According to statistics, an American woman adds an average of 64 pieces of new clothing into her wardrobe every year. That means, more than half of the population shops online for a new piece every 6 days. For independent fashion retailers like Lularoe, this offers a huge business opportunity. But, is Lularoe worth the investment in an already saturated fashion market?
Let’s find out what goes behind the scene.
What Is Lularoe
Established in 2012, Lularoe is a direct sales organization founded by DeAnne Brady Stidham, who has years of experience in selling female clothings. The product range includes brightly printed skirts, dresses, blouses and the much sought after leggings, which typically sell for $25 to $75.
While the company hasn’t really disclosed their profit earnings, it is estimated that they have a strong network of more than 20,000 fashion consultants and more on the waiting list.
How Does One Become a Consultant?
In order to be part of this business, you need to sign up under a sponsor (preferably within your area) and submit your details through email. When the application is approved, you may order your inventory at wholesale, have them shipped over for free and sell the clothes at a 35% to 50% mark-up price.
Sounds very profitable, right? Well, here are some reality checks.
The Challenges of Selling Lularoe
(1) The Waiting Time
Even though the application process is fairly simple, you don’t actually become a fashion consultant immediately. The company takes 3 to 5 days to process the documents, put you in the queue before they confirm your membership through a phone call.
Waiting time varies (some up to 3 months) and training is often recommended, especially if you are new, before you can sell anything. Your sponsor is usually the person who will guide you.
In the eCom world where things are processed with a click of a button, I find that Lularoe moves at a slower pace. I mean, with an online business, you can typically set up a website within 3 days (no approval required) and literally earn your first dollar in 3 months time.
(2) The Costly Investment
As stated in the title, you will need a 4 figure initial investment into this business. Here’s an overview of the inventory you can expect to pay;
- Package #1 – $4812 (336 pcs)
- Package #2 – $5365 (365 pcs)
- Package #3 – $6784 (463 pcs)
Don’t raise your eyebrows just yet because that’s not all. Pop up boutiques (aka setting up small store fronts) are Lularoe’s main way of selling. So you’ll need physical infrastructure to display the clothes such as foam mannequin, hangers and storage boxes.
Obviously, this adds to your costing and speaking of storage, those staggering number of clothes can take up A LOT of your home space. If you’re planning to use your house as a selling point, you might even extend to your basement to keep all that growing pile of clothes.
So before you start this venture, ask yourself – do you have that kind of space?
(3) The Selling Hustle
The contemporary way of selling Lularoe is through face-to-face contact. Whether it’s hosting fashion parties in your home, at someone else’s place or in a fund raising event, that’s all in compliance with the company’s policy.
You are also allowed to sell online via social media such as Facebook, Instagram and Periscope. In fact, I found that their social presence is relatively strong when compared to other direct selling companies. But this type of selling strategy requires a lot of hustling.
You need to prepare promotional material (flyers, business cards and etc.) in advance, plan for the time, venue and arrange products for shipping. This is great if you are a stay-at-home mom or have flexible hours to work with, but how many of us actually have that luxury of time? I certainly don’t.
On the contrary, I am quite surprised that their regulation forbids consultants from selling through personal websites. Yup, you read that right. You aren’t allowed to promote through any form of online stores.
To me, that’s absurd because that’s like doing eCom 10 steps backwards. An online store can help you sell 24/7. That’s passive income we are talking about and that’s what major fashion retailers and budding designers do to generate sales every minute.
So even when you don’t have access to Wifi or a bad weather prevents you from traveling to an event, you can still rely on this method to sell the clothes. This is such an important factor to move your inventory. What’s the point of storing them in your basement when you can’t use all the avenues to sell them?
(4) Shoddy Payment System
From this point onwards, the fact gets murkier. Lularoe uses their own point-of-sale to process transactions. The previous version called ‘Audrey’ was reportedly sued for overcharging sales tax on customers when it wasn’t supposed to.
The company defended themselves by saying that it was a ‘technical error’ and has since rolled out a new system called ‘Bless’. While the latest one hasn’t caused much trouble, it would only work on Apple products, not Android. So if you don’t have a MacBook or iPhone, it’s time to get one. That’s more addition to your already costly setup.
(5) Defective Product
Even though the company claims that their clothes are of good quality (made in the US), customer testimonials are revealing another side of the story. Thin fabric, poor workmanship and pants that tear easily – these are some of the complaints that are circulating online especially on YouTube.
Imagine spending 5K for such an inventory and the trouble you have to go through processing all the refunds. Will future clothings and customers suffer from similar wardrobe mishaps? There’s really no way of telling because Lularoe doesn’t seem to provide any transparency about their manufacturers either.
(6) Recruiting for Profit (Or So You Thought)
Apart from the funky fashion, there’s another reason why Lularoe is appealing – multi-level marketing and that’s what attract more than 80,000 women to join the company.
You see, in order to run a profitable business with this brand, you’ll need to recruit new consultants so that you can be eligible to earn 5% bonus from the personal volume of the direct downline and 3% from the generation thereafter. Typical MLM pyramid, right?
However, there’s a caveat to this. In order to receive the bonuses, you must purchase an additional 175 pieces of clothing in the calendar month for which the bonus is calculated.
The good news is, you can add varieties to the inventory. The bad news is, it’s a costly endeavor which requires more hustling to sell and literally more frustration if you are stuck with more clothes. Can you see how all this could snowball and eventually become an avalanche that’s too big for your business to handle?
(7) Sales Quota
After your application went through and you received the first package of inventory, the countdown begins. In any one month, you must produce a minimum sale of 33 units in order to remain as an ‘active’ consultant.
If you can’t sell at least 99 units within 3 consecutive months, you’ll be considered ‘inactive’. Do that for two consecutive 3 month periods and your partnership with Lularoe will be terminated.
Having sales goal is important, but such quota has to also be realistic and it all boils down to how you (are allowed to) market the product and the cost that comes with it.
Remember the no-online-store rule? That’s limiting. Remember how you need to scour for racks and make posters for promotion? This is all money that you need to fork out from your own pocket even before you earn anything.
No, thank you for me.
So, Is Lularoe Worth The Investment?
Even as someone who has never been involved in clothing retail, I could tell that Lularoe is a high-risk business. It is all because you are tied to an inventory and there’s no full control over product choices and marketing channels. Plus, fashion trends can be unpredictable. Who knows when printed leggings will become outdated? Maybe floral blouse wouldn’t be popular next season.
The red flag message here is very clear – if you don’t sell fast enough, you’ll suffer the cost and walk away in debt.
There is, however, a better (and safer) way to get involved in the fashion niche and still earn a living from it. Ever heard of affiliate marketing? It involves choosing a merchant/brand that you personally like, promote the products through blogging and earn sales commissions as a result of your effort.
No inventory, no quota and no recruitment.
If this sounds like a better deal, then head over to my recommended training platform to see how you can get started for as low as one dollar per day.
Have you been involved with Lularoe or other similar programs? What are your thoughts about their business model? I would love to hear about your comment below.
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