Market America

Market America
Private
Industry Multi-level marketing
Founded 1992
Founder JR Ridinger
Loren Ridinger
Headquarters Greensboro, North Carolina, United States
Area served
 Worldwide
Key people
 JR Ridinger (President and CEO)
Revenue USD 791.1 million (2016)[1]
Total assets USD 146.1 million (2010)[2]
Number of employees
 800 (as of 2016)[1]
Website marketamerica.com

Market America is an e-commerce[3] and multi-level marketing company[4][5] that describes itself as a product brokerage and internet marketing company. Market America was founded in 1992 by JR and Loren Ridinger. Headquartered in Greensboro, N.C., the company employed over 650 people as of 2010. Market America's offerings include household cleaning supplies, jewelry, personal care products, auto care, cosmetics, dietary supplements, custom websites, water purifiers, and weight management products. It conducts business through several affiliated companies. The company uses the web domain Shop.com for retail e-commerce sales which it acquired from Microsoft founder, Bill Gates.[6][7] A 2017 lawsuit accused the company of being an illegal pyramid scheme.[4]

History

In 1992, Market America was founded by former top Amway distributor JR Ridinger (real name, James Howard Ridinger) and his wife Loren.[5] The company is headquartered in Greensboro, NC and employed over 800 employees as of 2016.[1] Over the years, Market America has sold items such as auto care, electronics, apparel, water filtration systems, flowers, coffee, and oral hygiene through affiliations with outside companies that advertise and offer these items on the firm's site. The company later announced that it was expanding its operations to Australia (2002), Taiwan (2005), Hong Kong (September 2007),[8] Philippines (October 2010),[9] United Kingdom (February 2012),.[10][11] Mexico (June 2012),[12] Singapore (2014), and Malaysia (2017).

In August 2008, Market America announced that it was partnering with iMirus to produce MA Newsstand, a service offering digital and print versions of magazines, books and catalogs.[13] In late 2010, the company bought shopping comparison firm Shop.com for an undisclosed amount.[14] The acquisition prompted the company to shift its retailing domain name from marketamerica.com to Shop.com, with the aim of expanding a cashback program that Market America had introduced in 2008.[15]

Products and services

Market America's product categories include health and nutrition (Isotonix), home and garden care (Snap), pet care (Pet Health), automotive care (Autoworks), weight management (TLS), personal care (Royal Spa, Fixx, Skintelligence), cosmetics (Motives by Loren Ridinger), jewelry (Loren Jewels, Yours by Loren Ridinger), and water filter systems (Pure H20). Services include personal financial management (maCapital Resources) and Internet marketing services for small to medium-sized businesses (maWebCenters).

The firm's Isotonix line of dietary supplements was introduced in 1993, and came to include more than 20 products.[16] Its Prime line of nutraceuticals consists of 12 supplement formulations.[17] In 2004, the Transitions Lifestyle System (TLS) weight management program was introduced.[18]

Business model

According to Market America, all of its products are manufactured by other firms and are exclusively marketed by Market America. The company refers to individual persons and business entities as independent distributors or "UnFranchise Business Owners" who may also operate online retail websites called "Partner Stores".[19] Individual distributors pay startup and monthly fees, and are expected to recruit others.[20]

Market America distributors are eligible to earn money from product sales commissions and recruiting new members to their sales team. In June 2017, the startup fee to become a Market America distributor was reportedly $399 plus additional monthly payments of $129. Market America representatives operate as independent contractors, but are required to spend between $130 and $300 on Market America products and attend seminars and training events that are estimated to cost between $20 and $200 each.[4]

Market America has been criticized as an "incarnation of multilevel marketing" whose products are "almost interchangeable with what you could find in your local CVS or Duane Reade for half the price" and as a business driven by "distributors finding customers, introducing them to Market America products, and then explaining to them that by selling this product, they can become as wealthy as, well, JR Ridinger."[5]

In 2004, consumer awareness group president Robert FitzPatrick commented that based on available figures, the company's growth "could not go on forever" and disputed the claim that "distributors can achieve financial independence".[21]

In December 2010,[7] Market America began acquisition of Shop.com, a shopping comparison site on the Internet.[22] The acquisition combined shop.com's database technology with Market America's Cashback program and network of independent distributors ("Independent Shop Consultants"). Market America was to remain in Greensboro, N.C. and the previous shop.com staff were to remain in Monterey, California and London, UK. In September 2011, the two-step integration process was half-complete.[23]

In 2011, Consumer Awareness Institute president Jon M. Taylor ascribed Market America's success to a "stage" typical of multilevel marketing companies, saying, "What happens in these companies, because of the endless chain of recruitment, they get into a momentum phase where they grow rapidly, and to avoid leveling off, they set up new products and go to new countries." According to Taylor, a study of similar multilevel marketing businesses showed that "99.6 percent of people who sign up as distributors wind up losing money."[5]

In 1999, the firm and its CEO resolved, without admitting or denying any allegations, certain charges by the United States Securities and Exchange Commission concerning the manner in which the Company was taken public in 1994. The charges related to alleged violations of the federal securities laws in connection with the distribution of unregistered Market America stock.[24] The case was settled with a $100,000 fine and payment to the SEC of $235,498 (plus interest).[4] The company’s CEO agreed to refrain from future violations of the federal securities laws. The company was made private when all outstanding shares were purchased by their CEO in 2001.[25][26]

On March 3, 2006, Steve Sawyer sued Market America in Guilford County, North Carolina claiming breach of contract and violation of the North Carolina Wage and Hour Act with respect to certain Internet consulting services he was providing to the company. Sawyer alleged that Market America failed to pay him for $8,333.34 in monthly services and a $25,000 bonus.

In 2007, the court granted Market America’s Summary Judgment motion with respect to Sawyer’s claim that Market America had violated the North Carolina Wage and Hour Act. Sawyer appealed the decision to the North Carolina Court of Appeals, which affirmed the trial court’s decision in favor of Market America in June 2008.[27] Sawyer appealed to the North Carolina Supreme Court, which denied review on December 11, 2008.[28] On December 26, 2008, Sawyer filed a lawsuit against Market America in Multnomah County, Oregon, based on the same facts as the North Carolina lawsuit. In 2009, Market America sought to bring the North Carolina lawsuit to trial. Sawyer filed a motion to stay the North Carolina lawsuit, which was granted.

Later in 2009, Market America filed a motion to stay the Oregon lawsuit, which was granted. Sawyer appealed the decision to stay the Oregon lawsuit to the Oregon Supreme Court, which denied review in January 2010.[29]

In a 2017 federal lawsuit, two distributors accused the company of violating the Racketeering Influenced and Corrupt Organizations Act and California state law. The suit claims the company targets Chinese-American immigrants to sell products to friends and relatives in Asia. The lawsuit characterizes Market America's business practice as "racketeering" and says that "while the executives tell distributors they can earn more than $560,000, only those at the top make that kind of money. Ninety percent of sellers do not receive a penny".[4][30]

References

  1. 1 2 3 "The Inc 5000 Market America profile". 2016. Retrieved 14 March 2018.
  2. ↑ "Market America Worldwide, Inc. and Affiliates Consolidated Balance Sheet" (PDF). 31 December 2010. Archived from the original (PDF) on 18 October 2011. Retrieved 17 August 2011.
  3. ↑ Atoyebi, Deji. "4 Effective Business Models That Built Billion Dollar Companies". Entrepreneur.com. entrepreneur.com. Retrieved 10 July 2018.
  4. 1 2 3 4 5 Berr, Jonathan. "Market America faces federal racketeering suit". CBS News. CBS. Retrieved 10 June 2017.
  5. 1 2 3 4 "Market America's American Dream Machine". June 23, 2011. Bloomberg Businessweek. Retrieved 1 May 2014.
  6. ↑ Shop.com, backed by Bill Gates and Amazon.com, finds a buyer, Dec 15, 2010, 8:30am PST, BizJournals.com
  7. 1 2 Robin Wauters (15 December 2010). "Market America Acquires Bill Gates-Backed Shopping Site Shop.com". Retrieved 17 August 2011.
  8. ↑ "Market America opens operations in Hong Kong". Retrieved 26 March 2012.
  9. ↑ "Market America opens Philippines site". Retrieved 26 March 2012.
  10. ↑ "Market America expanding into UK". Retrieved 26 March 2012.
  11. ↑ "Market America expands to the United Kingdom". Retrieved March 26, 2012.
  12. ↑ "Market America Launches in Mexico with Tremendous Success". Retrieved 15 June 2012.
  13. ↑ "Market America and iMirus Partner to Create World's Largest Online Newsstand for Magazines, Catalogs, and Books" (Press release). 16 September 2008. Retrieved 17 August 2011.
  14. ↑ "Shop.com finds a buyer". Retrieved 26 March 2012.
  15. ↑ https://www.internetretailer.com/2011/04/04/market-america-plugs-technology-upgrade-shopcom
  16. ↑ "Isotonix Delivery System". Retrieved 26 March 2012.
  17. ↑ "Prime Anti Aging Nutraceuticals". Retrieved 29 September 2011.
  18. ↑ "Market America 2010 International Convention: Looks to Social Media, Celebrity Partnerships & Technology Enhancements, Scottie Pippen & Kim Kardashian Partner with Market America" (Press release). 11 August 2010. Retrieved 1 August 2011.
  19. ↑ "Partner Stores". Retrieved 23 August 2011.
  20. ↑ Steven Gaines (27 January 2009). Fool's Paradise: Players, Poseurs, and the Culture of Excess in South Beach. Crown/Archetype. pp. 6–. ISBN 978-0-307-45221-4.
  21. ↑ Hoag, Christina (16 February 2004). "Direct Sales Company Allows Miami-Area Founders to Enjoy Extravagant Lifestyle". The Miami Herald Knight Ridder/Tribune Business News. via HighBeam (subscription required). Retrieved 2014-05-02.
  22. ↑ "Market America to buy Shop.com". 15 December 2010. Retrieved March 26, 2012.
  23. ↑ "Market America completes the heavy lifting of integrating Shop.com". September 26, 2011. Retrieved March 26, 2012.
  24. ↑ "Litigation Release No. 16131A / May 4, 1999". U.S. Securities and Exchange Commission. 4 May 1999. Retrieved 17 August 2011.
  25. ↑ "Market America CEO looks to take company private". Retrieved 26 March 2012.
  26. ↑ "Company Overview of Market America, Inc". Retrieved March 26, 2012.
  27. ↑ Steve Sawyer v. Market America, Inc., COA07-1257 (North Carolina Court of Appeals 3 June 2008).
  28. ↑ "Supreme Court of North Carolina Petitions 11 December 2008". 11 December 2008. Retrieved 17 August 2011.
  29. ↑ Steve Sawyer v. Market America, Inc., 7 (Oregan Supreme Court 21 January 2010). Text
  30. ↑ Reynolds, Matt. "Class Accuses Market America of Racketeering". Courthouse News. Courthouse News Service. Retrieved 10 June 2017.
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