Is LuLaRoe a Scam? A Must-See Look Inside This Expensive Business Opportunity
LuLaRoe gets a lot of hype, both online and in the real world. But most of this hype comes from people promoting the brand and looking to earn a buck. So can you believe what you hear? Or is LuLaRoe a scam that is out to get you?
I have reviewed LuLaRoe’s business opportunity and if you are interested in this then I suggest you keep reading. There are some things that you should definitely know about it before you decide whether or not you want to dive on in without being able to back out.
- Website: www.lularoe.com
- Startup Cost: $5,500 (Yikes!…I will go over this)
- Recommended?: I’ll go over this at the end
LuLaRoe started in 2012 by Deanne Stidham and is a fashion clothing company that has a rather unique business model when it comes to this type of business.
Their entire business model is based around independent contractors, which are just regular individuals who want to make money selling LuLaRoe fashion.
Anyone can sign up to become what they call a “fashion consultant”. As a consultant you will buy LuLaRoe products at wholesale price and then sell them at a markup, thus earning you money.
And not only can you earn money by selling LuLaRoe fashion directly to customers, but you can also earn by recruiting new consultants, just like you, into the business.
Cost To Get Started
The cost to get started with LuLaRoe is a major turnoff for many…. because its a heck of a lot. The minimum to get started is $5,500.
This is because in order to get started you have to purchase a Starter Kit, which consists of 381 articles of clothing at wholesale price. If you do the math each product averages out to around $14.50. Now of course some are more expensive an some are less, but that is the average.
There is no way around the $5,500 start up price. Every consultant has to buy this starter kit to get going. But if you are good at selling and have knowledge of fashion, this isn’t impossible.
Other than the incredibly steep startup cost, there is nothing else that is require. There is no interview, vetting, or anything.
The 2 Ways To Make Money
Working as a LuLaRoe consultant you can make money in two different ways. You can sell the products directly to customers and you can recruit new members into the business.
There is no set price that you have to sell the LuLaRoe products that you buy for. That is up to your discretion as a consultant. LuLaRoe encourages you to markup the price by 40-60%, but that is up to you.
If you do markup the price of products by 50%, the starter kit will earn you $11,000. So that is a $5,500 profit because you paid $5,500 to buy the products wholesale.
Recruiting New Members
LuLaRoe is what you call a MLM business. This means that there is a hierarchical pyramid structure and consultants can recruit new consultants to work beneath them, and in turn you can get paid from the efforts of those beneath you.
You get paid 5% commissions from what your recruits buy wholesale from LuLaRoe. But in order to qualify for this commission each month you will have to purchase $175 worth of wholesale products.
On top of that you get paid bonuses when those beneath you move up the ranks. Moving up the ranks comes from selling a lot of products, so you are kind of indirectly getting paid from the products the consultants below you sell here too.
How Much Money Can You Make?
As with pretty much every MLM type of business, it is much more difficult to be successful if you get in the game late. The money is in the recruits. Recruit, recruit, recruit, and you will make money. If you want to make good money it is going to be hugely beneficial to be a recruiting machine.
But now that LuLaRoe has been around for a while the market is getting more and more saturated, which means it is more difficult to recruit.
Most LuLaRoe consultants don’t make that good of money. According to CBS MoneyWatch, over 70% of consultants earned less than $5,000 in a months time. And only 5% of consultants were able to make $10,000 or more a month.
And according to GlassDoor, where individuals can submit their own salaries and reviews, most people earn very little…
There are a lot of complaints about LuLaRoe. Some of the more common ones include…
Poor Quality Clothing
There are a lot of complaints about the quality of the clothing, especially over the last several years. The leggings seem to be the hot topic for this type of complaint, with many reviews of easily ripping and tearing. This makes consumers unhappy and makes it harder for consultants to make money selling.
Many people think that it is ridiculous to have such a massive startup cost, and I have to agree. If you want to be a consultant you better not be hesitant about that decision, you are going to need to be all in.
Horrible Customer Service
The consultants deal with the customer service. And many consumers find it very hard working their way through the web of many consultants to find the one that sold them their product or find one that is willing to help.
I have read multiple times that consultants are encouraged to “rat out” other consultants when guidelines are not followed. This leads to bad and tense relationships between consultants, which work for the same company.
Final Thoughts About This Opportunity
I have never been too big of a fan of MLM businesses because they usually are only a great opportunity when they are just getting started. Recruitment is the name of the game if you want to make serious money and that is easiest at the beginning.
There is definitely some opportunity there with LuLaRoe, but the market is becoming increasingly saturated and increasingly difficult to make money in.
I would only recommend becoming a LuLaRoe consultant if you are really into fashion, know how to sell, and are going to go all in with this. If you aren’t this, then I would stay away. The startup cost is too high to get passed.
What are your thoughts on LuLaRoe? Comments, questions, concerns?? Leave them below…