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Is DoTerra a Pyramid Scheme or MLM?

Before you read the below article, please note that this article doesn’t mean we are saying that doTerra is an illegal Pyramid Scheme or scam.

It is not.

They just have a MLM marketing model that can be confused with a Pyramid Scheme by some people who don’t know what a Pyramid or MLM is exactly.

In the world of multi-level marketing and Pyramid Schemes, doTerra has made a name for itself.

Not only is it one of the most successful Pyramid Schemes and MLM, but also the short period, within which it has clocked, is rather commendable.

It has now become a cult in the Utah region and broke ground with $60 million within just 5 years of doing business.

The thought that comes to your mind at this juncture is that surely the doTerra multi-level marketing firm is engaged in a great business model or is it a scam.

The phenomenon speed at which it is growing will no doubt make you probe deep.

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An Insight into DoTerra Pyramid Scheme

DoTerra Pyramid SchemeFirst and foremost, before we make any assumption about the company’s legitimacy, it is important to understand the business model and the essential growth drivers.

This Pyramid Scheme was launched in 2008 and founders of this firm belong to healthcare and business backgrounds.

The primary objective of this company is to offer an alternative health and wellness avenue using the healing power of many essential oils.

The company claims that they have health experts and hospitals associated with them who are experimenting alternative healing methods using their oil.

Given the very limited public understanding about Essential Oils, the doTerra Pyramid Scheme has latched on great and niche business model to make a successful earning source.

doTerra offers the products that are worth to be studied.

This is because unlike many illegal pyramid schemes, this multi-level marketing or Pyramid Scheme actually has a real product that is also being claimed to be effective.

Some of their top offerings include:

  1. Lavender
  2. Lemon
  3. Peppermint

Nearly 33% of the customers for the company are from the Utah region.

The question that comes to the mind at this juncture is whether this high sale is driven by great product quality or rather is it a case of being trapped in a scam and inability to get out of it.

1. The doTerra Compensation Package

That will surely stir your curiosity and make you probe deeper into the overall firm’s business model to understand better.

Well as seen in other pyramid scheme firms, doTerra also offers commissions to its sales representatives on the basis of the

  1. Retail salesperson
  2. New recruits that they incorporate

But surprisingly the other striking similarity with most other pyramid scheme is the the low success rate.

Most of the success stories that you get to hear are centred upon the paltry 1% who are the ones that created the pyramid scheme at the very behest.

The average earning is rather pathetic and the outlook going forward is absolutely grim.

Some of the most recent data indicators throw a rather depressing state of affairs.

  1. The 2013 annual income of the Young Living (primary and associate company) representative is $312
  2. The doTerra distributors’ average income borders around $1577 annually and close to 85% of these distributors have either already quit their jobs or look at an exit route.

Most Multi-Level-Marketing Companies Have the Same Fate

In fact, not just doTerra pyramid scheme but studies indicate that on an average most multi-level-marketing companies have the same fate.

Less than 1% of the distributors or sales representatives working with them are able to realize their total investment in the company.

The remaining 99% lose money out and out and doTerra is no exception to the rule either.

Most times the income projections that they advertise is only the best case scenario.

That is not even accessible to 1% of the total distributors who are trying to get in new sponsors.

Almost 95% of the business associates engaged with doTerra pyramid scheme are either trapped or looking for exit route in practically every sale that they undertake.

Perhaps at this juncture, you cannot help but ask if the doTerra pyramid scheme is a scam or legitimate business model.

2. Can You Consider doTerra Legitimate?

For an average consumer, looking for a great product and banking on top trends on the internet, doTerra pyramid scheme might come across as a promising business with a great product line-up.

It is among the top trending elements on Google, robust revenue pipeline and a strong product to back up the claims.

Well, the fact is even if it is not a scam, any pyramid scheme program can be profitable only to a select set of people.

The biggest catch for this business at least is in that line.

Recruiting is one of the biggest platforms to make money when you are dealing with a pyramid scheme program like doTerra.

In this context, studies show that almost 98% of the people are really bad at it.

Rest of the mathematics is not difficult for you to work out in an effort to make a rightful assumption of the success prospects for those associated with doTerra pyramid scheme.

Customer retention is one of the key factors to consider in this context.

The moment a pyramid scheme program like doTerra loses out or exhausts its immediate warm circle of friends and families and relatives, getting new customers and holding onto them can be a great challenge and often the key reason for the failure of this type of MLM.

The average distributor retention rate of the entire industry is not more than 5%.

Moreover, when you look at the way the doTerra pyramid scheme has priced its products, the red flags become even more prominent.

The price of the essential oils that they market is often 3-10x more expensive than other retail brands that are available in the market.

This can often make it difficult to sell the product once you move past the initial euphoria.

The fact whether doTerra pyramid scheme is a scam is still debatable.

One factor is clear that it does not make business sense for anyone who does not have the skill to market products aggressively.

Pyramid scheme, by the nature of their composition, are essentially for those with aggressive direct selling abilities.

But even for them, doTerra might be an avoidable company for the lack of transparency about the compensation plan and method of operation.

DoTerra BBB ReviewsDoTerra BBB Reviews

Unlike the other companies that we analyzed, DoTerra has no reviews on BBB which means there was no complaint against it.

Maybe this is something that makes the DoTerra Pyramid Scheme different from all the Pyramid Schemes and MLM firms.

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