The Inventory “Investment” Con in Mary Kay

The secret to getting Mary Kay consultants (especially new ones)  to order lots of inventory is overcoming their objections. New consultants typically are skeptical about spending thousands of dollars on inventory that they’re not even sure they can sell. But no need to test the waters and hold a few classes before you order! ORDER NOW! You’ll sell tons. Trust me.

And so the con game goes. You want to be successful, don’t you? Would a store open without anything on its shelves? Do you think women really want to wait for their cosmetics? Order now. Order often. Have lots on hand and you’ll be successful.

Still not convinced that you need to order thousands of dollars of inventory from the start? Your Mary Kay director will bring out the big guns: It’s an investment.  Debt bad. Investment good. Investment is not debt. Credit card or not, it’s not debt. It’s an investment. Get it? An investment in your family’s future.

More is more. More is not less. Not less money to feed your children. Not less money to put clothes on their backs. More products means more opportunity to profit.

And the below story is one that has been circulated for years in Mary Kay. There’s only one huge problem with it: The story assumes that you’ll be able to sell all of the inventory you’ve ordered. Anyone who’s ever been in Mary Kay and is honest about it will tell you that it is extremely difficult to sell the product.

Oh yeah, there is an occasional woman who is beating down your door to order something. Once in a while you’ll find a hostess who has 8 women show up for your class and you get 5 new bookings. But those instances are so few and far between. The truth is that very little of the Mary Kay products are actually retailed. The vast majority (I estimate more than 80%) actually sits in basements and garages.

So while this “investment” con sounds great when you’re in the pink fog, those of us out of Mary Kay recognize the story for what it is: pure fiction.
We have some money to invest and I was thinking about the story one NSD told. While she and her husband were lolling around the pool he said, “Honey, I meant to tell you; I invested $10,000 in (whatever) and we will make 7% interest in 7 years.”

She said, “Oh, really?” He said, “What’s wrong?” She said, “Nothing.” He said, “I know something is wrong; what is it?” She said, “I know you think of yourself as a great businessman.” He said, “so tell me what’s wrong.”

She said, “Well, I was thinking that if you had invested the $10,000 in Mary Kay products, I would have received 13% (her Unit Commission) on $10,000 immediately – that would be $1,300, plus, some gorgeous prize, probably a TOP TRIP with Mary Kay and 50% – $10,000, when I sold it!

And it wouldn’t take me 7 years to sell it! That would be $11,300 we would make on our $10,000. A consultant with 5 recruits would make the same commission as the NSD!

Do you look at your MK inventory as an investment, or something you hope you can sell? What are you making on your Money Market Account? 4%, 5%? How about your savings account, 2 1/2%, and CD’s, 5%? If you’re doing GREAT in the Stock Market you may make 15%, (and no one is doing great in Stock Market right now), or you may lose it all! We have looked into different plans such as an annuity which makes 7% if we invested $15,000 and leave it there for 10 years. Bonds could make 4% or 5%, if interest rates are high, but they’re low so that won’t work.

I have money in a IRA. That’s good. However, I am past the age where I can add to it and if I take it out I am taxed on the full amount THIS YEAR. Everyone is telling you to plan for your retirement. I do believe that you need to start some kind of retirement RIGHT NOW!

Oh, you aren’t making enough money to save any? Work your MK (along with your regular job) and put your profit into a retirement account. You say you don’t have time to do anymore than you are doing now? Sure you do. You better, if you want any money when you’re 65 or older.

The best interest you can get on your money RIGHT NOW is to invest in your Mary Kay Inventory (at 55% UNTIL JUNE 28TH) and learn to be the best Mary Kay Consultant in the business. Listen to motivational tapes in your car daily. Other consultants are doing it. Find out how.

Do you get tax benefits at your other job? What if you can’t sell it? Oh, well, the only reason you wouldn’t be able to sell it is if you never told anyone that you were a Consultant. What if you have to send it back to Mary Kay. So what! You had to have sold some of it at 50%. You can’t lose any money.

What about the interest on the loan? What about it? When you are working a profitable business, making a lot of money you need tax benefits. It is important to get your TAXABLE INCOME down to as close to zero as possible. Say you are making $40,000 at your job, then want enough tax shelters to get it down to as close to zero as you can. You probably don’t have ANY tax shelters working for someone else. With Mary Kay you do!

Maybe you do want to quit your job but you say, “The Company pays for my insurance”, not true, the Company doesn’t pay for your insurance, you do! They just don’t pay you what you are worth because they are using the money they should pay you to pay your insurance. DO YOU KNOW YOU CAN PAY FOR YOUR OWN HEALTH INSURANCE? THINK ABOUT IT!

12 Comments

  1. Char

    Brain teaser:

    MK customers are encouraged to be big spenders, where it’s suggested they can easily charge double retail for products to others; but at the same time, MK convinces the original customer to send the double retail paying customer directly to MK – to place a big order and become a customer. Repeat.

    What’s the name of the actual retail customer? And who is paying double retail?

  2. cindylu

    Just wait for it. The company doesn’t care one iota about its mostly female sales force. Buy inventory and soon afterward it’ll change and some of it will become obsolete. Your director will convince you to get the seasonal useless products: men’s unsellable junk, perfumes etc. You’ll be advised to hold an open house. You’ll spend hours packaging and making the products look nice. You’ll invite those women you know. In the year 2018 women will avoid you like the plague. For decades women have been scammed by these mlm’s. Maybe a sympathetic friend will buy a few smaller items. Your tea and coffee will be a waste. This will happen for most useless time consuming, humiliating open houses or any other stupid idea MK promotes to sell their has been products. The Directors can try to persuade the IBC’s that this is a great company. The reality is MK is not advertising anywhere main stream. No commercials, no real magazine ads, no radio ads etc. Absolutely no help for those trying to sell this decades old dream. Sadly the directors are brainwashed and surprisingly good at conning new IBC’s into joining and buying products. After all some of the Director’s and failed SD’s have been conning hundreds of women for decades. In the end even with mandatory meetings, fake conferences and cheaper trinkets given for ordering products, most women realize they’ve been deceived. MK is not dual marketing. It is an mlm. The Faith, Family, Career and “Golden Rule” philosophy are a myth. Directors do not make executive income. The products do not fly off shelves. You will leave MK humiliated, confused and disillusioned with a company that has exploited women and ruined families financially and otherwise for decades.

  3. ran4fun

    “Say you are making $40,000 at your job, then want enough tax shelters to get it down to as close to zero as you can. You probably don’t have ANY tax shelters working for someone else. With Mary Kay you do!”

    I think she is confusing tax shelters with business expenses. If the cost of doing business costs all your profit you will get to zero and owe no taxes. You will also have no income to feed or clothe your family.

    This whole idea of MK people don’t pay taxes was a big lure for my loved one. Such a scam, as they “mentored” her into thousands of dollars of credit card debt.

  4. Lazy Gardens

    You probably don’t have ANY tax shelters working for someone else

    WRONG! you are ignoring the IRA, the 401K, and the stock bonuses. Those are TRUE tax shelters because that income gets sheltered BEFORE taxes are paid on it and gets held aside until your tax rate probably has gone down. I knew people who retired after a few decades of working in semiconductor fabs whose net worth (in stocks and 401K and IRA) was over a million.

    And your employer kicks in some 401K money. And pays half the Social Security tax, too.

    “It is important to get your TAXABLE INCOME down to as close to zero as possible. Say you are making $40,000 at your job, then want enough tax shelters to get it down to as close to zero as you can.

    No, I want to have taxable income, because if I spend it all on business expenses, I will have NO MONEY LEFT TO SPEND ON ME! It’s not about how much tax you pay, it’s about what’s left to spend on rent and chocolate.

    Let’s pretend my friend had a small freelancing business with income of $60,000 and she followed the above advice and racked up $40,000 in business expenses: went to several writing conferences in posh places, got all kinds of office equipment on leases, signed a lease on a fancy office – ran that taxable income right down to ZERO.

    Then let’s pretend I had a small freelancing business with income of $60,000 and did the prudent freelance thing and kept expenses to a bare minimum: two professional conferences, one local and one further away but a “name” conference ($2,500 for fees, travel and hotel); had a home office with the same inexpensive equipment that I’ve had for a few years ($500 for supplies and a new keyboard and modem) … and that’s my expenses.

    Oh horrors, I have $57K in taxable income! To simplify things, pretend I live in a state with no state Income tax and don’t itemize a thing. Wyoming, for example.

    With $57K in post-business deduction income I will pay the IRS about $6K in taxes, Social Security about 3500, Medicare about 800 and have FORTY-SIX THOUSAND DOLLARS TO SPEND ON ME!

    That’s a lot of chocolate.

    1. MLM Radar

      Exactly right. Winning the game is not about how much you make. It’s about how much you keep.

      If your Mary Kay “business” gets you a bigger tax refund, it’s only because you lost money. When you’re in the 15% tax bracket, you have to lose $1,000 to reduce your tax bill by $150. Yes, you get that $150 refund from the IRS. But the other $850 out of that $1,000 is gone forever.

  5. BestDecision

    I’m so sick (still!) of all the bashing for working in corporate America. Not one of the Directors in my lineage are farther along in over 5 years since I left. Unit members I gave up are either just now making to Red Jacket or still aren’t even there yet!

    And June? This entire month is madness of racing to get every contest hit and every bit of production you can get out of these 30 days. Oh, but then they’ll beat the first few days of July how they’re “so glad they have choices” and can go on vacation.

    But, I can, too. Only, I no longer fear missing out on opportunities to make goals and production requirements every month. When I’m off, I’m REALLY off. And I have benefits 24/7 that my employer pays, a car I don’t worry about losing at the end of 6 requalification months and the embarrassment of visibly going backwards. Nor do I have to hide that I missed a goal or cleverly brush it off and brag hoe focused and committed I am to Seminar 2019.

    I’ll say it again: If you or your Director aren’t in a 2016-2018 Cadillac, the most you/she could possibly be grossing is $46,000/year after taxes.

    Don’t forget to subtract expenses from that total, including the fake jewelry prizes and Seminar goody bags that a Director is buying right now.

  6. MK-B-I-L

    $10,000 invested for 7 years at 7% = $16,000.
    $10,000 invested for 14 years at 7% = $26,000.
    $10,000 invested for 21 years at 7% = $41,000.
    $10,000 invested for 28 years at 7% = $66,000.
    $10,000 invested for 35 years at 7% = $107,000.

    Oh, by the way S&P500 is a 12% average for any 20 year cycle.
    So, $10,000 invested for 35 years at 12% is $528,000.

    But yeah, keep that inventory investment.

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