What is Vemma, and why have they made big news lately? If you are in the network marketing industry, you may be involved with selling Vemma, which is a company that makes nutritional products, especially vitamin and energy drinks.
In November of 2013, Vemma CEO BK Boreyko announced Vemma 2.0 coming in January 2014. Vemma wants to rebrand itself in a new way and go back in the marketplace with a fresh way of doing business for itself.
What is Vemma going to become?
It will be converting itself from a network marketing company to an affiliate marketing company.
Or at least it will be calling itself an affiliate marketing company.
“In April, 2014, the company announced that it was modifying its compensation plan by removing sign-up fees and the $150 minimum monthly product purchase to qualify for commission, among other things. Boryeko stated that the changes were intended to avoid the fallout from the Federal Trade Commission that has happened to other multi-level marketing companies, such as Herbalife.” – Wikipedia
Vemma is going to begin branding its compensation program with affiliate marketing terms rather than network marketing terms.
Boreyko explains: “We've always done things a bit differently than a typical MLM/network marketing company. We have a very dynamic culture of leaders that like to do business in very transparent and progressive ways. Vemma prides itself on being different, to stand out from the rest,” explains Boreyko. “If your goal is to become a household brand, it only makes sense to make a few more necessary operational and compensation plan changes to complete the move. To be more like Amazon.com and less like Amway. To give our potential customers and Affiliates a better, more modern and transparent description of how we do business.”
“This has been in the works now since late last year,” Boreyko continues. “It all started when I read an article in Fast Company magazine on Jeff Bezos. I had the idea to move our third-party fulfillment to Amazon. Unfortunately, after months of high-level talks with Amazon senior management, costs prevented us from making the move. During that time, I began to study their affiliate marketing model and the similarities to how we do business really hit me. A tremendous amount of high-level field leader discussions helped get us to where we are today, a progressive affiliate marketing company that uses a multi-tiered compensation plan. Some of the biggest changes our Affiliates will notice are now everyone who joins Vemma must first join as a customer, and there is now no requirement to personally purchase product in order to earn bonuses.”
“After taking 7 years to reach the $10 million monthly sales mark in July 2012, Vemma has doubled that to $20 million a month just 12 months later.” – businessforhome.org
Boreyko goes a little deeper in his explanation of the new terminology structure. He says that instead of describing the company as an MLM and linking it to examples like Avon or Amway, affiliates can say, “It's sorta like Amazon, but we pay better.” The CEO of Vemma explains that this is a business of coversations. Having good conversations with people is one of the vital components to making sales and earning commissions within the company. He declares that Vemma is “not your dad's or granddad's” business, it is a business in the information age. Therefore, he has made the decision to “simplify” the explanation of what this business does. For the past nine years, Vemma has already been calling its people affiliates. Now it will be official with Vemma 2.0.
A Lawyer's View On Vemma's Affiliate Change:
(1) Amazon is not a member of the Direct Selling Association;
(2) Amazon does not terminate its affiliates for promoting other MLMs;
(3) Amazon does not bind its affiliates to non-solicitation clauses (commonly done by clients of mine and every other company in the MLM industry);
(4) Amazon does not have monthly volume requirements. BK makes it clear: “We no longer require our affiliates to buy products.” Well that’s good to know, because you technically were never supposed to have such requirements anyways. I know, I know….it’s debatable whether a company can impose a purchase requirement. ViSalus does it (I think). But in my opinion, I advise all clients to stay away from required monthly purchases. Instead, Vemma is doing what 95% of all other MLMs do: they’re now requiring VOLUME. Can this volume be achieved via the now optional Autoship? Yep. Will the majority of reps qualify in this manner? Probably. Does this “change” make Vemma more like Amazon and less like Amway? No. Ironically enough, Amway has ZERO volume requirements for reps to join.
(5) Amazon does not have a genealogy for calculating commissions i.e. there’s no opportunity for recruitment;
(6) Amazon discloses its revenue from customer sales. While BK implies of significant customer activity, we have no way of knowing the numbers.
What is Vemma's Affiliate Structure Like?
Vemma's compensation plan, which will not change, is very similar to an affiliate marketing structure:
- There is no set-up fee.
- You don't have to purchase a product in order to sell it. For example, if you have the Verve drinks but want to sell MoJoe, you can without having to have purchased it.
- There are no renewal fees
- You get a website that is decked out with all the bells and whistles of an ecommerce website.
- There are no additional fees to access it as an affiliate.
- In line with the mobile revolution of the past few years, you also get a free mobile app. This app helps you manage and promote your Vemma affiliate business.
BK Boreyko continues, “We have done so many things differently over the years than traditional M-L-Ms so it made sense for us to make this change. We do market ultra premium products, so they do cost a bit more, but we also have products in our line that are priced the same as what you’d find in your local grocery store. Going forward, we want to emphasize more of a customer acquisition focus, which also allows us to be more transparent about the way we do business.” [pullquote]To be less like Amway and more like Amazon.[/pullquote]
Boreyko believes being rebranded as an affiliate marketing company and be associated in the customer's mind with companies like Amazon, at least in the way they do business, will give them a huge boost. Plus, he believes that Vemma has several advantages that Amazon does not have. Amazon sold $70 billion in 2013 through its affiliate program. Boreyko hints that the Vemma can potentially do even more.
- Vemma is branded.
- Vemma is global.
- Vemma is keeping up with technological trends, especially in websites, social media and mobile apps.
- Vemma has a dedicated force of affiliates, that love the brand and can reach people that other affiliate programs cannot.
Vemma is also now a member of the Performance Marketing Association (PMA), whose member companies include giants such as Amazon, eBay and Google.
According to Vemma, there are now two main types of people who are involved with the company:
An Affiliate is a person who:
Purchased an Affiliate Pack at the time of enrollment.
Enrolls a Customer or an Affiliate.
A Customer is a person who:
Purchases product for themselves only.
Has not enrolled another Customer or Affiliate.
Customers can bring in other customers, but can opt out of joining as an affiliate. It is totally up to the consumer to choose what status what to be officially recognized as, and not totally based on Vemma's policies.
Although customers can stay in customer status, and not upgrade to affiliates, they can still earn benefits if they refer other customers into Vemma and those other customers purchase the products under their account. It is called the New Customer Bonus (formerly called the Fast Start Bonus). These are credits to buy more products, so that the referring customer can pick up free or discounted products for themselves.
If you have an affiliate status with Vemma, then you can still earn cash commissions. Customers can only earn credit towards the purchase of Vemma products.
Network Marketing Vs. Affiliate Marketing
“Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. It’s a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money.”
Another characteristic of multi-level marketing is that people are to speak to their relatives, friends, co-workers and anyone else with whom they come in contact on a day-to-day basis. This is why it is also called network marketing or referral marketing. Generally, recruiting or selling on the internet is not emphasized, even frowned upon.
Affiliate marketing pays solely on commissions. An affiliate must bring a prospect to a merchant, who then purchases a product or service. The affiliate gets a cut of that sale. The affiliate has to spend their own time/money in order to earn that sales commission. Generally, an affiliate does not have to purchase the product in order to make a commission.
Affiliate marketing is great to use online. Generally, you are selling a product, you earn the commission and the transaction is done, unless there is another arrangement or the customer keeps coming back to purchase more.
Courtesy of Jack Media
Network marketing is relationship marketing, while affiliate marketing is purely sales. Network marketing has levels of compensation while affiliate marketing generally does not.
Network marketing commissions can arguably be more likely to be recurring commissions, especially if you get customers to sign up for auto-ship. Though there are plenty of affiliate marketing products that are recurring.
Affiliate marketing sales are almost purely from online marketing strategies: Pay-per click, search engine optimization, email lists, blogs, etc.
Networking marketing sales come from neighbors, your kids' teachers, your relatives and friends.
Obviously, there is a lot of overlap, but you can get the feel of each one.
Selling products through Amazon is affiliate marketing.
Selling vitamin drinks to your mom is network marketing.
Vemma US Income Disclosure 2013
Is Vemma Ready For The “Average Joe”?
“Call me a pessimist, but I think energy and time can be better spent with businesses with secure and consistent paychecks.
Sure, run-of-the-mill college student jobs like restaurant hostess, car detailer, barista or ripped denim expert at Hollister aren’t the most glamorous or rewarding, but that’s what college students do.
We work terrible jobs for average pay through our young adulthood until we graduate and find something better. It’s part of the natural order of the American cultural world.” – statepress.com
What is Vemma? Will There Be Fallout?
People are still asking, “What is Vemma exactly?”
Others are saying, “What is Vemma? It is still an MLM!”
Many people would argue that Vemma is in fact, still a network marketing, MLM company. The fact that they simply changed the wording does not change what they are.
Still, others might say it is a smart move.
President and Co-Founder of Affiliate Summit Inc. Missy Ward applauded the move by Vemma and said she believes affiliate marketing is the perfect match for the company, based on her experience with Vemma for the past five years. “Moving to an affiliate marketing model is a brilliant move on their part, as affiliates are on the cutting edge of content creation, mobile apps, social media and niche marketing,” Ward says. “Great affiliate programs create win-win opportunities for everyone involved.”
What is Vemma trying to accomplish?An article in the New York Post (by michelle celarier) reveals what MLM companies require people to buy products initially and on auto-ship. The MLM companies are the ones that have the most benefit, while very few people in sales actually make a profit or even break even.
Possible solution -> Vemma would be eliminating the requirements to buy products or services.
What do you think about Vemma's new approach to the network marketing community by declaring themselves as an affiliate marketing program and not an MLM? Smart or stupid? Is it a way to be more transparent or a way to dodge the FTC legally?
It this good for the Network Marketing industry as a whole by having Vemma “leaving”?