Wednesday, July 17, 2024

Market America puts sizzle, N.C. spin on e-commerce

Photo of Marc Ashley provided by Market America

The two small houses have a lot in common. In one, Scott Ashley, a middle-aged salesman at Greensboro’s Rice Toyota, and wife Tina, who worked at a dry cleaners, and their four children squeezed into quarters as tight as their finances. Originally from New York, they’d relocated to Florida but rebounded to Greensboro in the 1980s when the kids were in grade school.

“We came from nothing,” says Marc Ashley, one of their two sons. “We were lower middle class.”

[/media-credit] Marc Ashley co-founded Market America in a small Greensboro house 26 years ago. It now employs about 1,200, including 549 at its offices near Piedmont Triad International Airport.

The other is a 1,200-square-foot tract house in northwest Greensboro with a white railing across the front and wilted monkey grass in the yard. Here, in the early 1990s, Marc’s older sister, Loren, and New Jersey native James Howard Ridinger, a former Amway distributor with a $37,000 bank loan, were hustling a new enterprise. Marc, a 1988 Page High School graduate, attended UNC Greensboro but spent mornings, nights, weekends and holidays at the house.

They worked phones, tripping over each other and cartons of vitamins and supplements that jammed even the bathroom, taking orders, shipping them and sweating. “Then every Friday morning, we’d rent a van and drive up and down the East Coast,” Ashley says. “We’d meet with anybody we could get to expose our products.”

Today, Greensboro Coliseum isn’t far from the original office, but it’s a different world.

“Marccc Ashleeee!” a rolling voice thunders. Flames, sparks and smoke erupt from a dozen faux volcanoes as rock music trembles the giant video screen above. A middle-aged man emerges from stage left, and 20,000 people leap from their seats, cheering.

“How do you feeeel!” Ashley asks, not really a question. Like him, they feel revved, pumped, and they’ve paid $200 for him to make them feel more so. In a dark suit, white shirt and necktie, Ashley paces like a preacher in pursuit of souls, taking cues from floor-level teleprompters scrolling the gospel of achievement.

It’s Market America’s annual August convention, with consummate pitchman Ridinger, long since known as JR, now pushing 70, and Loren, who is now his wife, also as featured speakers.

“I’m living the life!” booms Ridinger, Market America’s chairman and CEO, as the overhead screen flashes scenes of wealth. He extols optimism, hard work and the joys of riches, sweat drenching his open-collar blue shirt, hammering home the message, “… and you can be like me!”

Ashley, president and chief operating officer, is the closer. “JR used to tell us when we had nothing, we gotta fake it till we make it,” he says. Walking offstage with a wave, his suit sleeve rides up to expose a $75,000 Richard Mille rose-gold wristwatch that says yes, he, Loren and JR have made it.

Since 1992, Market America Inc. and its unit acquired in 2010 have grown from a direct-sales startup into a hugely successful e-commerce company. It has been ranked for more than a dozen years on Business North Carolina’s annual list of the state’s largest private companies, compiled by accounting firm Grant Thornton and based on revenue. With more than 180,000 distributors globally, Market America’s online sales totaled nearly $900 million in 2017, up 12.6% from the previous year. Since its formation, revenue has topped $8.5 billion. Further growth is likely amid predictions that U.S. online retail sales will double to more than $1 trillion over the next decade.

“In 26 years, we’ve never had to downsize once,” Ashley says. “We’ve had to shuffle some positions we didn’t need to bring on technology to make us more efficient, but never layoffs. I’m proud of that.”

[media-credit name=”Business North Carolina” align=”alignright” width=”400″][/media-credit]

Market America has made hundreds of individuals it calls “unfranchise owners,” or UFOs, into millionaires, the company says. Meanwhile, the bulk of participants are part-timers, supplementing other income. The company’s career manual states the average UFO nets less than $1,000 a year.

On another day, Ashley, 48, is in a calmer setting. The 6-foot-1 executive strides through the company’s west Greensboro headquarters, a 163,000-square-foot brick building with a curvilinear glass entrance. He’s explaining details about operations and chirping “good morning” to dozens of the 549 employees here. The company employs 1,200 worldwide. The fulfillment center is running full speed, UPS tractor-trailers are backed against the loading dock, and out front, nine flags flap, one for each country in which Market America and have outposts.

Eventually, Ashley lands in the boardroom, rattling off statistics. Market America’s distributors, like those at its Greensboro convention, sell about 4,000 proprietary products such as Isotonix dietary supplements and Motives Cosmetics. They also sell more than 60 million items made by other parties.

Tomorrow, Ashley will jet to Monaco to meet Loren and JR and pick up the couple’s new $50 million-plus Rossinavi superyacht. Construction of the 207-foot Utopia IV was supervised by the Ridingers after they outgrew the 162-foot Utopia III. Market America’s tens of thousands of distributors sell a lot of things, Ashley says, and the unabashed display of wealth is its keystone.

“They have to have the dream,” he says.

Beneath the glitter is a business model that’s an amalgam of, Avon, QVC and similar companies, but with twists that make it different, according to the owners. One quirk is the semantic contortion “unfranchise owner,” which emphasizes that distributors are independent contractors, not franchisees.

Its core proposition is that its products make users healthier, younger and more attractive and their lives easier and better. Equally important is the potential profit earned through a complex system of commissions based on personal sales, cash-back provisions on purchases and residuals on sales achieved by others whom distributors have signed up. The explicit message: Learn to work the system and you, too, can be an Ashley or Ridinger.

Ridinger grew up in Woodbury, N.J., in the 1950s as the older of two brothers, then majored in biology at Gettysburg College in Pennsylvania. While working as a marine biologist for a federal agency, “I almost got washed overboard” during a Caribbean scientific expedition, he told a biographer. He quit and landed in Bermuda, where he saw firsthand how rich people live. “It was an odyssey and journey into entrepreneurism and marketing,” he said. To fulfill his dream, Ridinger joined Grand Rapids, Mich.-based Amway, the nation’s largest direct-sales company. He became one of Amway’s top distributors and also signed on with American Gold Eagle, a marketer of gold and silver coins based in Greensboro. When that company folded in 1990, he set out in search of independence. “He’d been like a hamster on a treadmill,” Ashley says.

Ridinger married Loren Ashley in 1992 and they settled in Greensboro. “At the time, we didn’t have very much, but Loren and I were adamant. [Ridinger had] seen good and bad, and we said it’s time for you to start something.” Marc Ashley says. “It was his idea, but we said, ‘We’ve got your back, we’ll make this thing work.’ That was the birth of Market America.”

Ridinger was among the first to see the potential of internet sales. “The first year I was in college, we weren’t doing much of anything, just trying to get it off the ground,” Ashley says. “Our direct selling was mainly one-on-one. The second year, we did our first million, and in the third year, we went from $1 million to about $19 million, boom, just like that. It took off as the internet evolved.”

After his mother, Tina, died in 1993, Ashley stepped back from his work and studies. “That was my second year in college, and it destroyed me. I took a year off from school, and then the business took off.” He went on to graduate in 1995 with a business degree.

By then, Market America was signing up thousands of converts such as Elizabeth Weber. A contract administrator and legal secretary in Boston, she joined the newly chartered Market America in October 1992. “I’d tried different marketing companies in the past with only limited success,” says Weber, who now lives in suburban Charlotte. “This one was radically different from anything else I’d seen, so I quit my job of 18 years and went full time.” Ashley and others at Market America tout her as one of the company’s top sellers.

“I went all in,” Weber says, coaxing friends and family to buy items such as Isotonix OPC-3, an antioxidant for improving cardiovascular health and cholesterol levels. A 90-serving bottle sells for $72. “We have some amazing products,” she says, while residual income from the network of other agents whom she signed up in the 1990s provides a large chunk of her income.

“Right now, I don’t put a lot of time into it.” With only her sister as help, she also gets a slice of sales run through her internet site. “I make over $1 million a year, and have for the last 20 years. A lot of it is based on my hard, hard work for those first five years.” She has also created a nonprofit, The Weber Foundation of Helping Hands Inc., to benefit sufferers of life-threatening illnesses.

While Weber and thousands of others across the globe promote the company, the nuts and bolts of the business are on Pleasant Ridge Road near Piedmont Triad International Airport. The headquarters and fulfillment center of Market America are a swirl of industrial automation, advanced robotics, digital artists and a laboratory for creating and testing formulations.

Ashley pauses at a wall map. Pins and strings link Greensboro to China, Hong Kong, Mexico, Nigeria, Spain, Taiwan, Vietnam and other points.

In a call-center cubicle, a woman chatters into a headset in Mandarin. She’s one of 150 company employees fluent in what Ashley calls “the language of the future.” The center fields 2,000 inquiries a day.

In a laboratory, Deedra Mason, the white-coated director of clinical education and research, says Market America’s nutraceuticals and other in-house products, marketed mostly under the Isotonix label, “are powered by results.” She also oversees a division called nutraMetrix that supplies naturopathic doctors. Her degree from a Portland, Ore., school is in naturopathic medicine, which relies heavily on natural products, vitamins, and Chinese and other health philosophies.

[/media-credit] Proprietary products are key to Market America’s success, though distributors also sell millions of top-selling branded products. Living longer and enhancing looks are major focuses.

“You can go to an over-the-counter source and get a product, but it won’t be to the same level of quality and formulation,” she says, rebuffing those who criticize the company’s supplements as overpriced. “We work with our vendors to develop unique formulations, combinations that people don’t get through diet alone.”

In a darkened room, Ashley jokes with a team of technicians poring over computer screens. Dazzling images that flash on the Greensboro Coliseum screen during the company’s annual convention and a second event it calls its World Conference — it attracted 23,000 to Miami’s AmericanAirlines Arena in February — originate here, along with graphics promoting products on company websites. In another office, five staff attorneys juggle questions such as what product labels can claim.

“Each country is unique,” Ashley says. “Singapore is a big market for us, and it’s great to do business with them. It’s similar to the United States. Hong Kong is the same. Malaysia is totally different. If we want to sell Isotonix there, it takes six to nine months just to bring it to market.”

The company develops different products for different countries. “We have a skin lightener sold in Asia because many want lighter skin,” he says. “Malaysia has about 70% Muslim population, and if you’re Muslim, you’re not going to buy a product that’s not halal.” Halal refers to Muslim dietary laws, similar to kosher rules in Judaism. “We had to change our whole manufacturing process.”

In a bright, windowed corner room, Michael Brady, the company’s chief information officer since 2009, also oversees an office with 60 employees in Monterey, Calif.

“Put this on,” he coaxes. Inside cushioned goggles, a Market America product seems to sit on a table. With a handheld trigger, a user can pick it up and examine it. Turn, and the landscape changes accordingly.

“One of our big plays right now is virtual reality and artificial intelligence,” Ashley says. “Sooner rather than later in our homes, you’ll be shopping without even having to be on your computer. It will be like walking through a store, the exact experience. That’s what Michael and his team are developing.” With artificial intelligence, he adds, Market America is offering shoppers tips on their favored color and pattern neckties, for example.

Ashley moves into the fulfillment center, a high-ceilinged room the size of a football field where company-branded products are shipped. With a soft rumble, brown cardboard boxes flash along serpentine lines of conveyor rollers, monitored, but rarely touched, by employees such as Iris Ledbetter. “I do a little of everything,” she says. ”But the main thing I do is fulfill orders.”

She also watches boxes being made. “This is my favorite machine,” Ashley says of a Rube Goldberg contraption that seizes cardboard and, in less than two seconds, folds a shipping box. “Just lay those babies right here and it sets them up.”

Since its early days, Ashley and Ridinger have confronted what they call misbranding as a multilevel marketing company. Though a legal business model, such companies are frequently criticized as pyramid sales schemes in which only top echelons prosper.

“It mischaracterizes what our business is all about,” Ashley says. “In a multilevel marketing company, people are getting paid on levels for bringing other people in. In our business, there are no levels. People get paid either by moving products or services to customers, or the second way is through override commissions, which are strictly based on the sales they create.”

Market America’s portrayal of the good life could foster misconceptions. Featured in publications such as Haute Living, the Ridingers’ homes include their main residence, “Casa de Suenos” or “dream house,” in Miami Beach, and a New York penthouse furnished with Renoir and other Old Masters paintings. Ashley makes no bones about the worth of his Richard Mille watch. “I’m not a jewelry guy, but I like a nice watch,” he says.

For a 26-year-old company approaching $1 billion in annual sales, Market America has faced few major legal issues. Securities and Exchange Commission records show Ridinger took the company public in 1994 in a reverse merger, buying the shell of a dormant company in order to sell stock without an initial public offering. Five years later, the SEC faulted the transaction and fined Market America $100,000, though the company did not admit any wrongdoing. In 2002, with the Ridingers then holding 79% of shares and revenue at $145 million, it reverted to private ownership. Sixteen years later, revenue has soared more than fivefold.

A California class-action lawsuit filed in 2017 claims the company misled Chinese immigrants regarding fees, including a $399 startup payment and other costs required to maintain good standing, and exaggerated earning potential. The case is pending.

“You have some who come in and do nothing, they’re not going to make anything,” Ashley says. He and others stress the company isn’t a get-rich-quick scheme. “If you follow our proven business plan, you’ll succeed.” Adds Weber, the Charlotte-area $1-million-a-year distributor, “You get out of it what you put into it.”

A spokeswoman for the N.C. Attorney General’s Office says it has had three minor complaints, such as for product contamination. The Better Business Bureau has given the company awards for business ethics, and Kevin Hinterberger, president and CEO of the group’s Greensboro unit, has appeared on stage at company conventions. “Our experience is, when they do have a complaint, they handle it in fast order,” he says.

Now, on a summer day, the international flags out front flutter languidly, and Ashley talks about adding more banners. He’s just returned from an Asian tour, pumping the company on some of its fastest-growing turf.
There’s room here for expansion at the company’s site, though the city of Greensboro has claimed some land for road work.

“Now when was that?” he mulls to himself. “The older I get, the harder it is to keep track of time.” One date remains clear, though.

“When we started 26 years ago, in 1992, we had nothing,” he says. “Our biggest product was belief.”

It still is.

Focus on the family

[/media-credit] Co-founders JR and Loren Ridinger, daughter Amber and son-in-law Duane McLaughlin regularly show up on society websites describing their celebrity friends and lifestyles in Miami and New York.

Market America’s executive roster suggests it’s a classic family business. President Marc Ashley’s younger brother, Steve, is president of Monterey, Calif.-based, whose original investors included Bill Gates and Market America bought the business for an undisclosed sum in 2010. His sister, Brandi Ashley Quinn, is vice president of operations. His father, Scott, was an executive until his death in 2014.

Another sister, Loren, is married to co-founder JR Ridinger and senior executive vice president overseeing fashion, jewelry and cosmetics. Her job entails hobnobbing with Kim Kardashian, sports stars and other celebrities.

A second generation is also emerging. The Ridingers’ daughter, Amber, 25, has her own cosmetics line, launched when she turned 15. At her 2013 wedding to actor-model Duane McLaughlin in Puerto Rico, guests including Eva Longoria and Khloe Kardashian heard performances by Mary J. Blige and Marc Anthony, among others. Fashion-industry publications pegged the event’s cost at $5 million. Amber and McLaughlin also co-founded the DNA Miracles line of wellness products.

“Amber is the type of person who can accomplish anything she puts her mind to, but what makes her different from others is the fact that she actually follows through and makes it happen,” JR Ridinger wrote in a February blog.

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