In 1985, Back to the Future played in theaters, Michael Jordan earned Rookie of the Year and Blockbuster Video began reminding us all to be kind and please rewind our rented tapes. That was also the year that a small company with a unique business model and a strange name quietly debuted in downtown Idaho Falls: Melaleuca.
Officially launched on Sept. 1 of that year, Melaleuca has since grown into one of America’s largest online retailers with an offering of over 450 wellness products that bring in over $2 billion in annual sales. The Idaho Statesman ranks Melaleuca as Idaho’s seventh-largest private employer based on its workforce of roughly 4,400 employees worldwide and 1,700 local employees.
Since April 2020, Melaleuca’s manufacturing and distribution centers have been filling orders at a record-setting pace. So, what is it that keeps shoppers coming back for more?
A Foundation for Success
Frank VanderSloot was only 36 years old when he became the CEO of Melaleuca, Inc. Although young, VanderSloot applied the management experience he had gained as an executive at two Fortune 500 corporations. He built a company that would not only withstand the test of time, but would also take a bite of the consumer packaged-goods market, dominated for more than a century by the likes of Proctor and Gamble and Unilever.
Although these American giants paid no attention to an obscure, Idaho-based wellness company in 1985, today they would welcome the opportunity to acquire it. Over the years, numerous offers to purchase Melaleuca have crossed VanderSloot’s desk. His response is always the same: “We’re not for sale.”
A Fast-Growing and Efficient Product Line
The initial line of eight products featured Melaleuca Alternafolia oil (tea tree oil). Thirty-five years later, Melaleuca now manufactures and sells over 400 products, all inspired by nature and proven by science. The company also leads in product concentration, which it applies to its EcoSense cleaning product line. Just last year, Melaleuca introduced Melaleuca MelaPower 9X – the world’s first 9x concentrated laundry detergent. Melaleuca MelaPower cleans 96 loads of laundry while Tide Original, in the same-sized bottle, handles 16 loads.
By manufacturing concentrated products—which reduces the need to produce, ship, and dispose of plastic—Melaleuca has saved the environment from 260 million pounds of plastic waste, 45 million gallons of fuel consumption and 1.4 billion pounds of harmful gas emissions.
A Pioneer on the E-Commerce Frontier
In 1985, VanderSloot embraced an unusual product delivery model that eliminated the need for retail stores, shelf space and middlemen. Instead, he refined an efficient model that ships products directly from the factory to his customer’s doorstep.
Back then, many so-called “consultants” thought an online shopping club of wellness products was doomed to fail. They claimed consumers wouldn’t buy from an online retailer over traditional brick-and-mortar stores. They also claimed Melaleuca wouldn’t survive unless its products were exorbitantly priced and sold in bulk.
Fortunately, VanderSloot didn’t listen to them. Instead, Melaleuca heavily invested in melaleuca.com and product innovation. It created exclusive products and priced them against those found at grocery stores. It educated its shoppers. It partnered with UPS. And it counted on consumers returning because they understood and appreciated the value of Melaleuca products.
All bets paid off. VanderSloot proved that even though profit margin on each online order was small, the number of orders would be enough for the company to survive.
While Melaleuca still maintains two call centers in Idaho Falls and Rexburg, 87% of customers today place their orders online. As a result, Melaleuca has become Idaho’s largest e-commerce company and one of the top 100 e-commerce companies in North America.
A Leading Referral Marketing Company
If you’ve lived in Idaho Falls for a while, you may sense that Melaleuca is a different kind of company. That’s because every single one of the two million customers who purchases Melaleuca products on a monthly basis was referred to it by another customer.
We all know that word-of-mouth marketing is powerful. Studies show consumers are 90 percent more likely to buy a product recommended by someone close to them.
This is why Melaleuca’s model depends upon creating buzzworthy products that are worth sharing. The company has obviously dialed that in because Melaleuca has paid more than $6 billion to customers who have referred others to the company. This program has led some to have a misconception that Melaleuca is a multi-level marketing (MLM) company, but that is inaccurate.
Melaleuca only has end consumers, not “distributors” as MLM companies require. While MLM companies pay distributors to resell products, Melaleuca flat-out prohibits it. The majority of Melaleuca customers (about 82%) have never referred a customer. They shop with Melaleuca for the simple reason that they want its products. The referral program is simply the cherry on top for the few who wish to introduce others to their household products.
While MLM companies require distributors to make large upfront investments, Melaleuca does not. Customers buy what they use in their homes.
A New Chapter
As the wellness company celebrates its 35th anniversary, some may wonder what the next chapter holds, especially considering the unprecedented challenges businesses have faced in 2020.
“Melaleuca has a really, really bright future,” VanderSloot says. “Debt? We have none. We can weather the toughest of times. We have products that no one else can offer, and we offer them at reasonable prices. People want to stay well. It will always be that way. We think we have a really bright future because of our superior product line, and we’ll work to stay ahead of that. We want to be the best. Our requirement of ourselves is to be the absolute best.”