As a follow-up to yesterday’s article about sales directors ordering too much inventory, let’s go back to ABC’s 20/20 segment about Mary Kay and Pink Truth. Two of the biggest problems in Mary Kay Cosmetics are the lack of retail sales of the product and consultants and directors having large stockpiles of inventory. Watch below and then continue reading.
When asked by 20/20 how Mary Kay knows “… that the product isn’t ending up in people’s basements,” Laura Beitler replied:
“Oh, trust me Rebecca. We know that women love to buy Mary Kay products over and over again.”
See what she did there? She didn’t answer the question. She was asked about products being stockpiled in basements, and the best answer she could come up with is that women buy Mary Kay products.
Sure, women buy the products. But in what amounts? How does Mary Kay know that all of those “star orders” are ending up in the hands of actual consumers? The fact is that most of the product does NOT end up with a customer. Mary Kay knows this, so they choose to track only orders placed by consultants, rather than tracking actual retail sales. Ignorance is bliss! The company gets to pretend that most of the products sold to consultants are retailed to actual customers.
Then there is this little tidbit that Mary Kay used to attempt to prove that there are lots of retail sales:
The company says tens of millions of dollars of consultant orders are shipped directly to consumers every year.
That sounds impressive, doesn’t it? Tens of millions…. or something between $20 million and $99 million… is shipped directly to consumers. Impressive, until you do the math. Mary Kay says they sell $3 billion wholesale annually:
That’s $6 billion of products at retail pushed out Mary Kay’s door each year. They brag that “tens of millions of dollars” go directly to customer. This means that something between 0% and 2% of Mary Kay’s yearly sales are shipped directly to customers. What about the other 98% or more of products that are in the hands of consultants?
You can’t have it both ways, Mary Kay. You can’t fail to track actual retail sales, then claim that lots of retail sales are occurring. If you’re not tracking sales, you don’t know. The anecdotal evidence is very clear: If you walk away from your encounter with Mary Kay without unsold/unwanted products on your shelf, you are one of a very select few. (And you certainly won’t get to the levels of top director or national sales director without hoards of product in your basement or garage.)
We’ve heard it all before. When Harper’s magazine ran an article called The Pink Pyramid Scheme in August 2012, Mary Kay had some damage control to do. In an interview on NPR, Mary Kay’s Laura Beitler claimed that “…the majority of the product ends up with end consumers.”
The lie behind that statement was exposed here by The Scribbler:
False. Ms. Sole-Smith was quick to remind Beitler that “Mary Kay doesn’t track their retail sales. She can’t tell us how much they’re actually selling to the retail market.” while Beitler tried to suggest that “…when you look at all the beauty editor mentions we have in magazines regularly, being named as a top beauty brand, you don’t get there without having a significant number of end consultants, consumers in the mix.”
Beitler’s logic is fractured, as she assumes that because Mary Kay gets beauty editor mentions or gets named as a top beauty brand, this must mean that that the majority of the product is being sold to end consumers. Again, without proof of retail sales, Beitler cannot accurately make this claim.
Mary Kay has a vested interest in pretending that the vast majority of products sold to consultants ends up in the hands of third party consumers. If it didn’t, the company would be nothing more than a glorified pyramid scheme which uses mediocre cosmetics as a front to look like a legitimate business. Wait a minute…..