Melaleuca Business Model

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Melaleuca competes against industry giants like Procter & Gamble, Colgate-Palmolive and Unilever. But the company uses a different approach to distributing its consumer packaged goods (CPG) to the masses.

Much like Amazon, Melaleuca customers order online, and products are shipped directly to the customer’s home. Rather than rely on traditional retail shopping outlets like their competitors, Melaleuca uses word-of-mouth marketing from its customers.

Melaleuca calls this strategy Consumer Direct Marketing. This model allows Melaleuca to sidestep the costly battles over shelf space in the retail stores, instead investing those funds in researching and developing its products. This also means that the products are free from the influence of retailers.

Melaleuca’s business model compensates marketing executives, a term Melaleuca uses to describe those who refer customers and help them set up shopping accounts. To date, Melaleuca has paid $7.2 billion to marketing executives who have made referrals and have helped others to do so.

With Consumer Direct Marketing, there’s no middleman markup, which typically means lower prices and a strong brand loyalty based on personalized product development. Word-of-mouth advertising is formidable because it helps Melaleuca customers establish a direct relationship with the company and learn about the products. In fact, every current Melaleuca shopper was referred by someone who was already purchasing the products.