What is LuLaRoe?
For those of you who are still unsure what LuLaRoe is, it is a direct sales company geared toward women that sells fashionable yet comfortable clothes. Actually, the business tagline is: “Where fashion meets comfort.” It initially became popular through their leggings, which come in various colors and unique patterns. Recently, they expanded what they offer and now carry tops of different styles as well.
How does it work?
During a previous interview on what makes consultants successful, Leslie* told SavingAdvice that individuals will invest an initial $4,000 to $6,000 of their own money. These costs go to an initial start-up kit, from which, upon receiving, you can immediately start selling. Sellers can expect to make a 35-60% profit from each item sold. It is important to note, though, that this $6,000 does not include any additional business costs that may be necessary, such as hangers, storage for the inventory, marketing costs, and so on. Despite this, this does not seem to be too much of a deterrence for women looking to become a part of this multi-level marketing company. Also included with the initial costs are tools and tips to get started along with a coach. This person serves as a motivator and mentor in helping you become successful as a LuLaRoe consultant.
You continue to purchase your inventory wholesale and host “pop-ups” online, and as you increase your sales, both through coaching and direct selling, you are also paid bonuses through LLR headquarters. According to their income disclosure statement, the average overall bonus amount paid in 2015 was $91.65 per person.
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What is the LuLaRoe business model?
When you are a part of LLR, you are marketed as a fashion consultant but you do not receive a salary or freelance fee from the company. Sellers are responsible for their own taxes, as any independent contractor would be. Profits are based on sales, and as you recruit people to sell under you over time, you would be considered their “upline” or coach, allowing you the opportunity to make more money. However, coaches also take on the responsibility of essentially managing their “downlines” by consistently following up on their sales, giving them the tools to increase their own income and more.
Each seller receives different inventory and may contain some pieces that are considered “unicorns;” that is, very rare patterns in high-demand. This allows multiple consultants in one area without selling the same exact product, which is different than those with Avon or a similar MLM. This is one of the aspects that makes it particularly attractive for women to become involved as more than just a consumer. Not just that, but their merchandise is only available to buy through people; there is no online store nor is there a brick-and-mortar for people to visit. LuLaRoe is all about the face-to-face interactions with sales.
For any business, it typically takes money to make money, and this holds true with LLR too. Although you hear stories of many consultants who make enough of a profit that they were able to quit their job in six months, this is not always the case. Although the company attempts to give you the tools needed for success, it is ultimately up to you to ensure it works out.
The LuLaRoe business model was developed as a way to provide stay-at-home moms with a viable source of income, while also tapping into their creative side. Basically, LLR consultants are treating this as their own business, but with some limitations due to branding guidelines and policies. This creates a sense of entrepreneurship to the women involved while also reducing employee costs to the company.
Is it sustainable?
According to this Business Insider article by Hayley Peterson in September 2016, moms across the nation are making a substantial profit. In fact, many of these women actually claim to be consistently making six figures annually. The proof appears to be in the numbers, but only time will tell if LuLaRoe can continue to adapt to maintain its success as a business.
What are your thoughts on the LuLaRoe business model?
Photo credit: Flickr user wild_cherry_1228
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