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The LuLaRoe MLM business model, like so many companies before it offers an opportunity to leverage a proven business model to grow a home based business.
But the raw truth is for over a century, so many multi-level marketing companies have preached passive income and financial freedom, while most people in the industry don’t make a dime.
And is LuLaRoe any different? Well, I’m about to share everything you need to know about this opportunity to give you some real answers. So hopefully you can make an informed decision.
Let’s dive in.
Table of Contents
What is Lularoe MLM?
LuLaRoe is a multi-level marketing company that operates in the clothing industry. The company is headquartered in Corona, California and was founded by DeAnne and Mark Stidham in 2012. The idea to create the company came to life when DeAnne made her daughter a maxi skirt.
She loved it so much that she told her friends about it. In the three days that followed, DeAnne took orders for three hundred skirts. Mark took note of this development.
He saw the impact it had on DeAnne’s personal and financial life. And he suggested that they create a business that could do the same thing for other women.
LuLaRoe MLM officially kicked off in 2013. DeAnne marketed it as a project that would help women achieve financial freedom through fashion.
What are LuLaRoe’s Products?
LuLaRoe sells clothes and most of their popular brands are for women. In the beginning, they primarily dealt with leggings. But over time, their catalog expanded to include dresses, skirts and more.
The company has 4 collections:
- Women
- Men
- Kids
- Limited
Their merchandise is available in a variety of colors, sizes, and patterns. The company has made a strong push in its advertising campaigns as noted by their association with designer Patrick Winget.
DeAnne and Mark were introduced to the established designer through relatives. They also built a relationship with Dan Kang who runs MyDyer. A clothing manufacturer with factories in Asia and the United States.
Kang joined the couple in their initiative because he believed in LuLaRoe’s goal of empowering women. He was not wrong. At its peak, LuLaRoe had over 150,000 men and women participating in its program.
How Does LuLaRoe Work?
The LuLaRoe business model is based on multi-level marketing principles. First, the company uses partners to manufacturer clothing items. And LuLaRoe sells that merchandise to consumers through consultants.
Consultants then recruit other consultants who join their team to promote the company’s products. These consultants must purchase Lularoe’s clothing, and after that they can do one of two things.
They can either sell LuLaRoe’s products to the consumers who want them, or they can recruit more consultants who can earn commissions from the sales that they make.
It is not mandatory for all consumers of LuLaRoe’s clothing items to become consultants. However, the company works very hard to push their customers to become consultants where they can be incentivized.
Most of LuLaRoe’s business happens over social media. The most popular method that consultants use to promote their business is through Facebook.
Here’s a snapshot of the company’s social medial guidelines at the time of this review.
How to Become a Lularoe Consultant
To join the business opportunity, you need to visit LuLaRoe’s official website. From there, you’ll need to be connected with a Local fashion retailer who will be your sponsor from the list provided. And then you’ll need to fill out an application form.
Before you can get started, you need to buy some merchandise to be on-boarded as an Independent Fashion Retailer.
You become a consultant when you make an initial order of 300 or so clothing items. The average consultant can spend anywhere between $2,500 and $9,000 to join LuLaRoe’s MLM. The minimum purchase order required is $2,500.
When you purchase LuLaRoe’s merchandise to get started you are buying it at wholesale and then your job is to resell it at retail with a markup. That markup can be twice the price.
Everything you buy as a consultant has a 6-month warranty that allows you to make returns in the case of defective clothing. You need to present the original receipt to get a refund or replacement.
Happiness Policy
The business also has what’s called a Happiness Policy, which permits you to return any item for a full refund or credit, if you’re unhappy with it for any reason. You have 90 days to take advantage of this policy.
The Happiness Policy is one of the most attractive aspects of doing business with LuLaRoe as a customer. Most potential consultants will happily spend $9,000 on the company’s merchandise. Because they believe they can return it all for a full refund if they fail to generate the sales required to make their investment worthwhile.
The LuLaRoe App
LuLaRoe also has an app that is available for download on both iOS and Android mobile devices. It is called the BLESS app and is available in both the App and Play stores.
This app is your one-stop shop for managing your inventory and customers. BLESS allows you to:
- Schedule your Pop-Ups
- Accept card payments
- Receive inventory updates
What is the LuLaRoe Compensation Plan?
Once you have signed up and been on-boarded you are now an Independent Fashion Consultant. You will have merchandise to sell to customers, which can be sold by what the company calls pop-up boutiques in your home.
You can also recruit and sponsor other consultants. By selling LuLaRoe’s products, you will earn anywhere from 35 to 50 percent (of gross sales) in commissions.
From your recruit’s personal volume, you stand to earn a 5 percent override bonus, and a 3 percent bonus on the consultants that your downline bring onboard.
The Compensation Plan seems to be pretty straight forward. There are basically a couple ways to get paid to lead:
- Sponsor
- Train
Here’s an excellent video breakdown of the company’s most recent comp plan.
Pros and Cons of LuLaRoe
Pros
- Anyone can join the LuLaRoe program and start a business in the fashion and clothing industry. And the process of becoming a consultant is very simple and straightforward.
- You can start selling the moment you get your inventory. And you have a variety of selling options at your disposal ranging from social media to personal eCommerce platforms and even pop-up boutiques.
- If you can sell enough merchandise each month and if you can recruit a decent number of consultants, the bonuses and commissions you get are high.
- The company stands for a good cause with a program geared towards empowering women.
- The company has a generous money back guarantee, which allows customers to get refunds if unhappy with purchases for any reason. This is a good selling point for customers.
Cons
- The initial investment is very high compared to other mlm business opportunities at $2,500 to become an Independent Fashion Consultant.
- The clothing market is saturated and selling your merchandise will require an advanced skillset. MLMs are notorious for using Facebook and house parties, which can be challenging in this market.
- The company’s marketing plan of house parties is outdated and not a viable way to do business these days. Their online marketing recruiting platform isn’t automated and needs some work.
- The company has a poor rating with the BBB, which could raise eyebrows of some potential customers. And on January 23, 2019 the Attorney General’s Office of the State of Washington filed a complaint.
- Being in an MLM is a challenge and many view them as cults, scams and not legit. Which would make trying to grow your business an uphill battle.
Is LuLaRoe Legit?
In 2019, it came under fire from the State of Washington’s Attorney General’s office where a complaint was filed under the Consumer Protection Act and the Anti-Pyramid Promotional Scheme Act. It has also been criticized by former consultants who spent tens of thousands of dollars on LuLaRoe merchandise that they ultimately failed to sell.
These same individuals complained that LuLaRoe denied their attempts to make returns. So they lost money and they were stranded with more clothes than they could ever hope to sell.
LuLaRoe has its advocates. And people at the top make the lion’s share of the money like most companies. When you consider the hefty investment required to become a consultant, you cannot help but imagine there is money to be made if you can recruit.
LuLaRoe Better Business Bureau
Technically speaking, LuLaRoe is a legal business. However, not only is it not accredited with the Better Business Bureau, but it has a D+ rating with the BBB.
Revenues
The company saw one of their best years back in 2017 when they generated $1.5 billion in revenue. The company missed my most recent rankings report for top mlm companies by revenue and has been stagnant in the past 4 years. According to Business for Home, here’s a breakdown of their revenue numbers:
2018: $750 million
2017: $1.5 billion
2016: $700 million
2015: $300 million
Conclusion
When choosing a business opportunity, I’m a firm believer that you should do something you’re passionate about. If your passion is clothing and fashion, you might have a solid opportunity here.
Just keep in mind, that this industry is fiercely competitive and $2,500 is a pretty penny to have to lay out to get started, compared to other mlms.
In the grand scheme of things, you can be successful in any business with a little stick-to-itiveness and desire. 🙂 And when considering startup costs of other types of businesses, $2,500 is a drop in the bucket.
