Tim Ramey - D.A. Davidson
Great. And one more quick one on the Autoship number going up. I was -- I guess I had in my head that it would probably never go up, that as you became more international, those numbers would -- the mix would change and you probably wouldn't, why would it go up, what happened to make it go up?
Gilbert Fuller
Tim, one of the things that we try to do sometimes more successful than others is create incentives for people to be on Autoship. And just looking at it by country here, it looked like we had the U.S. go up a couple hundred basis points in the quarter versus on a consecutive basis for the second quarter. And that was what drove, since it's the biggest market that we have -- that was the thing that seemed to drive our overall number up nicely. So we are always looking for ways to give folks a reason to have their products on Autoship. It helps compliance. It's a great -- that is, they will likely to keep taking their products and also of course, it's a great cash flow thing for us and also gives us some visibility as to what's coming.
Fuller's response really goes to the heart of the pyramid scheme allegations that have been leveled at Usana. Fuller refers vaguely to the "incentives" that are driving Usana distributors toward Autoship. What exactly are those incentives?
In his original report on Usana, Barry Minkow posited that there was a very compelling reason for distributors to be on Autoship: In order to qualify for commissions, distributors must purchase products. Autoship is an easy way to do that. In a YouTube video demonstrating how expensive Usana's HealthPak 100 is versus comparable products, Minkow argued that people buy Usana for the commissions. Standing in front of a table full of vitamins that were cheaper than Usana, Minkow said that, "You only buy this product to qualify for the commissions that you fear to lose... You don't buy this because it's economically good. Do you really think the potency claims on here are better than all these? You can buy all these, and take one of each for cheaper..."
In other words, Fuller is backing up Minkow's claims. People don't buy Usana products for the vitamins. They buy them because of other incentives, namely the commissions that they can earn by recruiting others to buy Usana vitamins -- but only if they buy them themselves! If people are really buying vitamins because they want to take them monthly, why would you need to give them a reason to have the vitamins sent to them monthly? Wouldn't they buy them because they wanted them?
If Tim Ramey were something other than a lapdog, he might have asked Fuller to expand on the "incentives" that existed for associates to be on Autoship. But he didn't. Instead, he responded to Fuller's explanation with "Terrific, thanks."
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