03 Aug

Usana Contradictions

Are most Usana distributors with the company for the business opportunity or the vitamins?

  • June 20, 2005 Earnings Call Usana CFO Gil Fuller says business opportunity – “We now have 125,000 active associates who are pursuing a home-based business opportunity.”
  • Success From Home Magazine Usana CEO Myron Wentz says business opportunity – “I have no question that I made the right decision by launching Usana the way we did. Not only has it delivered true health to consumers, but it has also delivered true wealth to our associates.”
  • April 18, 2007 Earnings Call Usana CFO Gil Fuller says vitamins – “So you only have something on the order of about 12% of people who get into this business with the intent of making money.”
  • April 18, 2007 Earnings Call Usana President Dave Wentz says vitamins – “So making money for them [the associates] isn’t the goal. Just covering the cost of their products may be the goal. For others of course, its just customers with our survey 75% joined just focused on the nutritional benefits, and 25% joined on the business aspect.”

Can Usana distributors lose money in trying to build a business?

  • April 18, 2007 Earnings Call Usana President Dave Wentz says distributors can only lose money if they throw vitamins in the garbage or sell them at a discount -“The only way [Jane and JC Bishop could have lost money is], yes, they could have bought $5,000 worth of product and threw it in the garbage can, in which case I guess you would call it a loss, or they could have I guess sold it at much less. The couple you are referring to actually made commissions for a while and were purchasing the product, we would assume, to consume and to resell. So we don’t know how much they made total.”
  • Jane Bishop, former Usana distributor on YouTube video says she lost money – How much money did you lose as a Usana distributor? “I lost about $5,000.” How much did your daughter lose? “About $600.00 dollars…My friend Norma down the road lost money.” From follow up conversations about Mrs. Bishop’s her net loss: “The $5,000 I lost took into consideration the $1,200 in commissions I had received. My net loss included “tools” forced on me by my upline to ensure my success.

Do Usana Associates make money or not?

  • 2004 Usana letter to shareholders Associates build strong businesses – “We remain committed to giving our Associates the highest level of support and respect for their contributions to Usana. We believe helping our Associates build strong businesses is clearly working because by the end of 2004 we had paid out more than 500 million in Associate commissions since Usana’s inception.”
  • Usana Health & Freedom Newspaper 2006/2007 Usana EVP of Operations Fred Cooper, Associates make excellent incomes – “Our commission plan is designed so that we have many Associates who earn a phenomenal income, even more making a healthy full-time income and thousands making excellent part-time incomes, rather than a single individual at the top earning millions.”
  • November 2006 Direct Selling News Usana CEO Myron Wentz says Usana has given Associates true wealth – “Not only has [Usana] delivered true health to consumers, but it has also delivered true wealth to our associates. Through no other avenue of marketing could I have achieved the kind of organization we have today in the USANA family.”
  • 2006 Usana Associate earnings chart shows that the vast majority do not make money – 72.2% of commissions paid in 2006 went to 2.6% of the distributors.

Does Usana spend a significant amount of money on Research & Development, or not?

  • July 2003 Investors Daily Usana CFO Gil Fuller says a fair amount of money – “Fuller boasts that his firm maintains high standards of research and product quality to ensure customers get a good deal. ‘We spend a fair amount of money on research, making sure the latest thinking and evidence is being utilized in our formulations,’” he said.
  • April 20, 2004 Earnings Call Usana President Dave Wentz says a high percentage of R&D – “I’ve encouraged Tim Wood, our Vice President of R&D to make sure that we stay on a leading edge with scientific products and so I’ve encouraged him to increase his clinical studies, increase his research to make sure that we’re ahead of everyone else. And so I’ve asked him to continue to try to maintain a high percentage of R&D going forward, because at the fast pace of sales, that percentage would drop quickly and I want to maintain that we are a science- based and an advanced nutritional company.”
  • Usana Health & Freedom Newspaper 2006/2007 Usana invests significant money in research – Groundbreaking nutritional research – USANA invests significant time and money in extensive scientific operations, information systems, research services, worldwide scientific alliances, and technical support. USANA experts are at the forefront of nutritional science.
  • Usana’s 10-Ks filed with the Securities and Exchange Commission show low R&D percentages – Annually, Usana spends less than 1% of net sales on R&D: 2001 0.9%; 2002 0.8%; 2003 0.7%; 2004 0.8%; 2005 0.7%; 2006 0.9%

And the discrepancy between the statements about distributors wanting to build businesses or just get good vitamins becomes even more problematic when we consider that 67% of associates never make a dime of commissions and 86% of associates don’t even make enough commissions to pay for their monthly minimum purchases of vitamins. They aren’t profiting from a business, nor are they making money to pay for their vitamins.

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