The wellness and beauty industry is competitive. And finding an opportunity to invest in may be your lucky encounter. Today, we look at one of the companies in this $80,212M industry, NU Skin. In this guide, we discuss, what is NU Skin? How does it work? How can you make money from NU Skin? Do they pay well? Can you invest with them? Most importantly, is NU Skin a fraud or not? By the end, you will have answers to these questions.
In this review article, we present our research on NU Skin. Hopefully, we can help you determine if it is worth investing in or not.
What is NU Skin?
If you have been scouting opportunities to invest in, you might have heard of NU Skin. It may be from social media platforms or a recommendation from a friend. Anyway, what is NU Skin, and what do they do? Keep reading to find out more.
NU Skin is a multi-level marketing company in the US. It majors in developing and selling personal care products. You can also find dietary supplements under its Pharmanex and NU Skin brands.
NU Skin first came to be in 1984 in Provo, Utah. Its operations began in the US and later expanded to Canada in 1990. In 1991, the company had operations in Hong Kong, and in 1996, it enlisted as a public trading company in the New York Stock Exchange market.
NU Skin Enterprise sells products in over 50 markets through its 1.2 million independent distributors.
The NU Skin Enterprise opportunity
NU Skin uses a multi-level marketing (MLM) business model. The independent distributors market the company’s products directly to the retail buyers. They also recruit and train more distributors.
Like any other MLM, you can earn money from the company by selling or recruiting. These 1.2 million distributors make from the retail markup on products. They buy wholesale from the company and sell at the recommended retail price.
The distributors also receive a performance bonus depending on their sales and recruits. According to NU Skin, they pay out about 43% of their product revenues in compensation. The NU Skin opportunity is genuine, but keep reading to find out if it is worth your investment.
The NU Skin product line
The company operates under two brand names; NU Skin and Pharmanex. They develop and sell over 200 products for personal care. Later in the late 1990s, NU Skin bought Generation Health, a company that owned Pharmanex.
Pharmanex had patent rights to the ‘BioPhotonic’ scanner, which measures the carotenoid levels in the skin. However, many cited the product as a fraud meant to boost supplement sales.
In 2009, NU Skin invested in LifeGen Technologies, which deals with genomics. They later acquired the company in 2011 and its database in genetics to aid the development of the ageLOC brand.
The NU Skin product line includes:
- NU Skin
- Pharmanex
- ageLOC
- NU Skin Swag
AgeLOC helps users remain youthful by keeping the skin rejuvenated and young. Some of their products include:
- Skincare products-moisturizers, anti-aging serums, peels, masks, etc.
- Hygiene products- shampoo, body wash, sanitizers
- Makeup-lipstick, eye makeup, foundation, etc.
- Oral care to brighten, whiten and protect your mouth
- Weight management products
- Accessories
- Nutritional supplements
A scrutiny of NU Skin Enterprise
NU Skin has had its share of legal battles with various states. For instance, in the early 1990s, Ohio and Michigan investigated NU Skin for their marketing strategies. Connecticut, Illinois, Pennsylvania, and Florida also investigated the company.
The issue of misleading marketing practices ended with NU Skin settling with five of these states. NU Skin paid disgruntled distributors and the states’ investigative costs. Connecticut was not happy with the terms and accused NU Skin of being a pyramid scheme.
Pennsylvania accused the company of running a pyramid scheme with its subsidiary, QIQ. To this, NU Skin denied the claims and closed down QIQ. According to the company, this reflected a few overzealous distributors.
NU Skin then revamped its marketing model, which seemed to do the trick. In 2012, Stuart Kim, a professor at Stanford, wrote to NU Skin requesting them to remove his name from their advertising claims.
In the same year, NU Skin’s marketing model in Mainland China came under heavy scrutiny. Citron Research stated that the model was an illegal MLM. The Chinese government set out to investigate the claims. In 2014, NU Skin paid $540,000 in fines to the Chinese government due to the operation of illegal marketing models.
NU Skin also got into a securities fraud class-action lawsuit with the district of Utah.
The Pharmanex LifePak anti-aging supplements also failed the FDA labeling requirements. According to ConsumerLab.com, the company failed to indicate the total Vitamin A content in their label, which is illegal.
That was in 2005, but it seems that NU Skin has been doing its part. Its stock prices seem to be improving after three hard years. The company has also received some honorable accreditation, such as being the most trusted female-friendly product line. It also got several awards from the Direct Selling Association.
How to earn money at NU Skin
There are two ways to earn with NU Skin:
- Retail markups
Brand affiliates buy products from the organization at reduced prices. The member prices are lower than the retail prices. Therefore, you buy your products directly from the company’s warehouse and resell them to your customers.
The amount between the member’s price and the retail price is the retail markup. You can go crazy with your retail price. The company has no estimate on the pricing of the resale products.
- Sales compensation (bonuses)
Brand affiliates also earn money from product sales. The sales can be personal or team sales in 53 markets, excluding Mainland China. However, you do not receive compensation for selling promotional materials.
The amount earned by affiliates (distributors) vary. Some determining factors include ambition, time, commitment, skills, and goals. To make money as an affiliate of NU Skin, you need time and dedication.
Note: You do not earn any commission from recruiting members into the NU Skin family. Most importantly, you only receive commissions when products sell.
The NU Skin compensation plan
In 2020, the brand affiliates living in the US received a total of $161,333,653 in sales compensation. The amount was different for the different levels of the brand affiliates.
On average, a brand affiliate in the US sold $160.05 monthly. According to their 2020 compensation plan, NU Skin paid out sales compensation to 19.04% of the US active brand affiliates, representing 43.56% of the brand affiliates.
An 11% of these active brand affiliates earned an average of $384 annually. Brand Representatives, who make up 3% of the brand affiliates, earned $7,392, while the diamond directors (constituting 0.12% of distributors) took home an average of $112,932 annually.
The top 0.2% in the organization pocketed an average of $449,688 in 2020. Look at the NU Skin compensation plan in the US market here for a more apparent breakdown.
How do you join NU Skin Enterprise?
Like most MLM, joining the team is not free. The joining process is a simple two-step procedure. You need a sponsor, but that is easy. You can find a friend selling the NU Skin products to be your sponsor.
Their website has no information on the cost of joining. According to the NU Skin compensation report, you do not need a joining fee. This becomes an attractive feature to recruits. However, you do not get any products to sell. You have to pay separately for these starter kits.
After joining the NU Skin Enterprise opportunity, you will need some packaging materials. The product packaging costs between $475 and $1,519.
NU Skin Enterprise encourages its distributors to join the Automatic Delivery Reward (ADR) program. This means continuously ordering products of a certain amount to remain an active distributor.
The ADR demands a $100 standing order. Moreover, to remain active, you need to make $200-$350 per month. It is essential to know this before jumping knee-deep into the MLM.
Pros and cons of joining NU Skin Enterprise
Pros
- NU Skin is a reputable company that has been around for many years. It is rare for MLMs that mostly last about ten years.
- They have a solid background. The NU Skin products are also relatively high quality.
- They operate in a long-lasting industry of health and beauty
- You don’t need a minimum purchase or inventory to join the brand affiliate team
- Also, there is no sign-up fee or a must-buy starter kit as you join the NU Skin Enterprise team
- You can terminate your account anytime with a written notice
Cons
- If you terminate your contract, you only get 90% of your money back. You have to pay the shipping charges for any inventory you may have
- Their products are pretty pricier than others are in the market, making them difficult to sell
- Only 1% of their brand affiliates take home a sensible income annually, considering all the time, effort, and resources you put into the job
- NU Skin is involved in excessively many lawsuits not to raise a concern
- The health, wellness, and beauty industry is a crowded market, which means you have to invest a lot more in your marketing to make any sales
- To become an independent distributor, you need 2500 points, which might force you to buy extra packaged
- Like any other MLM, the work may be overwhelming to novices, and it never guarantees success
So, is NU Skin Enterprise a scam?
Many pointers indicate that NU Skin is a legit business. However, they operate like a pyramid scheme in disguise. For instance, they have an established product line. This alone sets them apart from the regular old pyramid scheme.
In addition, unlike most MLMs in the market today, you do not earn any return from recruiting members. Therefore, there would be no problem with the Federal Trading Commission (FTC). Additionally, NU Skin has been around for over 30 years now, which is rare for MLMs.
NU Skin offers you the opportunity to learn and grow, but you have to invest your blood, sweat, and tears. Do you want to earn passively through all that hassle?
One of the significant reasons NU Skin Enterprise seems to be a pyramid scheme is the constant lawsuits. In China, the company had to part with $540,000 in fines for their illegal marketing model. They even attempted to bribe a government official in their NYSE case.
NU Skin has also had complaints from states depicting its operations as fraudulent. The company went as far as removing one of its founders from the list. She had lawsuits and had pleaded guilty to one of them, a prescription drug fraud.
NU Skin is a lawsuit galore. When looking for an investment opportunity, lawsuits are an unattractive feature. On the other hand, once you join the team of brand affiliates, you are encouraged to join their ADR. Therefore, you part with $100 every month on purchases, which you have no guarantee you will sell.
Our recommendation
NU Skin Enterprise is a huge player in the health, wellness, and beauty industry. It has been around for some time and may be around for a lot longer. The joining steps are minimal, and it is cheap. NU Skin also has a broad market reach, available in over 50 countries. It is not a scam.
However, that is just as far as the good goes. The bad outweighs the good. You have to enroll in ADR and sell over 80% of your inventory to earn a commission. Failure to do so puts you at the risk of losing your investment.
If you choose to return your inventory as you back out, you lose 10% of it in the shipping. Like most MLMs, only the top 1% enjoy a substantial income. What are the chances you can become part of the 1%?
With 85% of the brand affiliates earning nothing, you might want to reconsider despite their investment. There are better business opportunities out there for your investment options, and with more selling opportunities.
