Herbalife Nutrition Ltd. is going on the top among investors. As stocks of 68.7% flow on a year-to-date basis as compared with the industry’s decline of 0.1%. The company is gaining from quality volumes in key markets as well as bulky products’ portfolio and global presence. However, negative impacts on the industry are due to currency fluctuations that need to be considered. Over the last twelve months, the revenue growth of Herbalife has been 24.00%. In 2017, Herbalife’s net sales of 71.8% were accounted in the top ten nations of the world. Then in the third quarter of 2018, volume points increased by 15% to 1,506.9 million that exceeded management’s projections. This got the second highest volume points achieved by the company.
However, currency fluctuations weighed on the gross margin in the third quarter of 2018. Management expects the falling situation in the fourth quarter of 2018 performance. Further, the company exposed that leads to hard competition from other retailers as well as distributors of nutritional products. Then it is expected that the company’s extensive business, focus on their brands, and a strong direct-selling network that will lead to high performance and enable the company to overcome these hurdles. Such growth drivers and a high past performance encouraged the management to raise earnings for 2019.
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Herbalife sold its products in 91 countries and had a network of 3.9 million members or distributors, approximately 0.2 million members were in China. The direct-selling channel is ideal for marketing Herbalife’s products because personal contact builds more trust. Thus, leading to increased sales of weight management, nutrition, and personal care products. Moreover, members consume the products and can provide first-hand testimonials of the effectiveness of the products to their customers, which can serve as a powerful sales tool. Most of the members join to receive a discounted price on family products. Members also have the opportunity to gain profit by selling the products. Once members achieve certain qualifications, they can earn Royalty Overrides or commissions on sales.
The main three advantages of the Direct Sales Model include brand name recognition as it has been around for 40 years. It is in the list of top ten direct selling companies in the world as well as have strong relationships with over 91 countries. The second advantage is flexibility for the distributors as they can work according to their schedules in the free hours of the day. The third advantage is personal relationships that the direct sales model depends on consultants or distributors who work with their customers directly and maintain good relations. So, by considering these advantages, individuals encouraged to join Herbalife as it also offers training opportunities and educational materials to its distributors. In 2019, it can be an excellent opportunity for students to join and explore Herbalife brand and take the benefit out of it.