'Multilevel' marketing goes green - Amway Corp. and Shaklee see profits from environmentally safe products - includes related article on 'green' networking

E: The Environmental Magazine, April, 1994 by Jim Motavalli, Leslie Pardue

Multilevel marketing - otherwise known as MLM or "network marketing" - a a familiar concept to many Americans, though most would more readily recognize the names Amway and Shaklee, companies which have employed such neighbor-to-neighbor sales strategies successfully for decades. Indeed, both companies have become major contenders in the personal care, vitamin and household products industries. This is due, in large part, to the viability of the network marketing concept, but also to increasing consumer interest in environmentally safe products, which have gradually become a bigger and bigger part of both Amway's and Shaklee's product lines. But now some relatively new arrivals on the MLM scene - such as the unmistakably green-sounding companies Greenway and Natural World - are looking to prove that the grass is even greener on their side of the fence.

The multilevel marketing technique, just one way marketers sell their wares directly to end users, involves selling not only products, but business opportunities as well. Each independent distributor at an MLM firm receives a commission on the products he or she sells - but also earns commissions and bonuses on all of the products sold by other distributors he or she recruits (the "downline" sales force). Because of the importance of repeat business, consumable products are standard MLM offerings. MLM companies emphasize the value of one-on-one selling of products to family, friends and associates in an informal atmosphere that allows the distributor to conduct product demonstrations, answer questions and provide information. Most MLMers believe that this personal touch gives their products an edge over retail and mail-order competitors.

Amway Corporation, the MLM kingpin with $4.5 billion in estimated sales for fiscal year 1993, though not founded on environmental principles, has recently taken to emphasizing its environmental accomplishments. In national magazine ads and in its literature, Amway boasts an on-site recycling center, the 1989 elimination of animal testing, biodegradable ingredients, concentrated and some phosphate-free products, a 1989 United Nations Environment Programme Achievement Award, and sponsorship of the American Forestry Association's Global ReLeaf project and Environmental Protection Agency (EPA) programs to reduce toxins and increase the use of energy-efficient lighting. Amway's "Environmental Mission Statement" reads, in part, "Amway recognizes its responsibility and role in both fostering and promoting sound environmental stewardship."

Shaklee, with $459 million in sales for 1992, was founded in 1956 and as early as the first Earth Day in 1970 was emphasizing the biodegradability of its products in its literature, long before emblazoning environmental attributes on product packaging became the norm. Today Shaklee also points to its Family Circle Magazine "Green Chip Award" and its sponsorship of Earth Day 1990, the Cousteau Society and the Sierra Club as evidence of its environmental commitment, as well as its two-for-one matching environmental gift program for employees, its concentrated products line (available in large refillable and/or recyclable containers) and its line of phosphate-free laundry products.

Enter the new kids on the block: upstart MLM companies with a decidedly environmental bent and a relatively low-key approach to sales and recruitment. Greenway, a multilevel marketing firm offering environmentally-friendly household and personal care products, was founded two years ago by Jim Whitaker, the first American to climb Mount Everest, and his wife Diane Roberts, who began operating the company out of a converted laundry room in their home.

Greenway hopes to top $1 million in annual sales by 1994. And although it officially counts 800-plus distributors, chiefly in the Pacific Northwest, spokesperson Pat Nelson notes that many of their distributors only buy occasionally and for their own use, while only 25 percent actively engage in sales.

Greenway's stated mission, "to work cooperatively to ensure a clean, safe Earth, for now and for future generations," hopes to tap consumer interest in environmentalism by offering products priced to compete with their mainstream counterparts. "Prices have to be as good as or better than grocery store prices, on a per-use basis," says Whitaker. Greenways products are manufactured by 20 or so subcontractors who, Whitaker says, "have contracts that guarantee the products are OK and not tested on animals." Pat Nelson says that almost all of Greenways cleaning products "will biodegrade within 24 hours... and there's no known physical or environmental hazard when they biodegrade." Greenway products contain no artificial preservatives, petrochemicals, perfumes, phosphates or dyes, and are predominantly packaged in recyclable plastic containers. "We have a strong mission orientation," says Nelson.

Natural World, another - and the largest-newcomer to the MLM green scene was founded by former Vestron Video owner Austin Furst Jr., also in 1991. Based in Stamford, Connecticut, Natural World markets cosmetics, household products, nutritional supplements and weight-loss products, and produces a catalog which enables repeat buyers to order direct from the home office (with commissions still going to the distributor), freeing up the distributors to make new sales contacts. "We chose multilevel marketing because it's the best opportunity to get the word out about the importance of nontoxic products," says company president Janice DeLong, who notes the difficulty smaller manufacturers have in competing for supermarket shelf space with industry giants like Procter & Gamble. In 1991, the fast-growing company had three employees; now it has 25, plus some part-timers. DeLong says that Natural World currently has about 6,000 distributors in 43 states who make "from $500 up to five-figure per month" salaries. "We don't give out statistics on our gross income but we are doing well financially," says DeLong. "I can tell you that our average sales per representative are much higher than the industry average."