LuLaRoe has instant name recognition from their fashion line and, particularly, their leggings, which took the internet by storm in the past few years. Let’s look at the business model with this LuLaRoe MLM Review to see if you can make money.
Having heard of the company and its presence on social media, one might conclude that its “independent fashion consultants” are making tons of cash. To put it another way, the consultants could injure their backs, pushing wheelbarrows full of commissions. They must be the kind of people who buy a new boat when their other one gets wet because they are so filthy rich!
Before you invest in LuLaRoe and a fleet of high-end wheelbarrows, let’s look at some facts and critical information and see if it’s LuLaRoe or LuLa-NO!
Who Is LuLaRoe?
DeAnne Brady and Mark Stidham, her husband, began LuLaRoe in 2013; as a result, by 2016, they reached over a billion in sales. In addition, in, 2017 they had 80,000 active “independent fashion consultants” in the field and were shipping 35,000 packages a day.
When the volume reached 35,000 packages a day, the company received numerous lawsuits from distributors, consultants, and customers for multiple reasons. With this in mind, it appears the company outgrew its distribution.
What Is MLM (Multilevel Marketing)?
An MLM, or Multilevel Marketing company, is a type of business that relies on its sales force to recruit additional salespeople below them, thus creating a “downline.” These salespeople then receive commissions on their own sales, as well as the sales of people they’ve recruited into the MLM.
While some people view MLMs as pyramid schemes or get-rich-quick opportunities, others use MLMs to make an active income.
While others work hard at their MLM business and never break even, so to be on the safe side, it’s important to do your research before deciding whether or not an MLM is right for you.
What Products Does LuLaRoe Offer?
LuLaRoe offers a variety of women’s fashion and accessories, including their famous stretchy leggings. Not to mention, as a wholesale company, they only sell inventory to independent distributors.
Some of the fashion products offered are
LuLaRoe MLM Review
In 2017, In California, attorneys filed a class-action lawsuit against LuLaRoe, claiming the company was a pyramid scheme. And to top it off, in 2017, the Better Business Bureau downgraded their rating to “F” for unresolved issues.
In 2018, a distributor on the web mocked a disabled person during a broadcast; as a result, the National Down Syndrome Society opted to sever ties with LuLaRoe.
This event, combined with the other issues, led the top-performing consultants to leave in mass numbers.
In 2019, the state of Washington filed a class-action lawsuit and later settled for 4.74. Million. For this reason, a condition of that settlement requires LuLaRoe to add income disclaimers regarding how the compensation plan works and create more transparency in their payment plan.
The chief complaint in many lawsuits, such as; quality of the LuLaRoe product line, previous compensation plan, and imbalance of both, is often overlooked.
The company had to post a disclaimer to the distributors, and, as a result, caused a considerable loss of the top performers. In this case, LuLaRoe was deemed insensitive with a poor payout model.
The compensation plan has a lot of combined metric qualifiers that can insulate the company from paying out many top-tier amounts. Though, that’s typical for all MLMs.
How Can You Become An Independent Fashion Consultant?
You can go to the LuLaRoe website to join or join as a downline under friends and family.
Price To Join
To become a distributor for LuLaRoe, you have to pay an initial minimum investment of $499, including 65 pieces of clothing valued at $2400. If you know anything about fashion, you know that you’re going to need a lot more inventory than that. As a matter of fact, on average, people spend over $5,000 – $9000 to purchase items to join.
To remain active status as an independent distributor, you must sell 33 items per month; as a result, you can make a 45 – 60% profit. In other words, you make approximately $2,200 – $3,000, and in the long run, you pay $5000 + and make $3000. Not a profit!
LuLaRoe Compensation Plan
There are two ways to earn an independent consultant — first, your retail profits. Secondly, you get whatever you sell the item for minus the wholesale price paid. The first thing to remember, you have to take your business expenses out of that profit.
You can obtain a second income stream by recruiting people to do what you do. They become part of your “downline,” and you receive commissions from the company based on a percentage of sales.
Benefits can impact earnings but, a point often overlooked, do they have a true value. With that in mind, here is a list of benefits from the LuLaRoe website.
- Free shipping on orders from us to you (ground)
- Point of Sale system, e-commerce website, and sales reports
- Platform for selling on Facebook Live
- 5% off wholesale orders when using retailer card
- Sales Tax and Shipping & Handling Tax remission
- Payment processing with instant funding
- Marketing assets for product launches including product photos
- Education for new retailers and ongoing peer-to-peer coaching
Video Of The Compensation Plan
LuLaRoe is rated an “F” by the Better Business Bureau.
Pros And Cons
LuLaRoe MLM has a few pros as well as cons. We will list a few pros on the positive side, and on the negative side, we’ll talk about some cons.
- Name recognition
- Product recognition
- Free shipping
- Payment processing
- Fashion products that are trendy
- Terrible reputation
- Have been sued repeatedly
- Poor rating with the BBB
- High cost to join
- Low-quality products
- Low credibility
- Questionable ownership.
LuLaRoe MLM Income Disclosure
The image above is the 2020 income disclosure for LuLaRoe. To Point out, one most important thing, on the top of the image, there is a disclaimer to the figures on the image. It states, Not including Non-Product Expenses.
To put it another way, when you become an independent fashion consultant, you are starting your own business so, you will have business expenses. The more you make, the more you will need to invest in your business.
The image points out that most make $4999 a year. Now that’s not too shabby, keep in mind that you will spend $5000 – $9000 a year on clothing inventory with this MLM business. So, you just lost everything and more; that is to say, you made no money and worked hard.
If you want to read more about the income disclosure, you can find it at this link on the website.
Bear in mind that only 25% of MLM participants turn a profit. Please note that this says “turn a profit.” It does not say that 25% make money. After you take out expenses, very few make money.
Is LuLaRoe MLM A Scam?
A scam is a fraudulent business where the company is dishonest in what they offer, generally speaking, LuLaRoe does not meet that threshold. They do offer a product for the money one pays.
All things considered, while they are not technically a pyramid scheme or a scam, the reputation of all MLM models of business closely resembles a Pyramid scheme.
Video Overview Of The LuLaRoe MLM Review
The Problem With MLM Companies In General
A chain letter is the mail version of those emails you would get that said, “If you forward this to ten friends, you’ll get a $100 gift card to Wal-Mart, but that card never came, but all your friends started getting spammed.
The FTC Government document also states that the MLM model “is inherently flawed, unfair, and deceptive.”
My Recommendations Regarding LuLaRoe MLM
Ultimately, I’m not a fan of the company nor the income potential of this MLM. Once you’ve subtracted your investments and expenses, the remaining amount is likely to be less than expected, and when you divide that by the number of hours you put in, that hourly wage will likely feel insulting. I am uncomfortable recommending this MLM in any possible way.