Melaleuca (company)

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This article is about the direct-consumer company; for the genus of plants, see Melaleuca

Melaleuca, The Wellness Company

Type	Private
Founded	1985
Headquarters	Idaho Falls, Idaho
Industry	Health
Revenue	$782 Million Sales Graph 1985 to January 2007
Employees	2,500
Website	www.Melaleuca.com

Melaleuca, The Wellness Company , often called simply "Melaleuca", is a consumer-direct company founded in 1985 and headquartered in Idaho Falls, Idaho, USA. The company produces and sells a broad array of nutritional, cosmetic, and personal care products.

Melaleuca was listed on the Inc. 500 list of fastest-growing companies in 1990, 1991, 1992, 1993, and 1994.^[1] Melaleuca CEO Frank L. VanderSloot appeared on the Forbes 400 list of 400 richest Americans for the year 2004.^[2] Melaleuca also earned the Blue Chip Enterprise award which is given out by the United States Chamber of Commerce.

1 History
2 Products and business model
3 Criticism
4 Awards and Public Recognition
5 References
6 External links

History

The company began under the name "Melaleuca Oil" with the offering of a single product called "T36-C5 Melaleuca Oil" which was formulated from extract of the melaleuca tree, commonly known as tea tree oil. A previous Melaleuca-based company operated as a standard multi-level marketing company whose literature made health claims the FDA would not approve. The company sold products whose uses and benefits were not verifiably documented. There were also exaggerated claims of the efficacy of the active ingredient, tea tree oil, and claims that the company was a sole source of the same, creating an impression of privileged access to a unique product.^[3]

In 1985, the company was taken over by Frank L. VanderSloot who dissolved the previous company, created a new marketing plan to support consumers, immediately launched an initiative to bring the company's product line into compliance with FDA regulations, and rechristened the company "Melaleuca, Inc.". He made the compensation plan more favorable to Marketing Executives, by establishing Consumer Direct Marketing. Their Independent Representatives were no longer required to sell products but instead became membership enrollment facilitators. Since VanderSloot has taken the helm, Melaleuca has experienced consistently increasing sales and revenues and expanded internationally.^[3] Melaleuca now has over 2,500 employees as well as sales offices in Hong Kong, Japan, and Australia, Taiwan, New Zealand, and United Kingdom and grossed US $782,000,000 in sales in 2006.^[4] Melaleuca began sales in Singapore, Netherlands, and Jamaica in 2006.

Products and business model

While initially based predominantly on the researched health benefits of melaleuca plant extracts, the product line has since expanded beyond this initial focus. Melaleuca now markets over 350 items such as household cleaners, personal care items, pharmaceuticals and nutritional supplements. The company markets itself as being earth-friendly, and many of their products are certified organic. They also launched a cosmetics line in partnership with fashion designer Nicole Miller in January 2003.

Melaleuca has been outspoken against the abuses inherent to multi-level marketing and the damage they can cause. By contrast, Melaleuca does not allow inventory loading (a practice used by many multi-level markeing companies encouraging them to purchase up to thousands of dollars worth of inventory), limits the marketing chain to 7 generations, and prohibits "breakaways" (another practice commonly found in multi-level marketing). According to the company, another way it is less exploitive than MLM's is that it does not require its marketing executives to maintain an inventory. In order to receive commissions from one's customers, marketing executives must produce a minimal number of 35 product points per month (the equivalent of about $45-50 each month) to remain an active Marketing Executive. This in turn qualifies the customer to receive a 30-40% discount. The company also offers an opportunity to collect up to 15% of your monthly order in "Advantage Awards" dollars. Upon reaching $20 in Advantage dollars you are allowed to redeem these dollars to pay for subsequently purchased products. The products being purchased are everyday necessities that one would be purchasing anyway (i.e. shampoo, hairspray, cleaning supplies, etc.) and, the minimum required level is compatible with typical household or personal use.

Criticism

Melaleuca has drawn criticism on several grounds. A Quackwatch article questioned the value for money of its vitamin/mineral Vitality Pack and the effectiveness of certain Melaleuca vitamins and fat conversion bars.^[5] Melaleuca once had a lawsuit in which distributors and affiliates accused the company of misrepresenting retention rates of customers, which is crucial to marketing executives receiving a satisfactory revenue stream. Melaleuca won the lawsuit.^[6]

One of the main ingredients in many Melaleuca products, tea tree oil, is a natural antiseptic and has been found to increase MRSA risk (the development of "superbugs" resistant to antibiotics)^[7] and has been linked to prepubertal gynaecomastia.^[8]

Awards and Public Recognition

Melaleuca has carried a long-term "satisfactory" rating with the local Better Business Bureau, the highest rating given by the BBB. To achieve a "satisfactory" rating a company has to properly and promptly address matters referred to it by the Bureau, and be free from an unusual volume or pattern of complaints and law enforcement action involving its marketplace conduct. In addition, the Bureau must have a clear understanding of the company's business and no concerns about its industry.^[9]

Melaleuca and its 22 year President and CEO, Frank VanderSloot, have been the recipients of numerous distinguished honors and awards:

Inc 500 Hall of Fame - In 2005 Melaleuca was inducted into the Inc. 500 Hall of Fame.^[10]
Healthy Workplace Award - Melaleuca was one of 15 organizations in 2004 recognized nationally by the American Psychological Association with a "Best Practices Honor" for efforts to foster Family Support in the workplace.^[11]^[12]
IACI Environmental Excellence Award - in 2003 Melaleuca was awarded the IACI Environmental Excellence Award. Criteria for the award includes environmental practices, investment in pollution control, recovery from waste streams, conservation, and other environmental achievements.^[13]
Entrepreneur of the Year Awarded - Ernst & Young and CNN awarded Melaleuca's President and CEO Frank VanderSloot the Entrepreneur of the Year Award for the Northwestern United States in 2001. Past recipients have include Amazon.com, eBay, Southwest Airlines, and Enterprise Rent-a-Car.^[14]^[15]
Blue Chip Enterprise Award - In 1991, the United States Chamber of Commerce honored Melaleuca by presenting it the Blue Chip Enterprise Award. Melaleuca was singled out because of its "ability to succeed in the face of tremendous economic challenges."
Idaho Business Leader of the Year - Frank VanderSloot was named Idaho Business Leader of the Year by Idaho State University in 1998.
Distinguished Community Service Award - given by Boy Scouts of America in 1998.
Service to community award - presented by the Greater Idaho Falls Chamber of Commerce in 1997.
Inc. 500 List of Fastest Growing Businesses - Melaleuca is one of only a few business in history who have been listed in the Inc. 500 five consecutive times.^[16]