MARY KAY COSMETICS: A Scam Club for Girls? (Guest Post)

July 20, 2008 Franchise Publicity

(FranchisePick.Com) This is the latest in a series of guest posts on the Mary Kay cosmetics business opportunity.

This post is from SCAM, who blogs at Scam Types.

Are you a Mary Kay consultant? Ex-consultant? Customer? Ex-customer?

Please share you experience and opinion with a comment at the bottom of this post.

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Is Mary Kay Cosmetics a Scam Club for Girls? by Scam

‘You may think I’m foolish
For the foolish things I do..’
“Pink Cadillac” – Bruce Springsteen

Was the Boss singing about Mary Kay, a multi level marketing cosmetics organisation?

Of course not, but his lyrics may have some meaning to their business… let’s find out..

Mary Kay Ash

Mary Kay Ash was a mother of three in the 1930s. Her and her then husband often found it hard to make ends meet and so Mary began selling books to supplement the household income. During her first 6 months, she sold a remarkable $25,000 worth of books!

In 1938 she divorced her cheating husband and joined Stanley Home Products, selling via home parties. She was successful for 25 years and enjoy selling. However, she felt that women were underpaid compared with their male counterparts. She also felt that her good ideas for the company were ignored and rebuked, purely because she was a woman.

After retiring, she began to write books for women, designed to aid them with the challenges they faced in the workplace. Compiling 2 lists, one detailing the positives about companies and the other detailing the negatives, Mary Kay Ash began to realise that she was listing the qualities that could be used to form what she thought would be the perfect company.

With her life savings of a few thousand dollars, she began Mary Kay Cosmetics 13th September, 1963. With the help of one of her children, Richard Rogers, she was able to build the company up to the point of having over half a million independent beauty consultants who host parties and give demonstrations as they sell the company’s perfumes and cosmetics. In 1996 retail sales hit the $2 billion mark.

MLM

Mary Kay Cosmetics sells it’s products through multi level marketing, much like Arbonne, for example. As I looked for figures to determine how much product is sold by each consultant on average I discovered that Mary Kay Cosmetics is extremely secretive about such information. I would have to wonder why.

Multi level marketing involves selling products primarily, often with bonuses or commissions for recruiting new distributors, or consultants. On the other hand, a pyramid scheme, which is illegal, puts most or all of it’s emphasis on earning through recruitment, with any product sales being very much secondary to that cause.

Which category does Mary Kay Cosmetics fall into?

If you check out their website then you will see that the company is most definitely selling products, but are they viable?

The detractors of Mary Kay will highlight that they are not very competitvely priced. Not being the type of man who wears cosmetics, I couldn’t possibly have an opinion on that – perhaps some of the ladies could comment on price competitiveness? If products really are overpriced then that may push people into having to recruit to make any money, whether by accident or by design.

The majority of comments I found across the internet suggest that most Mary Kay consultants are not making much money – in fact several have lost money and those in profit are making only a couple of hundred dollars per year. Of course, these figures are subjective and open to interpretation – low earnings could be deliberately misquoted by those who are anti-MLM or disgruntled ex-consultants. Likewise, business takes hard work and it could, perhaps, be argued that the low earners don’t have what it takes.

Other criticisms include the fact that Mary Kay pushes an almost cult like belief that negativity has no place in their organisation. This means that only positive comments are given any credence and any consultant who highlights their failings risks being ostracised.

Also, at the time of recruitment, there are many stories of new consultants being required to but inventory. Of course, this sounds perfectly legitimate – how else do you sell cosmetics if you don’t have any stock? However, there are a lot of reports of pushy directors who try and get their new recruits to but the largest package of stock ($4,800 worth) rather than the minimum $600 package. Presumably, this is because they then earn a much bigger commission cheque?

There are also comments about how moving up the ladder within Mary Kay is dependent upon sales volumes. Again, this isn’t strange – the more successful people always rise to the top in any business venture. However, there are reports about people buying huge amounts of inventory, solely to gain promotion. Doesn’t sound quite right does it??

Pink Cadillacs

random pink car

Some time ago, Mary Kay hit upon the idea of leasing cars to it’s consultants and directors. A great piece of marketing for the company.. who does it really benefit?

From what I can make out the consultant, who is at the low end of the scale, receives a car as long as they continue to generate $4,500 per month in revenue. Should they ever fall below this level then they will suddenly start getting billed $375 per month until they get their revenue back up to the prescribed level again.

Considering all the conditions, qualifying amounts and provisos of first obtaining the car, it can be said that a mere consultant will need to have generated $130,000 in revenue before being able to drive their red Pontiac Vibe.

That figure increases to $576,000 for a director who wishes to have the pink Cadillac.

I guess that means you have to work pretty damn hard to get to lease a car for ‘nothing’.

Conclusion

As with most of these MLM companies that I look into, nothing is ever crystal clear (in most cases).

I expect any comments below to be split between those who have been burned by Mary Kay and those who are reputedly making a good income from it.

It would be fair to say that those pushing recruitment ahead of retail sales may be individuals looking to make money rather then people following any company guidelines.

I personally would stop short of calling Mary Kay Cosmetics an illegal pyramid scheme, however, I believe they are an MLM through which hard working women are likely to see very little return on their investment.

That’s my opinion… what do you think?

Verdict : Probably not a scam, but probably not a winner either.

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Scam is a retail manager from London. England. After a good friend of his fell prey to an email scam he decided to write about internet safety and security on his blog, Scam Types.