I ran across this blog the other night. I don’t think I have ever seen anyone sum it up better. Arbonne is simply focused on selling new distributorships instead of products. In any MLM the way to make the most money is to get other people into the business. Don’t be fooled into thinking that you can make 100k a year without tons of work, most of which is spent recruiting new people. I SELL PRODUCTS. That is where 75% of my income comes from. If someone is interested in the discounts, or opporunity of becoming a distributor than GREAT. I certainly don’t run around harrassing everyone I know to sign up for Senegence. Thanks again to “J” for this great article:
It is true that the information here may influence people’s decision on whether or not to begin an Arbonne business. As a result, many Arbonne consultants will have to answer some questions about the concerns raised here. It may be necessary to fully disclose the facts about the biz in order to persuade potential recruits to join.
For example, inform them that while you have been satisfied with your results, far less than 1% of consultants make it to NVP. Explain that it takes significant time and work to make it to DM, and they will not earn much (if anything) for their time and efforts for a long time if they are building it the right way.
While 10 hours per week is what most consultants aim to spend, it often requires more than that, (much more), particularly when getting started, (and sometimes after getting promoted). Let them know that at some point, cold market prospecting will be a necessity to maintain position, because they will run out of friends willing to spend money every month. This may involve them needing to take up extracurricular activities and getting acquainted with people they don’t know and wouldn’t normally talk to in hopes to recruit them at some point. They may be okay with this when you tell them that some of their friends will no longer want to be around them anymore if they are constantly “dripping” on them.
Inform them that large upfront investments are risky, and that promotion from fast track front-loading leads to fast crumbling of teams. Let them know that the likelihood of them losing any money spent up front is great, and that their odds of recouping their investment are greater at a slot machine in Vegas than with Arbonne (and, in fact, slot machines are less work).
When you’re talking product and patents, you may need to disclose that Arbonne buys formulas from other labs and chemists, and that these labs also develop and sell formulas to Arbonne’s competitors in the industry. Please explain that Mr. Botiglierri does not work exclusively with or for Arbonne, and he in fact develops products for several other cosmetic companies as well, meaning there may be similar formulas available from other companies.
For those that want to know if it’s like Amway, instead of saying “No, of course not,” try saying, “Well yes, it is. It’s multi-level marketing. In fact, our CEO has Amway on his resume.” When they ask about saturation, explain that some areas are already saturated, as this is inevitable, as the goal of any corporation is market saturation — it is how they make money. You can only hope that they don’t live in one of those areas. Oh, and there are no sales territories. They might be living next door to someone who has already sold the whole neighborhood.
Be sure they understand that they won’t be allowed to sell on the internet without using the Arbonne template website and paying the Arbonne fee for it. And be sure they understand that although this policy used to be enforced, eBay now has anywhere from 1500-3000 Arbonne product auctions going on any given day, where the products can be purchased for a discount of 50-80% off retail, usually sales tax free.
Don’t forget to add that even though these obstacles exist, the consultants have absolutely zero power or ability to do anything about them, as they are in reality at the mercy of Arbonne corporate, because that’s who makes the rules. Be sure to include that Arbonne has the ability to change their compensation plan at any time, for any reason, or just sell the company and leave them with a bill for a Mercedes and no paycheck.
So, in short, disclose that the success rate is low, drop out rate high, financial risk is great, competition is fierce, and almost any Arbonne product can be purchased online anywhere in the world much much cheaper without having to pay the $29. All of this with zero control over any of it. But that’s just capitalism, right?
Other than that, it’s a really great business opportunity that you’re totally satisfied with and would wholeheartedly recommend it to anyone.
Arbonne Anonymous – A Modest Prosposal
Carol Clifton – Senengence
Arbonne sells to you and yes you get a discount but they charge tax on retail amounts. If you buy a bonus product you are taxed on the retail price. When I buy something at the store and it’s on sale or discounted, I pay tax on the sale price not the retail price. I think this is a scam on their part and whoever is in charge is probably dumb or they are pocketing the extra sales tax to pay all the top people all those bonuses they say they are paying out. Who knows but I think Arbonne scams people. I belonged to another MLM who makes you pay tax on the price you pay for the product not tax on retail price. So is it worth it to pay an extra (depending on where you live) tax? simply put NO. there is a problem there on their end and it’s robbery.
This is the explanation of why tax is charged on full retail.
Arbonne charges full tax on the retail cost of products because Arbonne is a “Network Marketing” Company that operates under different laws that have been created for such companies. A Network Marketing company is a company that allows persons to become “consultants” who will represent and sell their products. Even though those consultants may purchase the products at a discount, this is not the same as purchasing products on “sale”. Arbonne is not a retailer of product. Arbonne is a provider of product for the opportunity for consultant to create a home-based business. Arbonne has an agreement to collect the sales tax from each consultant to send it to the state in which they live so that consultants are free from the paperwork that comes with retailing products to their clients. The government assumes that the consultant charged her client full retail cost for products sold and has also charged her client full tax based on that sale.
Because Arbonne has over a million people buying products directly from the company, there is no way for the company to know what each consultant is doing with the products they purchase (ie. retailing or personal use.) The law has been created for Network Marketing companies like Arbonne, and this is the law that Arbonne abides by.
An Independent Consultant may choose to sell products at different prices than the suggested retail and deal directly with sales tax at that dollar amount, and may do so by applying for and obtaining a Business License and a State Sales Tax License, and submitting these to the Business Application department in Arbonne. In this case, the consultant will not pay sales tax to Arbonne at the time of purchase but instead will be responsible to pay those applicable taxes directly to the state. As it is, Arbonne pays the sales tax to each state for the Consultants as a service so that they do not need to handle that paperwork.
I have to tell you that this explanation holds no merit. The HST is a tax that is based on 13% (in most provinces) of what you sell the product for. If you provide an invoice to a person who buys the product then you have proof of what they pay. That is ALL that the government needs.
It is ludicrous to say that the product retails for 600.00 but you can buy it for 300.00 but by the way you have to pay 26% tax.
I went to a party and paid once..I did not want to embarass my hostess by kicking up a fuss but you can bet your bottom dollar that I will not buy the product again because if they are doing this incorrectly you have to ask how shady everything else is.
The consultants seem intelligent. How they can believe this is beyond my comprehension.
Oh well this is something I will not be buying or encouraging anyone else to buy again.
I just recently had an Arbonne party. VERY unimpressed with how this business seems to operate. My consultant is a friend, and new to the business (although, she has another Direct Selling business). However, the lady who she was recruited by seems to be operating in an unethical way.
I gave a friend a catalogue as she couldn’t attend. She placed an order… as well as her mother … which was pretty much the entire RE9 line. That order was $399 before her Preferred Client deal… It was decided by the experienced Arbonne consultant, that this woman would benefit if her order was not included in my show… this way she could get a free night cream worth $100!
I don’t understand how this could be ok. I found the customer and did the work to get the orders… I don’t get credit for the purchase. I found out about this purely by mistake, also. So it was meant to be concealed. I was told about my friend’s order, and that to get to the next reward level, I could spend $100 as a “customer” (rather than hostess) to bump me up to the next level. Had I been credited that $400 order, there would have been no need for this.
It was explained to me that this is how it MUST be entered for the person to get free cream. So, basically, it cost me $100. That cream was on me- not Arbonne and certainly NOT the consultant.
PLUS they charge tax on FREE product… and the full price of the item. Very shady and I’m skeptical as to wether that’s even legal.
I won’t buy again.
Diane,
You obviously don’t understand tax laws. Arbonne is following the law, and if they didn’t they would be penalized by the governement. There is no scam going on.
Sincerely,
Carrie the Accountant & Arbonne Consultant
Carrie is correct. It is the law. And I assume since you are speaking of HST, you are in Canada.
I think that Arbonne did get in a sales tax audit situation that resulted in this collection of tax on the retail value.
A consultant can always file for a sales tax permit in the state which they conduct business, give a copy to the Arbonne corporate office and then, collect and remit the taxes based on the sales price. This way, the responsibilty lies with the consultant, not Arbonne.
Laurie
Tax Analyst