Earthly Clean sells a wide range of private label environmentally friendly cleaning products. All products are designed to be effective at cleaning, yet easy and non-toxic on the environment. Earthly Clean has contracted with a large national producer of environmentally friendly products to manufacture these products with the Earthly Clean private label. This vendor was chosen because of their quality products as well as their flexibility in offering low minimum orders ($150). The following are the initial products that Earthly Clean will offer. As the company grows they will consider adding new items to the product list as demanded by the market:
- All purpose soap: A concentrated formula for washing walls, floors, cabinets, and all other washable surfaces. Orange oil and sodium citrate based.
- Bathroom cleaner: Quickly and easily removes dirt and grime, cleaning and deodorizing the entire house. An all vegetable-based cleaning agent.
- Basin, tub & tile cleaner: Effective at removing soap scum from all surfaces. Citric acid, glycolic acid and orange oil.
- Dishwashing detergent: Easy on hands, tough on cleaning. A mild coconut oil based detergent.
- Window cleaner: A streak free cleaner. Citrus based, either orange of lemon.
- Oxygen bleach cleaner: A wonderful cleaner that works on sinks and bathtubs. Made from sodium percarbonate, calcium carbonate, soda ash, and sodium sulfate.
- Laundry liquid: Concentrated, biodegradable, natural cleaner for laundry. This is a vegetable-based surfactant detergent.
- Air fresheners: Natural, healthful, eco-mists containing essential oils, emulsifiers, and water. Available scents include, wild cherry, vanilla and hazelnut, citrus, lavender, and natural fruit.
Environmental cleaning products were chosen for a several reasons:
- It allows the participating individuals to make a positive contribution to the protection of the environment.
- The environmentally friendly cleaning industry is in its infancy in terms of growth. It is on the verge of market wide acceptance as more and more people are participating in activities that take into account environmental impacts.
- The MLM and environmental cleaning products is a perfect combination as it combines emotional, and economic factors in a selling opportunity to friends and other network contacts. The seller has an emotional reason for selling the products. They also have an economic incentive because if they find additional people to help sell the product then they get additional commissions on product the new people sell.
Because Earthly Clean buys private label goods direct from the manufacturer, even after paying out the sales commissions, their products are competitively priced. This is achieved through the private label procurement as well as the more efficient, grassroots system of distribution.
3.1 Business Model
Earthly Clean will use a multi-level marketing approach (MLM) to the sale of these products. An MLM approach is a grassroots networking based approach where products are sold direct from an individual (distributor) to the end consumer. The distributor receives the products from Earthly Clean who buys direct from the manufacturer. When a distributor is able to recruit a new person to sell these products (new distributor) then the “recruiter” receives a sales commission for all of the sales made by person #2. If person #2 is able to recruit another distributor (person #3) then both the original distributor and distributor #2 receive commissions from sales generated by person #3.
The MLM system in essence leverages peoples relationships and networking skills. It creates the ability to be your own boss, making sales pitches to friends and associates on your time schedule. It creates a common man, grassroots implementation of a real world distribution channel.
This arrangement differs significantly from pyramid schemes which are illegal in the United States. A pyramid scheme is a system where individuals sell products and get commissions from the recruitment of new people to also sell the products. The more people they recruit, the more money they make. Pyramid schemes are illegal and are broken up when they are found to exist. The regulatory analysis that is applied to determine if the business is a MLM or a pyramid scheme is as follows:
- Is the compensation merely for introduction of additional participants into the program;
- Or is the compensation related to the sale of goods.
If regulators believe the business is more like #1 it will be found illegal, against public policy, and shut down.
As it stands, Earthly Clean is clearly a MLM venture as participants get compensated for the products others sell, not for the specific recruitment of individuals.