Multi Level Marketing: Musings about Monat

Bronwyn Rideout (June 13, 2022)

Country of Origin: Doral, Florida, United States

Year Founded: October 2014

Founded by: Luis and Rayner Urdaneta

Year MLM established in New Zealand: Not established yet but incorporated in NZ, as a branch of MONAY GLOBAL AUSTRALIA, on January 27, 2022. There was a pre-launch in Australia on 1/10/2021 to pre-enroll distributors, followed by an official launch on 1/11/2021.

Generally sells: Hair and skin care products but has expanded into the wellness industry in US markets

“Cult” products: Rejuvenique Oil 30mls (Standard retail $153 AUD/ $130 for VIP customers)

Name for workforce: Market Partners

Is there a buy-in?: Yes. MONAT requires the purchase of a starter kit of $109 AUD (not counted towards personal volume)

Compensation Plan?: Yes, 30% pm sales from retail customers and 15% from VIP customers. The meat and bones of the Australian compensation plan is similar to the American plan. Australian market partners appear to receive more than their American counterparts in the pay-out of all the bonuses including rank advancement, matching, motor club, smart start, and product pack bonus, but this difference is nearly equal to the exchange rate of the US to Australian dollar.

Income Disclosure Statement?: Only for the US at this point, from 2021.

Price Guide: Prices available on the website.

Has a reputation for: Market Partners are very active on social media, garnering a lot of attention from Anti-MLM content creators. Lawsuits claiming that Monat products cause hair loss. Sudden outflux of market partners in recent months to other MLMs.

Origins

Founders Luis and Rayner Urdaneta had previous success in direct-selling before starting MONAT in 2014. Their previous company, L'eudine, had grown to be a $200 million organisation in the United States, Central, and throughout South America. When the Urdanetas acquired the manufacturing plant where L'eudine's products were produced, their purchase included a laboratory and the services of the Chief Science officer, Jamie Ross. Ross is the one credited for observing that there was a gap in the anti-aging haircare market which, along with its premium price point and lean towards natural/vegan ingredients, differentiated MONAT from L'eudine. MONAT grew rapidly from there and now operates in the United States, Canada, parts of Europe, and Australia.

The Lawsuits

As early as 2015, customers started complaining about hair loss, head sores, and scalp irritation. MONAT claimed that the hair loss was part of the detox process, a 90-day process in which your hair and scalp acclimatised to MONAT products, sheds dead hair, and grow larger follicles. Customers were encouraged to purchase more products to get them through this period. Over 300 complaints were laid with the US Food and Drug Administration which lead to an inspection of its Miami plant. In a report that is no longer available online, the FDA found unsanitary conditions which might have contaminated the products. Some products were left uncovered and exposed even after the end of the workday.

11 class-action lawsuits were filed and eventually consolidated to be litigated in Florida, where MONAT's headquarters were located. Monat eventually signed an agreement with the Florida Attorney General agreeing to stop making these claims and to give refunds if customers were dissatisfied. As such, much of this original advertising has disappeared from the internet with the exception of published lawsuits.

As the lawsuit was only about false-advertising, the science behind the products and whether they actually caused damage was not addressed. Complicating the cases was that customers, under the advice of market partners and company advertising, were using multiple products. Narrowing down to a single product is nigh impossible. MONAT funded studies obviously found that their botanical ingredients were safe, but it is possible that MONAT and its customers have bought into the fallacy that natural = safe or harmless and it is worth further investigation if complainants had allergic reactions to either individual ingredients or the by-products of any unintended reactions between components in their proprietary blends.

Product Math

Flagship product Rejuvenique costs $153 with an PV of 100 in other countries. PV or personal volume is the sum of the assigned value, not price, of products that you or your retail and VIP clients personally purchase. 200PV is needed to remain as an active market partner. As a bottom-level market partners, and assuming that you have no VIP customers, 2 vials of Rejuvenique needed to stay active would net you $92 in commission. Keep in mind that as PV does include you personal purchasing, inventory loading is both a strategy and a big risk to take when trying to reach, keep, or climb ranks.

If you ranked up to Managing Market Partner, you would need your customers to buy 300PV worth of product or vials of Rejuvenique, which would net you $137.70 in direct commission. If you successfully recruited 2 people into your downline, they and their own downline would need to sell 900 PV to help you meet the 1200 Group volume needed to keep your rank if you only sell the 300PV. Assuming they also only sell Rejuvenique, then they would need to sell 9 vials or $1,377 worth. IF that 900PV from your downline was sold only by your direct recruits, you could get a 10% bonus, or $137.70 which will net you a monthly income of $275.40 with an addition $140 if you ranked up within 3 months of enrollment. Lower ranks are limited by how far down their pyramid they are able to claim commission on group sales so in you early ranks, you want to recruit more people directly under you than have your downline grow their own downlines too quickly.

Mass Outflux

End of 2021/start of 2022, almost 44,000 market partners left MONAT for other MLMs such as Modere and crypto-MLMs iGenius and Q Sciences. As Anti-MLM youtuber CC Suarez illuminates, when the market partners hit the top ranks, it becomes very hard to maintain that rank. The appeal of crypto MLMs is their heavy reliance on recruitment instead of product which makes it easier to maintain their rank and their bonuses. The move was usually motivated by an upline, who would move most of their downline or team to the new MLM, earning not only the usual commission but also the bonus attached with rapidly recruiting and advancing their downline shortly after enrolling.

Should you be worried?: Definitely be wary. With many MLMs, the Australia and NZ markets are often merged and allow distributors on both sides of the Tasman the opportunity to sell. While enrollments are not being accepted from NZ (as far as I can find), it is worth further investigation whether the opening of the NZ branch is indicative of expansion plans. The Australian arm of Monat has not been in operation for long so it may be a while before relevant financials for this company are available, which may create opportunities for misrepresentation of sales figures and success. Product line is currently limited to hair and skin care for Australian customers but if wellness products are added, it will be worthy of investigation.

Part of their pre-launch was promotion of Asia Pacific Founders. It was an opportunity that was only available during the pre-launch period of October and promised opportunities to receive shares of 1% of Australian commissionable revenue per quarter, personalised gifts, recognition. However, it was expected that the applicant would reach the rank of Market Mentor, which is pretty high up the pyramid (although maybe easier to get to if you are getting in early).

The eligibility period to earn the Market Mentor rank ends on 30th November, 2022. As of April 2nd, 2022, it appears that only 2 market partners achieved Founder status. The vague wording implies that joining the Founders circle is still possible outside of the initial pre-launch time frame. It is difficult to say whether this is slow growth or maybe a haphazard social media campaign but the low level of traffic or obvious engagement on their Facebook or Instagram page compared to its American counterpart is noticeable.

Relevant Videos

Illuminaughti - Monat: The History of This Hair Raising MLM

Hannah Alonzo - ANTI MLM MONAT DEEP DIVE

CC Suarez - MONAT ‘Free Trips' Exposed

Savannah Marie- Monat Series | I used Monat for 8 Months | Monat ‘Lifers' are dedicating their entire lives to their MLM