My Problem With MLMs
Mary Kay. Younique. Avon. Princess House. Scentsy. DoTerra. LuLaRoe... and all the rest. What's my problem with these companies? How much time do you have? **Caveat** I reference LuLaRoe in this often because the focus of my blog is often LuLaRoe. If anyone feels I've poorly represented their MLM by mentioning them- even though I state at the bottom of this blog that some do all of what's listed, others do all of it, and some do none at all- or other things... I'm glad to make an article about the issues I see with your specific MLM. I also want to mention that I have bought into MANY MLMs because I generally use a lot of the products. I loved Younique's mascara until the reformulation issues happened. I was enrolled with them until January, but I never really enrolled in anything in attempt to sell it OTHER than LuLaRoe.*** First, I don't agree with any business owned by XYZ business owner claiming that by signing up to sell their product as an independent representative- that you own a business. You do not own any part of this business. ALL you own, in fact, is the merchandise you're encouraged to inventory load. What is inventory loading? That is when you're encouraged to buy a lot of merchandise to hold in your possession in effort to have it in stock in the event that a customer might want it- and want it NOW. There have been some court rulings that this is unethical, and defines inventory loading as encouraging or requiring a person who sells the product to buy in advance, "a quantity of product that would be unreasonably difficult to sell off in a short amount of time." Not very clear, but as in the theme with laws in this country, this isn't unusual. What's good and bad about that is it's subject to interpretation by the courts. 33 pieces a month in LuLaRoe as a minimum might not seem like THAT much. But when that can be upward of $600 as a requirement... the number looks a little more serious. As an independent rep, all of these companies tout that you can make your own hours. Be your own boss. But if you're married to a minimum inventory requirement, how can you ensure you're getting rid of this stuff effectively if you aren't hustling to sell it? That is a problem for me. It's a nice thought to be your own business, but unless you're a franchise (which these claim they are not) your own business would afford you a lot more freedom and flexibility to determine WHAT you order, and WHEN- with no monthly requirements. Some independent reps argue that they filed an LLC or an S-corp, and therefore ARE a business. Yes. For the purpose of your personal liability and tax filings- you are. Congratulations. That still does not afford you any rights other than what have been provided to you in the LuLaRoe (or any other MLM) contracts. If they say you have to hawk these items during in home parties alone, then by George- that's what you're supposed to do. If you were "Susie's Boutique, LLC" and you were selling merchandise from traditional wholesalers, you may have a MAP agreement, and some have minimum size run requirements, but there are no frequency requirements. And you'd be able to sell from 'A' company, 'B' company, and 'C' company without worrying about compliance coming and knocking in your email box. Second, I don't agree with income claims. "If you enroll, you can make $1200 or more a month! What can you do with $1200 a month?" What these people don't tell you is that isn't a controllable factor. Some things to consider before being able to determine potential income are: market saturation, supply v. demand, the amount of time you can invest in it, the amount of money needed to get to that level, etc. Sure, you can make a million dollars month, or you can make twelve dollars. Anything is possible. That's the truth. In an environment of total and complete variability, it is possible that you can make a ton of money. But the million dollar question is: IS IT LIKELY? If you're going to argue with the laws of probability, you'd be very wrong. If LuLaRoe has (as of 4/12/17) 81,000 consultants, and only what? A dozen or so mentors? What does that tell you? That means that 0.00014% of consultants become mentors as of 4/12. In plain English: Probability unlikely that you will too. As you go down the chain, your probability of that level being achievable goes up. Is it likely that you can enroll several people below you? Yes. Is it likely that they can too? Yes. BUT how likely is it that they will ALL hit their minimum sales quotas so that you may get your 5% from them every month? How likely is it that they will consistently do this with LuLaRoe continuing to onboard hundreds of people every single day? The structure is not maintainable, and mathematically, it is set to implode. Maybe it's just me, but I kind of want to make money I can rely on, not wait to see if the people I rely on for my income actually do what they are required to do so that I can get paid. Speaking to just a regular consultant, not enrolling anyone in their downline, just straight up selling LuLaRoe ordering 33 pieces every month, ask yourself how long it takes to get this work done? Let's walk through it: You order. Ordering doesn't take long at all. Maybe 10-15 minutes to select everything you need and enter your payment info. A couple days later (if LLR is on their shipping game) your boxes arrive. You must now unpack the pieces, sort them, photograph them, hang them up or store them otherwise. This process depends on how big your order is. Let's say 33 pieces. It is easily an 8-10 hour job to do all this if you are not interrupted. For the sake of this argument, let's say you already have 4 popups scheduled for that week. (Otherwise, we'd need to figure out time spent marketing yourself to others and reaching out to people to host these parties) Each pop up online requires albums to be loaded, pictures to be uploaded, and you, the consultant to be available and ready to answer questions. Some might argue you can do this without physically being there, but how many times have you seen this question: "What is the fabric content on this one?" or the infamous: "What country is this made in?" And you stepped away to go to the grocery store... shame on you. The party lasts for a few hours, but albums usually stay up until the next day to catch any stragglers. Suffice it to say that it's pretty easy to rack up 20-30 hours doing these popups online. Then you have to pick, pull, pack, print, and ship the orders. Add another hour plus depending on how many sales you have. In home? You pack your merchandise, you load the car, you drive to the location, you set up. Party lasts 2-3 hours. You break down. You load your car. You go home. You unload your car. Rinse then repeat. Is it absolutely believable that you are working more than 40 hours? Yes. Is it guaranteed money? No. Could you have worked that whole week and sold nothing? Yes. Congratulations, you are not even making minimum wage. Raise your hand if this has happened to you. But these companies make no issue with telling you that they expect you will do x amount, that you can make y amount per week if you do x. BUT YOU CAN NOT CONTROL YOUR CUSTOMER. You, the consultant, as a customer of LuLaRoe, CAN be controlled by minimum order requirements. But you, the salesperson can not make that requirement of your customer base, therefore that income can not be expected nor can it be controlled. It is a variable. My next issue is quality control. You have none. You can not control holes in leggings or clumps in mascara (as witnessed with Younique's mascara reformulation upon reformulation) It's not in your control. Add another variable to your success. Next, I really despise the West Side Story Jets vs. Sharks mentality these reps take on. LuLaRoe didn't invent leggings. Neither did Buskins, Agnes + Dora, or whomever else pops in out of nowhere for their little piece of the market share... but you will see this vicious attack dog mentality about how "we were first", "yeah but your butt doesn't pop out of our brand." and the like. You like leggings, order leggings. But why does it need to be gang wars? LuLaRoe will chastise you if they see you mixing brands. There have been several reports of reps being told they can't show an Irma (or whatever) with a pair of jeans- because they don't sell jeans. Newsflash: An Irma may be appropriate as a top for a business casual Friday, but leggings may not be. (Especially those sock monkey ones. Yikes.) I also saw this with DoTerra vs. Young Living. The rivalry started because the two companies started off as one, that saw the company going in different directions and went their own ways. DoTerra invented a term for the testing and certification claims they make- when there are currently no mandated standards of purity for essential oils- and no current consumption guidelines. But man do their consultants regurgitate that ad nauseum. It's not real! LuLaRoe loves to deny issues. The uplines and mentors call blogs like mine negative for the purpose of gaining attention. Yes. Gaining attention to the issues you fail to address! How many of you have received messages from friends or distant acquaintances that want to meet up out of the blue "to share an exciting opportunity with you" ? And the harder you press them for details, the more vague they become- ultimately stating that if you don't want to meet up, that's fine, they will share the info with someone else... Am I the only one that's like- Good! And don't come back! If you can't tell me what you're hawking, you don't get to come knocking. The only reason they use this tactic is because they KNOW that if they approach you with- "Hey, I totally joined the AmWay cult and I'd like to recruit you!" You'd block their messages so quickly, their internet would shut down. Next issue: Sense of urgency. LuLaRoe is notorious for manipulating a sense of urgency to inspire sales. It really is quite brilliant. As seen on TV did it first: "If you call in the next ten minutes (cue ticking countdown clock graphic), not only will we take off one of your monthly payments, we'll give you this handy-dandy salad shredder ABSOLUTELY FREE! Operators are standing by! ACT NOW!!!" LuLaRoe's version: Only 5,000 pieces in this totally awesome hamburger (that look like maybe they could have been tacos, or psychedelically colored vaginas depending on focus and lighting) print exist! Comment sold RIGHT NOW, because won't you be sad if someone else grabs them? And so the "sold" war ensues. I have actually seen women go nuts because a timestamp on a sold comment is IDENTICAL with the one above her and it's "not fair". What the actual fuck is in these leggings that make you go this crazy if someone gets them before you? I'm waiting for some independent chemical analysis to come back showing that the fibers are laced with some molecular cousin to crack cocaine or something. And from a consultant perspective, there is always a sense of urgency. Some mentor or upline is always running some contest to get their downline to buy buy buy. "Order 30% more this month and post your order screenshot below, and I'll enter you into a raffle to win an iPad or this shitty little bag I got from a street corner vendor in Guatemala for $3." For what some of these women are ordering, you can buy a plane ticket to Guatemala and buy the whole damn cart of bags from the woman and call it a day. This is just the beginning of my long, laundry list of issues with MLM, especially LuLaRoe. I realize a lot of MLMs only do some of these, some do none of these by practice, some do other things. I feel like an MLM isn't entirely a bad thing, just the direction they take once they reach a certain level. It's like all logic and sense of ethical responsibility goes out the window and it becomes an upline to downline free for all. "I'll just say this because it sounds good now." But no one takes responsibility for what's said. I think if I am going to make a prediction on the outcome of all of this LuLaDrama, I'd say that it will at very least make a very strong leap in providing caselaw for future legislation to protect consumers against the MLM seduction.