuation vehicles in the market as there is appetite for it. On the secondaries side alone, only half the deals in the secondaries market get done, which means there’s more to choose from and you can be selective,” he said.

“LPs are looking to the secondaries market as their liquidity solution on a go-forward basis. This market continues to grow, it continues to be the only area where transactions really are occurring in a meaningful way, and I think that will only continue to happen.”

GP-led activity reached about $52 billion last year, with “strong momentum gained in H2 2023… driven by record secondaries investor fundraising and new buy-side entrants”, according to Jefferies’ Global Secondary Market Review. That figure is expected to grow to more than $65 billion in 2024.

Amway’s exit from Russia reflects broader operational and geopolitical difficulties.

Avon and Oriflame exhibit signs of retreat or instability in the same market.

Larger companies increasingly question the viability of heavily recruitment-dependent MLMs in volatile environments.

In contrast, direct sales in their traditional form—selling directly to consumers without multi-level compensation structures—have diminished, often replaced by MLM schemes emphasizing recruitment.

The decline of legacy MLM firms like Avon and Tupperware, dramatic stock value drops for key players, and high distributor attrition rates reveal fundamental challenges.

Analysts attribute these trends to several interrelated factors: a shift in consumer skepticism towards MLM practices due to exposed unethical behaviors and legal battles; regulatory clampdowns aiming to curb pyramid scheme abuses; the rise of social media amplifying both MLM recruitment and critical scrutiny; and economic downturns, especially the COVID-19 pandemic’s profound impact on employment and disposable incomes.

While pandemic-related job market disruptions increased initial MLM interest, post-pandemic recovery and evolving labor markets may dampen sustained growth prospects.

Furthermore, the MLM structure inherently fosters a high churn rate, as commissions and income are disproportionately concentrated at top distributor levels, leaving most participants with little or negative financial return.

This dynamic encourages aggressive recruitment to replenish the distributor base, a practice increasingly criticized for exploiting social networks and personal relationships, raising accusations of commercial cult-like behavior.

Industry experts contend that future successes in MLM will rely on model innovations reducing reliance on recruitment-driven revenues and enhancing genuine customer sales.

Companies like EDUC demonstrate potential pathways.

Additionally, geopolitical factors may favor domestically oriented direct sales companies in specific markets, as seen in Russia.

However, longstanding criticisms and legal pressures suggest that the fundamental MLM business model faces ongoing existential challenges, risking further market contraction or transformation into simpler sales-based frameworks.

In sum, since 2018 the MLM industry has experienced a complex interplay of growth, decline, and transformation.

While some companies have thrived by adapting to new market realities, many iconic MLM firms have witnessed declining profits, stock values, and market relevance.

The COVID-19 pandemic temporarily increased participation but did not arrest underlying structural issues.

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Inside Live Sound’s Staffing Squeeze

As concert sound bounces back after the pandemic, there's fewer live sound pros coming back with it.

As coronavirus restrictions nationwide have slowly lifted in recent months, quite a few artists have returned to touring…though often for a succession of weekend dates rather than months of five or six shows a week, and often in smaller venues or just select regions. That’s become just one of the potential bumps in the road ahead as live entertainment production companies ramp back up in the wake of the pandemic.

Check out any touring sound company’s website and you’ll likely see anywhere from a handful to dozens of job vacancies posted. Production companies did their best to hang on to as many employees as they could during the pandemic, but for some staff members, there was no alternative but to find some other paying job.

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“Unfortunately, last March, we had to release a large portion of our staff,” Bryan Brunclik, vice president, production, at Clearwing Productions, says, though the company, family-owned since the 1970s, was able to retain about 30 people with the help of various state and federal aid programs, such as PPP. “We had to do a number of things, like reduce hours and salary cuts, but everybody was very understanding,” he says.

Even with the reduction in hours, the federal government’s stimulus checks and enhanced unemployment benefits helped employees through the pandemic. Clearwing also took advantage of Work Sharing, a state program that helps top-up weekly wages according to the percentage by which the employer has had to reduce a worker’s hours. “Luckily, each of the three states we’re in—Wisconsin, Colorado and Arizona—had that program,” Brunclik says.

According to Craig Mitchell, managing director, touring, for LMG Touring and Entertainment, the company’s diversified services, encompassing video, audio and lighting, gave it a leg up during the pandemic: “We’ve been around for going on 38 years. We’re privately owned, we have very little debt and we’re well managed. That’s given us some advantages.”

LMG’s soundstages in Las Vegas, Nevada, and Orlando, Florida, picked up the slack when COVID-19 shut down touring, hosting artists and Fortune 50 and 500 corporate clients shooting videos, commercials and other content. High-profile productions included Uber Eats’ Wayne’s World commercial, which debuted during Super Bowl LV, and a performance from the roof of Caesar’s Palace in Las Vegas by The Killers for the NFL’s Monday Night Football in September.

“We were doing up to 18 or 20 events a day,” Mitchell says. “We had techs working 80-hour weeks. We were able to train a bunch of people, taking them from live events to streaming, so we were able to keep comparatively quite a few people employed, along with freelancers. Some highend media server people shifted into XR mixed reality work— we have XR stages in London, Orlando and Las Vegas.”

Then, coming out of the pandemic, he says, “We had some of the first tours in the country. Country artist Dylan Scott was doing weekend warrior shows in smaller venues a month ago. Lindsey Stirling started an amphitheater tour the first week of July.” LMG’s rehearsal studios are currently busy hosting multiple artists, including Travis Scott, he says.

Clearwing, too, rolled with the punches during the pandemic, providing production for hybrid, outdoor and political events. The company’s admin and sales teams reacted to the situation by reevaluating and streamlining processes to improve client interactions and support. With entertainment venues closed down, Clearwing’s trucking division hauled freight for retail and manufacturing companies.

Now, as shows begin to return, including Milwaukee’s Summerfest in September and other events at that location before then, Brunclik says, a number of previous employees are leaving their current jobs to return to Clearwing. “They love working here; they want to get back to their family.”

Yet some people are not ready to return, he says: “They’ve found more stability or aren’t sure what’s going to happen with the coronavirus variants.” There is good reason for caution; as of July 16, the Centers for Disease Control and Prevention reported that the seven-day average of coronavirus infections nationwide had jumped nearly 70 percent in just one week, thanks largely to the Delta variant. Anecdotally, some observers believe a significant percentage of former live events production personnel may not return to the industry, for one reason or another, including workers in catering, transport and other associated jobs.

The hiatus also gave Clearwing, whose systems integration division had its busiest year and continues to thrive, an opportunity to reevaluate the production division’s business model, Brunclik says, in anticipation of labor and resource shortages as touring work returns. “The last thing we want to do is overpromise and underdeliver,” he notes.

Indeed, production gear could soon be in short supply, a situation exacerbated by the worldwide chip shortage. One digital mixing console manufacturer is reported to be backordered as much as 12 weeks. And if everyone’s gear is out on the road, there will be no possibility of cross-renting.

“We’ve built a business where we can respond to last-minute requests—we make the impossible happen—but there’s going to have to be some awareness, as things get busy and there are more tours out than normal, that there are going to be some shortages,” Mitchell says.

“Traditionally, the first thing a tour or production manager does is lock down their buses, but we’re rolling into a situation at the end of this year where they might want to start taking that approach with gear, locking it in a month or two ahead of time instead of two weeks ahead of time, because we are expecting some potential shortages across all vendors.” Plus, Mitchell points out, companies still need to recoup on the equipment they bought pre-pandemic and may not currently have the CapEx to buy more.

One place to turn for new staff might be the many specialist schools across the country. Rachel Ludeman, employment coordinator with the Conservatory of Recording Arts & Sciences (CRAS) in Arizona, reports, “From my recent work with our CRAS graduates who are looking for employment, live production is on the upswing. There seems to be a very large need for stagehands, techs, A2s and A1s. It seems as though many of the previous engineers have either found new work or have retired.

Back on the Road! Live Sound Gears Up for Reopening

“I’ve noticed more companies willing to take on our recent graduates who have the education and foundation to perform the position and are more willing to facilitate a small learning curve in the workplace, in order to fill these positions,” Ludeman says. “This has given our newest graduates amazing opportunities to get their feet wet and make a name for themselves in the live industry.”

That said, some positions can only be filled by experienced hands. “Even though there’s a demand and there’s a ton of work, we have to be selective with the people that we bring in. We want quality people,” Clearwing’s Brunclik says.

There has always been a talent shortage, Mitchell believes. “I think 2019 was one of the peak years for live entertainment, and we had gear and talent shortages then.” This year, he suspects, even reticent techs will eventually return. “They may not come back on the first phone call, but they may be more interested on that third or fourth call—and there are always opportunities for more people to get into the business.”

Colleges are great at turning out lighting designers and FOH engineers, Mitchell says, but what about the people behind the scenes who help make shows happen? “We realized that universities are not training system techs, LED techs, vendor account executives—so we’re building out curriculums and creating internship opportunities for the next generation. To grow, we need to take a leadership position in building that future.”

To that end, LMG has set up the Coil Learning Center and established relationships with colleges near the weeks-long training program’s four U.S. locations, which include Baltimore, Md and Detroit, Mich. “We have paid interns come in on the technical side and the front office side,” he says. Classes cover everything from using Microsoft Excel in AV to L-Acoustics system fundamentals.

Many touring production companies across the country kept idled staff sharp with technical refresher courses during the pandemic, including those hosted by some of the equipment manufacturers. LMG was no exception, offering employees a comprehensive menu of courses, especially on the visual side, from the likes of Barco, BlackMagic, NewTek/Vizrt and Ross, and trade association AVIXA.

One thing is for sure: It’s as important to get the body as sharp as the mind. “Gigging is demanding; it takes a toll,” Brunclik says. “You need to be in shape to pull those hours and be on your feet working. Everybody’s going to have to get reacclimated.”

Close

Emerging legal and ethical concerns, coupled with shifting consumer and distributor expectations, are prompting a reevaluation of the MLM model’s long-term viability.

Projections indicate that without substantive reform, the MLM sector will continue facing significant hurdles related to profitability, sustainability, and public trust.

Reviewers are invited to assess this report for completeness and clarity, and to recommend any areas requiring enhanced depth or further elaboration to fully encompass trends, company-specific nuances, or psychological implications relevant to the user’s research.