LuLaRoe - MLM or Pyramid scheme?

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So I have month on Amazon Prime TV up to Christmas and love a good documentary. This one caught my eye, the tale of LulaRoe.Inc, a work from home clothing selling company that went from rags to riches, if you excuse the pun. Some of our American Mylotters will know all about the brand and may even have bought some of it, lucky enough to own some garish colourful leggings to cover their cellulite and stacked bootys. Few will know the true story of its rapid rise and very public fall. I now do and its fascinating how these things work. The business was targeted at middle aged white women in the burbs and the products purchased by middle aged white women in the burbs and so grew exponentially in its first decade. It was – is – run by whirlwind De Anne Brady and the more subservient Mark Stidman, a husband and wife team and a match made in heaven. Both are Mormons and being part of that church helped them to set up in business together and find willing customers in the communities, and then a physical partnership and marriage grew out of that mutual respect to make some money. We learn that they started a clothing business together, mostly selling leggings to women home alone, those same women that could also become retailers with LuLaRoe - parents, single moms, housebound and you name it targeted, anyone who would buy their rainbow coloured ware or, indeed, wanted to sell it. Lularoe didn’t have physical stores but an online operation. Its growth relied on social media – another marriage made in heaven for this iridescent and internet friendly business. The basic premise to be a LuLaRoe ‘business partner’ is you buy a starter pack of stock and instructions to start your business for around £2500 dollars and you can then decide your profit margin when selling it your way. Women liked the idea of being allowed to work from home around bringing up their kids and been seen as business women even more engaged in it. They felt empowered by the opportunity and began to make money on their terms. The company played on that female emancipation a lot. LuLaRoe crawled off the start line in its 2012 start up year but quickly accelerated around 3 years later. We then get into Multi Layered Marketing territory where people known as retailers buy that minimum package but after a while realise getting to keep the profit from selling is ok but referrals is the real money. They maybe make 20% profit on sales and so tell their friends of this business opportunity as they are having fun so why not try it, buying more and more stock to grow their business. But for every friend they introduce to the company they get a 5% bonus off their friend’s sales, when they reach the second layer in the pyramid by meeting a target. If they get ex amount of introductions in for Lularoe they move up to the next level, ‘trainers’, and if they work hard, move up the stack again, earning higher and higher bonuses as they progress up the pyramid from all those layers below, again realising that the big money is not in selling the leggings so much but referrals. In fact the ladies at the top were on 95% bonus and 5% sales revenue. Why would you slog around selling leggings when you can make tenfold on referring friends? The documentary nudges at that first real deception at this moment when some of these women on camera realise they may have been exploiting people - fellow women - but still don’t know what a pyramid scheme is and just see the money rolling in and got on with it. The retailers that did know it was a pyramid scheme were clearly not saying that in the film. In fact you d wonder if there are vast amounts of people who move from different pyramid schemes and know when to get out. That subtlety in the participant’s body league and facial expressions on film when pushed on these points by the unseen interviewer is the documentaries strength. Have many ‘googled’ their company and realised the scam and just cracked on, hoping to push the blame on to the owners to lift their shame and blame in the film? The director doesn’t expand on that side of things but left to the viewer to decide their complicity. A lot of women lost a lot of money after the companies peak, the social media that had given LuLaroe rocket fuel growth the thing that bought it back down in the end. Its believed around 70% of its 87,000 business partners could never make money, due to the nature of the pyramid. MLMs are not illegal in America but Pyramid Schemes are. There is a slim difference between the two. It turns out the company, at its peak, made $1 in sales to every $100 in referrals and bonuses on the balance sheet. The authorities caught up with them but the documentary didn’t reveal their end game, the couple defiant that this was not a pyramid scheme and carried on trading, even until today, even after numerous police and legal interviews. Did they set it up as a pyramid scheme or just end up one? Who knows? What we do know from this enjoyable film is that America has a lot of these companies, some of them created back in the 1960s! Herbalife from the 1980s is one of the most notorious. 50% of the new surge of these MLMs are wellness product related, again most targeting women. Antivaxers that feel betrayed by the US health system are driving it, another gullible group of Americans buying useless wellness products to stick it to the man. Now I’m not saying women are more gullible or devious in these schemes than men. If you are making 20 grand a month bonus then why wouldn’t you go along with it? It also explores the cult like sales approach on how the women are deliberately hyped up and empowered by the managers at various seminars and free concerts so to make them more likely to encourage the business model. LulaRoe even had a feminist mantra of sidelining your man and concentrate on your business first. Moms lost everything, including their home and even their man, when they got in too deep. These multimillion dollar schemes will increase as A.I and social media entrap us in our homes. It’s only going to get worse. Current top 5 LML Companies Amway .5.4 billion Herbalife 5 billion XP Reality 4.3 billion Primerica 3.9 billion Mary Kay 2.4 billion