Company Name: LuLaRoe
Costs: $5,000 to $6,000
Update: Like many MLM companies, LuLaRoe has decided to sue people that criticize it.
Do I Recommend LuLaRoe?
LuLaRoe is a trending clothing company that offers casual and attractive clothing. Yet, it’s not one that I recommend for making money. There is significant risk involved with making money from the company, especially as you have to buy the products first and then sell them.
Instead, anyone interested in fashion would be much better off with affiliate marketing. That way you have fewer costs and access to a wider range of clothing to promote.
What Products Does LuLaRoe Sell?
LuLaRoe has become popular for offering a relatively unusual range of clothing, including many options that are quirky or funky. The products are also targeted at both children and adults, making them popular among families.
The brand has also been making waves for one specific type of item, which is their leggings. These come in a range of different patterns and are typically considered softer and more comfortable than most other legging options. In fact, the leggings have been extremely popular online, to the extent that they have been featured in articles on sites such as BuzzFeed.
Comfort is one of the key selling points of LuLaRoe’s clothing, along with the idea that the items are casual and fun.
The brand has also recently released a Disney collection, which (not surprisingly) features a range of Disney characters and patterns. Some of the styles in the range are overtly Disney-focused, while others are much more subtle.
Right now, LuLaRoe is trending. Much of this is to do with the leggings and the Disney range. But, many people also like the fundamental concept. And honestly, the brand does many things right.
For one thing, the products are unusual. That’s a must in the clothing world because there are already so many companies and brands on the market. There are even other direct marketing companies specializing in clothing, like CAbi. But, many of the clothing styles that LuLaRoe offers aren’t typically available in conventional clothing stores, especially not for adults.
Plus, for the most part, the clothing seems to be decent. For example, many of the reviews for the leggings are almost obsessed with how soft and comfortable they are.
As for price, the clothes are on the expensive side, although not absurdly so. For example, the famous leggings are roughly $25 a pair. Many people would be willing to pay that, but leggings are normally less expensive. You could probably find much more expensive ones at Lululemon though (some over $100)!
It’s easy to see the appeal of the brand, especially for people who want clothes that are a little unusual. But, while the products themselves may seem amazing, there are some fairly significant limitations too.
One of these is quality. For example, there have been recent issues with the leggings ripping, often soon after they were purchased. That’s not encouraging, especially as the clothes aren’t cheap.
Those complaints aren’t just isolated cases either. Instead, the number is rapidly growing.
To make matters worse, reputation plays a large role in success if you want to sell LuLaRoe products. So, if the company develops a bad reputation, it would become much more difficult to make product sales.
LuLaRoe also tends to generate a considerable amount of controversy. In particular, some people absolutely love the clothing, while others hate it. One reason is simply that the brand has become so popular lately, so people are sick of hearing about it.
Another issue is simply that the style won’t suit everyone. For example, the clothing selection can be considered fairly casual and some view the clothing as being unflattering and unattractive. Additionally, baggy clothing doesn’t suit everybody and some people simply don’t feel that the items are fashionable.
With this in mind, it’s important to consider your social connections before you get too excited about LuLaRoe. In particular, do you know people who would wear outfits like the ones above or below? Likewise, could you get excited about the products and wear them regularly?
If the answer is yes in both of those areas, then LuLaRoe may be worth considering. But, if this isn’t the case, then the business may not work well. After all, the unusual style of the clothing is LuLaRoe’s key selling point and you would need an audience that is at least interested in what LuLaRoe has to offer.
Is LuLaRoe A Good Business Opportunity?
LuLaRoe falls into the category of a purchase-first or resale MLM. This means that distributors are responsible for buying the products and then reselling them to customers at a markup. The company estimates that you can earn anywhere from 35% to 50% profit, depending on the products that you sell and the prices that you charge.
Beyond simple sales, you can also earn money by recruiting other people into the company. You can do this at entry level in the company, which is as a Fashion Consultant/Sponsor. Here you can earn 5% income from the orders that the people you recruit make.
The next rank up is a Trainer, which is where the team building component starts to be significant. At this level, you can earn more income from the people below you and there is also a greater focus on managing a team.
There are multiple different ranks beyond these first two and both the requirements and the bonuses increase with each rank. To reach those higher ranks, you also need some higher ranked people within your team, such as in the example below.
The overall design means that much of the income potential comes from recruitment and building a team. You can still make money with just selling the products but it would be extremely difficult to turn that into a decent income stream.
Additionally, the larger your team is, the higher the workload for maintaining it. For example, you’re likely to have to coach and encourage many members, which could include teaching them how the compensation plan works and how to effectively make sales. This can get frustrating and time-consuming fast, especially as you still need to make your own sales.
There is also a purchase requirement tied into the various ranks. For example, you need to order 175 items each month to be able to earn any bonuses from the people you recruit. What that calculates to would strongly depend on the products you buy. But, you’re likely to be spending several thousand dollars to meet that requirement.
One other aspect is that very few distributors ever make it into the higher ranks. This is particularly obvious in the company’s Income Disclosure Statement, which looks like this:
The percentages overlap somewhat because distributors may hold multiple ranks within a single year. But, less than 20% of distributors reach the second rank and almost all eligible (99.84%) are in the first rank for at least some of the year.
What’s more, many individuals aren’t even eligible, which is clear from the left column. This is a concerning pattern, suggesting that some people buy the initial kit but aren’t successful enough to make money.
Now, even at the lowest rank, you could still earn income, especially if you make regular sales. But, you don’t get the various bonuses that the team offers, so your potential would always be somewhat constrained.
Ongoing Costs And Requirements
Most MLMs have some ongoing costs, such as a yearly fee or the need to buy some product each month. But, the purchase-first approach for LuLaRoe increases those costs dramatically. After all, you have to buy anything that you’re going to sell. This also means that the main way to make more money is to spend more first.
For the most part, that idea is retailing 101 and is the same concept as for any physical store. And, as with retailing, you are buying at a wholesale price, so the potential for profit is there. But, LuLaRoe distributors typically don’t have any sales training, which makes the process that much more challenging.
Besides that, you’re selling clothing. Doing this is always going to be more complicated than other types of products, because there are multiple sizes to consider, along with all the different styles. You also have to try and predict what people are going to be interested in.
Getting this right would be easier if you knew your customer base well but it will always be risky. There is a significant chance that you would be left with some items that you simply can’t sell, while you may sell out of other items. And, if you don’t sell enough pieces, then you end up losing money.
For that matter, the initial startup for the LuLaRoe is somewhere between $5,000 and $6,000, That price gets you a large number of products to sell but it’s still a considerable investment. You also have very little control with the starter kit, so you may end up with products that nobody is interested in.
What’s more, selling LuLaRoe means that you have a considerable amount of clothing at hand. You’d then have to find a place to store the items and ways to display them. Doing so could add to your costs and is certainly something to seriously consider before you get involved. If nothing else, the clothing will take up space, which isn’t great if you have a small house.
LuLaRoe’s Success And Popularity
One other important aspect to consider is popularity. LuLaRoe is a trending brand right now and this can dramatically impact your chance for profit.
First of all, the popularity does mean more potential for sales. After all, there are many people actively interested in LuLaRoe products. Often you may not even need to promote the product at all because people are already wanting to buy.
But, there is a downside too. Interest in LuLaRoe means that there is already a large number of distributors for the company and more are continuing to join. As a result, the competition to make sales will often be fierce, especially if there are already some distributors in your local area.
LuLaRoe is also often sold online, including on Facebook. This gives you access to a wider audience but does serve to increase the competition as well.
Finally, the recruitment process actively increases competition. In many cases, the people you recruit will end up promoting their products to the same or a similar group of people that you are. As a result, the larger your team, the more competition you will face from within it.
Competition is also more significant with LuLaRoe than with many other MLMs. After all, individual distributors are setting their own prices for products – and there is a significant risk that somebody will undercut you. If that happens, you may need to decrease your prices to make a sale, which then lowers your profit margin.
Making sales is still achievable, especially if your contacts are passionate and loyal. Plus, each distributor will have a different selection of stock and could quickly run out of some items. Nevertheless, be sure to evaluate this competition carefully before you get started because it could easily undermine your success.
Cricicism From The Top
As many controversies grow around this company, folks at the top are starting to question things as well. This happens a lot with MLM. I think 2018 is going to be a tough year for LuLaRoe.
If you could promote the products without buying them first, LuLaRoe might be worth considering. But, the need to purchase means that this opportunity is a considerable investment and you may never make that money back.
Unahppy with my assessment? See what others are saying about how companies like LuLaRoe are contributing to huge amounts of debt.
How To Turn Fashion Into A Business
LuLaRoe seems to make sense if you’re passionate about fashion, but the costs of being involved are too high for most. Besides, what if you don’t have the physical space to store that many clothes or simply don’t want to?
What’s more, if you’re selling for LuLaRoe, you would be restricted to just their product selection – and your success would be strongly tied to theirs. That outcome isn’t good if the popularity of LuLaRoe declines, which it easily could if the issues with quality get worse.
Personally, I hate those types of restriction. In contrast, you could sell similar products with fashion affiliate programs and have much more flexibility as a result. Doing so also lets you avoid buying inventory. Instead, you would be promoting products online, giving your customers the chance to pick what they actually want. There is much less risk involved in doing this and you have access to a much wider selection of products as well.
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