Is LuLaRoe still a viable company?
Read this comprehensive LulaRoe review to find out.
What is LuLaRoe?
LuLaRoe is a United States based multi – level marketing company that is in the business of selling women’s clothing or apparel such as blouses, dresses, skirts, leggings et cetera.
The company’s best-selling product has however been the leggings. It was founded in 2012 by DeAnne Brady and her husband, Mark Stidham.
The name LuLaRoe was made by combining the names of DeAnne’s first three granddaughters: Lucy, Lola and Monroe.
The company was officially incorporated on 1st May, 2013. It is currently based in Corona, California in the United States of America.
It is a private company and is not available to the public on the stock market.
The current Chief Executive Officer of the company is Mark Stidham, one of the founders. The company makes over 2.3 billion US dollars in revenue per annum. For more information about the company, visit their website lularoe.com.
Okay, since we know the basics of the company, we must find out if it is a legitimate business or if there’s something more, something hidden about this establishment. Here we go.
How Does one Join LuLaRoe?
It is pretty easy. There is a website where you can be recruited to become their “fashion consultant”.
This is of course done at a reasonable fee. So, whatever you are thinking is not it. It is not a public company.
The money you pay is not for investing in stocks. LuLaRoe is a private company. The money paid is used to purchase clothing items which you will begin selling for the company.
So, the moment you sign up on their website and complete the payment, voila! You are in.
How is Business Conducted at LuLaRoe?
As earlier mentioned, LuLaRoe is a company that deals in selling women’s apparel. They do this by recruiting independent distributors (they are called Fashion consultants by LuLaRoe) who sell products directly to the consumers.
They use various means with social media being the commonest. They also use pop up boutiques and also a party plan.
A party plan is a marketing method where the sellers of the product host some form of event and the products are put up for sale at this event.
The key is to invite as many people as possible and among those that show up, some will actually buy the product.
What is done at the party is known as direct selling. According to Wikipedia, there were over 90, 000 independent distributors selling LuLaRoe clothing in 2021.
So now we are really interested. What is this business model?
LuLaRoe uses the multi – level marketing distribution business model. Multi – level marketing is a controversial marketing strategy used for selling products and services.
It is sometimes also referred to as network marketing or pyramid selling. I know most of us have heard of network marketing somewhere at one point in time or pyramid schemes.
So, how does this model actually work?
In this model, the business (in this case LuLaRoe) generates revenue from a non – salaried work force that markets and sells the company’s products.
The participants make their earnings from a pyramid shaped or binary compensation system. The earnings of participants are from two revenue streams:
- The commission made from actually directly selling the product and
- The commissions based on the wholesale purchases made by other sellers whom the participant has recruited to also sell the product.
The hierarchy of the organization or company is such that the recruited participants as well as those who are recruited by the recruited participants are referred to as downline distributors.
So, in this model, the sales people are expected to sell products directly to end – user retail consumers by means of relationship referrals and by word of mouth marketing.
They are also required to pitch the idea to more people so that more people can join the company’s distribution chain.
In such companies, in most cases, people do not get returns on their “investment” especially if they fail to recruit other people.
This is because the payment made to them is out of the earnings got from the new person recruited. No recruitment, no actual payment.
The only earnings one can actually get are from the commission made from selling the products.
More Facts about LuLaRoe.
There was a documentary made about the company by Amazon Prime. The docuseries is called Lula Rich and it features several former employees of the company and a current employee plus the founders.
The former employees complained about the company model stating that in 2015, the startup cost was 5,355 US dollars for a total of 305 pieces of clothing.
Courtney Harwood, a former employee stated that she took out a loan from her credit union in order to start.
Other retailers state that the tart up price in 2016 was a range between 5000 US dollars and 10, 000 US dollars.
These people had to take drastic measures in order to raise the money. Some used their credit cards and one even sold breast milk to raise the money.
As of 2021, the company’s website has changed a little bit. When a potential recruit visits the LuLaRoe enrollment website, they enter their name and email address and can then see the current price of joining.
It now costs 499 US dollars for 65 pieces of inventory. However, one has no choice in what items will be shipped to your address as it can be dresses or leggings or blouses, whichever.
One of the former employees said in the docuseries that you might even end up with leggings containing a phallic symbol in the crotch area. How preposterous!!
Amidst public criticism of the company and its business model, it has also faced a class action law suit filed in California in 2017 and a lawsuit filed in Washington D.C by the State Attorney where it was accused of being a pyramid scheme.
The class action law suit involved customers who complained that the firm’s proprietary point – of – sale software incorrectly calculated sales tax on interstate sales and also in jurisdictions that do not charge sales tax on clothing.
The company settled in the Washington law suit and this led to some improvements. There is currently an income disclosure section on the website.
This statement also includes a chart documenting the average LuLaRoe retailer’s gross profit.
In 2020, it was 10, 073.41 US dollars. Also, the median gross profit on 2020 was 1, 444.65 US dollars.
There were numerous complaints about the quality of LuLaRoe apparel such as the leggings and other clothes in general.
The customers frequently complained that the clothes are not durable and they developed holes pretty fast and tore easily.
The customers filed law suits concerning the quality and design of some of the products.
Is LuLaRoe Worth it?
Okay, let’s face it. Would you willingly be involved in a pyramid scheme? Would you go for it if you knew what it actually is? I, for one wouldn’t. I don’t know about you though, but for me, the entire set up of recruiting people to make returns on your money just doesn’t seem right. It actually seems like a business cult to me.
Okay, maybe I’ve gone too far, it is not a cult but it seems like one. Such companies flourish on the hope of others.
The hope that you will make more money and become rich off of the scheme is what keeps these people in business. Do not give these people your hope.
You work for them but you are not paid. Does that seem fair to you? So, do you know what happens when you put your heart and soul into this company and out of sheer bad luck, you don’t sell any products or get new recruits?
Do you know what you gain? Nothing!! At least if you are bad at your 9 – 5 job and still haven’t been fired yet, you are still paid, right?
Honestly, you’re not going to get rich out of this. I know you must have walked into it blindly but try to come out with your head held high. We won’t judge you. We’ll call it a business loss. We’ll move on. But, please steer clear of this company because they will squeeze you dry.
That’s time and money you’ll never get back.
Conclusion: LulaRoe Review – Is it a Scam?
Here’s my advice. LuLaRoe is not worth it. You can make your fortune elsewhere. I know I’m not Bill Gates or Warren Buffet or Jeff Bezos.
But, I am giving you a proper warning here. You are not going to get your money or time’s worth from this company. Try elsewhere. Try buying stocks on the stock market.
There are so many public companies that make profits and you will surely get a return on your money.
Try working a nine to five job as you figure out your next move or try an actual business. Whichever you want. Trust me, LuLaRoe is not where you want to put your hope.
Hope is truly expensive. Do not give it out anyhow because once you lose it, you won’t get it back.