To understand this industry it helps to know how it began.
HISTORY OF MLM
Multivitamins and Multilevel Marketing
Carl Rehnborg in China
The idea of creating a new product that would balance the diet came to Carl Rehnborg under the most extraordinary circumstances. It was the late 1920's and Carl was living in China, working as a representative for an American company. Travelling through the cities and around the local countryside, he witnessed unforgettable scenes of malnutrition and disease. He also noticed that variations in local diets led to distinct variations in health. His curiosity led him to the idea that maybe some diseases, such as rickets and beriberi, were caused not by harmful germs or microbes, but rather by a lack of something in the diet. From these experiences, he began to theorize that there might be a way to prevent disease by supplying inadequate diets with the nutritional elements that were missing.
He began to study the relationship between health and nutrition and realized that there were many plant-based substances critical to the human diet. He thought about making a plant-based supplement for the human diet and, on returning to the United States in 1927, set up a laboratory on California's Balboa Island to study which such sup-plements were needed.
There, he began experimenting with different plant materials. It would take thousands of hours and countless experiments, but he finally settled on a formulation of alfalfa, watercress and parsley-which formed the basis for the original product. Carl's dream was becoming a reality. Many people credit Carl Rehnborg with producing the word's first multivitamin/multimineral food supplement.
The more Rehnborg studied, the more he could see that the average person needed a single simple solution to the complex problem of dietary supplementation. After years of research Rehnborg came up with the then-revolutionary idea of combining every needed mineral and vitamin into a single product.
From his earliest studies, Rehnborg theorized that whole plant extracts contained beneficial elements beyond vitamins and minerals. He was right. Today, scientists have isolated and identified thousands of phytonutrients, many of which offer protective benefits for humans.
He called his company California Vitamins and produced the world's first multivitamin/multimineral food supplement in 1934. The name of the product and the company was changed to Nutrilite in 1939.
Back then, the concept of a single food supplement containing many different vitamins and minerals required a great amount of customer education-especially to a public just learning that vita-mins existed. Moreover, since Nutrilite's new multivitamin/multi-mineral product was a hybrid between a food and a medicine, it wasn't carried by either traditional supermarkets or pharmacies.
A Brand new product is sold in a whole new way
With his new product fully developed, Carl Rehnborg was ready to sell NUTRIWAY products to the world. Unfortunately, vitamins were a novel concept in the 1940s. Selling supplements proved to be almost as challenging as creating them. In spite of these hurdles, Carl persevered. He spoke at public meetings, gave products to friends and neighbours, and slowly built his business through word-of-mouth referrals. In order to distribute his product, his wife suggested that Rehnborg set up his own sales force of people- people who were already zealous consumers of Nutrilite themselves.
When some of his friends and early customers began referring new customers, he suggested that they sell the product themselves-and he rewarded these individuals with discounts on their purchases. Soon, many of these loyal customers began selling NUTRIWAY supplements using face-to-face presentations.
Eventually, they went on to sponsor their own customers as additional distributors. By nurturing a rudimentary multi-level marketing system in Southern California, Carl Rehnborg had created a new kind of business model.
In 1945, Rehnborg and his two main distributors came up with another idea that not only revolutionized the marketing of his nutritional supplements but also created a whole new multibillion-dollar distribution industry.
The revolutionary idea was a marketing plan that would allow salespeople both to sell the Nutrilite product and to recruit and train new salespeo-ple-earning one line of income from their product sales and another line of income from the sales of the people they recruited and trained.
Each individual salesperson, now called a distributor, would be treated equally by the company based solely on their sales and the sales of the people they recruited. When the sales of an individual salesperson reached a certain level, they could break away from the person who recruited them and become direct distributors for the company themselves.
In 1949 two young entrepreneurs from Grand Rapids, Michigan, Jay Van Andel and Rich DeVos purchased a Nutrilite sales kit and quickly rose to the highest sales levels in the company. Ten years later, while keeping their existing Nutrilite sales business, Jay and Rich started a new company to sell household products based on a similar marketing plan. They called their new company Amway, for "American Way." In 1972, Carl F. Rehnborg passed away at age 82, and Amway purchased Nutrilite Products, Inc. Today, Nutrilite is still maintained as a separate corporate entity and, with several billion dollars in annual sales, is one of the largest vitamin/min-eral/supplement manufacturers in the world.