Women Join Mary Kay to Make a Little Extra Money

Let’s take a look back to the 2012 Harper’s Magazine cover story, The Pink Pyramid Scheme: How Mary Kay Cosmetics Preys on Desperate Housewives. Mary Kay Inc. immediately responded to the article, but with almost no substance. There have been two primary arguments corporate representatives use to “prove” that Mary Kay is not a pyramid scheme and is a real business opportunity (no, it’s not):

Mary Kay products are sold to end users!

Mary Kay’s Laura Beitler proudly proclaimed, “The majority of the product ends up with end consumers.” Yet when pressed for details on actual retail sales of products, Beitler admitted that corporate does not track this. Thus, her statement that most product ends up with actual consumers is 100% fabricated.

Women join Mary Kay just to make a little extra money!

When presented with the fact that more than 99% of people involved in multi-level marketing companies lose money, MLM lovers turn to a common defense… no one wants to make money. Laura Beitler’s response to the high failure rate included, “Different people start a Mary Kay business for different reasons. Some are looking for just a little income…a new career…social aspects.”

Virginia Sole-Smith, the author of the Harper’s cover story, showed what nonsense this is in a blog post she wrote as a follow up to her article.  The post [Inside the Pink Pyramid] Women Join Direct Sales For All Kinds of Reasons starts with a screenshot from Mary Kay Inc’s. website, clearly touting how LUCRATIVE Mary Kay is.

Virginia wrote:

There are a couple of problems with this argument.

For starters, it’s a little too convenient for me. Mary Kay promises a “lucrative full-time opportunity,” (see that claim right there in a screenshot from their website, above, red circle mine). It puts out press releases billing itself as a job creator and the answer to our unemployment woes. In fact, it’s currently pursuing recent college grads, advertising its career potential to twenty-somethings saddled with student loans and facing down a tepid job market. But as soon as we start asking how much money you can really earn in Mary Kay, the tune changes. Now it’s oh don’t worry, most of these women aren’t relying on us for their income anyway. Really? In this terrible job market that you just told us about, with all their debt and unemployment issues?

[snip]

And last, there’s the fact that almost everybody I interviewed told me that initially, they “just wanted to make a little extra money…” but once their recruiter started outlining all of the income potential before them, they wanted in, in a big way. Lynne thought it would be just a sideline — until her recruiter convinced her that she could replace her full-time income. Mary Kay knows women are coming in with this idea — but it wants to convert as many as possible to the career path, because those are the folks who buy the most product. Lane, writing over on Jezebel yesterday, was similarly skeptical until she heard her recruiter’s pitch:

I bought into the lure of easy money hook, line, and sinker. She told my coworker and me her own rags to riches tale, which included how she had kept her family afloat during her husband’s layoff. She talked about financial freedom, economic success, and then showed us her newly earned pink Cadillac. I was sold, and I was going to sell Mary Kay cosmetics to all my Goth and Grunge friends, and I was going to make a killing.

In fact, even if you make it clear that this is just going to be a hobby for you, a successful Mary Kay sales director will find ways to increase your inventory purchase.

If you’ve ever gotten a whiff of a Mary Kay recruiter, one of the first things you probably heard was one of these:

  • Executive pay for part-time hours
  • You decide when you’re ready to promote yourself
  • You can make as little or as much money you want… you decide how much effort you’re willing to put forth
  • Earn a living while still being at home with your children

Indeed, all MLMs push the “income opportunity,” but when faced with the the fact that almost everyone loses money, they turn tail and say that no one wants to make money anyway.

19 Comments

  1. Data Junkie

    It breaks my heart to read story after story of desperate women getting exploited like Kim in that Harper’s article. The biggest and most important deception in MLM is the identity of the true customer. It blows my mind that in 2019 these companies are still able to convince recruits that there is a demand for these products outside the MLM. It takes some seriously targeted and emotionally manipulative tactics to pull this off given the overwhelming evidence available today that not only is the MLM rep the target customer, but any profit made comes from the losses of the reps in your own down-line.

    Traditional companies compensate their employees from the funds generated by sales to outside customers. MLM companies cannibalize their own sale force.

  2. Char

    Once again, the trap is analyzing it from the consultant perspective as though that’s the real business. We know it’s not, as being an MLMer isn’t a business. The real business is MKC using an unethical sales technique for MKC to prosper.

    “Different people start a Mary Kay business for different reasons. Some are looking for just a little income…a new career…social aspects.”

    MKC can’t thrive on “little income” or “social aspects”. As an MLM company, they rely on their “consultomers” to make big purchases to keep them in big business profits.

    An MLM scam strategy – The more discussion over the years about how good, or bad, the MLM-er “business” is, the more we believe it’s a business – even a sucky one. It’s the rumor that seemingly becomes true if repeated enough.

    Yes, we must talk about it to expose it, but the answer is far simpler than we think. We must come at it from the corporate perspective.

    So, you want to make money with MLM?………….Start one, and scam your participants. Some of those people might even help you perpetuate the fraud if you offer them some kickback.

    MKC doesn’t track consultomer re-selling just like Macy’s doesn’t track you re-selling last year’s boot purchase to a friend. Macy’s don’t care what you re-sell, as long as you come back and buy new boots FROM THEM.

  3. Stephanie

    Tracy,
    Let’s pretend MK products “fly” off the shelves. Would a consultant be able to make it if they could make triple vs double?
    Say they buy $1 and sell for $3 instead of $2

    My math tells me if a mk consultant is able to sell all the products at MSRP buying from MK $1 and selling for $2 doesn’t work after you count expenses, gifts, tax and all that other jazz.

    1. BestDecision

      You are very correct in your math. No one in MK talks about net profit, and that is complete denial that they don’t actually make as much money as they say or think that they do. Watch a single episode of The Profit. He’d shut those people down in a second.

    2. Data Junkie

      Stephanie, you are missing the point. At these high prices, Mary Kay reps are doing all the buying. Very little is ever sold to outside customers, so your premise is flawed.

      The only way to move product in Mary Kay is to recruit.

    3. MLM Radar

      Hi Stephanie!

      It’s not possible to buy MK for $1 and sell for $3, or even sell for $2. Shoppers are smart. You have a nice idea, but it won’t work. First, Mary Kay controls the maximum price. Even if you could find a buyer you can’t sell for more than Mary Kay’s “full retail” price. But you can always sell for less. Mary Kay tells you to give the stuff away as hostess gifts to anyone who hosts a home party.

      Next, anyone who really wants Mary Kay products knows how to get it for rock bottom prices.

      This is because there is too much Mary Kay unsold inventory available for “50% off.” You can find it at yard sales, on Craigslist, and on eBay with free shipping and no sales tax.

      When a consultant decides to quit her Director will pressure her to have a 50% off going-out-of-business sale instead of returning inventory. This makes it impossible for other consultants to sell at the regular “full retail” price.

      Finally, if you really love the products and just must have them the Director will immediately sign you up as a “personal use” consultant. Your Consultant becomes your Recruiter, and her cut of your purchases drops from 50% to 4%.

      So no, there is no real chance for a consultant to earn any money selling Mary Kay. All other MLMs work in a similar way.

    4. TRACY

      Mk doesn’t work at any price because almost no one can get a sufficient retail buying base. Women can barely buy MK for $1 and sell for $1.50… much less sell for the $2 they say you can/should.

      1. Stephanie

        Notice on my comment I said, “let’s pretend”
        Pretend: Keyword.

        I am basically asking IF you could buy $1 and sell for $3.

        I understand that customers are smart. Please read my question. I understand how MK works. I am asking IF while pretending the products fly off the shelves.

        1. Stephanie

          I mean, I am basically asking IF it would work buying for $1 and selling for $3 (if set up that way) could you make money after paying expenses?
          Heck forget it’s an MLM, let’s say you are you buying products elsewhere, is buying for $1 and selling for $3, would you make money that way ?

          1. Char

            I think you’re asking about a real retail business. “How much markup do you need to make a profit?” Idk, and it probably depends on location, overhead, etc..

            If we ask the same of MLM, the question is somewhat moot as MLM isn’t a real retail selling business. In actuality, products are just a front for opportunity selling on multi-levels.

            As posted, regardless of the markup in MLM, why pay it as a customer when you can just sign up and pay the $1? That’s what the company and upline want anyway. This is the inherent flaw with all MLM. Anyone can join, no territories, saturation, overpriced mediocre products, not market product driven but opportunity driven, etc..

          2. MLM Radar

            Hi Stephanie,

            In an MLM you can’t buy for $1 and sell for $3. Your contract won’t allow you to do that.

            In an MLM the best you can hope for is to buy for $1 and sell for $2. But other MLMs have you buying for $1 and selling for about $1.35.

            The problem is that your $1 MLM buying price includes the real wholesale cost of the product, plus all the commissions and bonuses paid to your upline. Those commissions and bonuses… paid THROUGH the company but ultimately by you… are as much as 50% of your “wholesale” product cost. You’re hamstring even before you add in all the crazy expenses and marketing restrictions (not allowed to advertise, etc).

            That said, in a REAL business you don’t pay any of those upline commissions. Wholesale cost in a real business is just the real cost of the product, so its a low lower. Consequently, your resale margin is automatically a lot higher.

          3. Data Junkie

            Stephanie, let’s take this to the logical extreme. I am a rep for the TP MLM and I sell boxes of toothpicks for $10 apiece. These are made of special acacia wood which has untold medicinal powers to provide not only clean teeth but also promotes gut health! I get $1 on every box sold under me, down to 5 levels. I tell everyone under me that they also get $1 on every box sold under them, down to 5 levels, etc.. If you just recruit 5 people, who do the same down to 5 levels, willing to buy one box per month and you are looking at $3K/month in profit! How difficult can that be? Sign up 10 who sign up 10, etc.? That’s $100K, from only 10 direct recruits!

            Oh wait, you don’t want to recruit, as market saturation concerns you? No problem, you can just sell the toothpicks for $20 per box and pocket the difference. Everyone needs toothpicks, after all, and these have unmatched quality. If everyone of your social media contacts would buy just one box per month, you’d be rich just working from your phone! 500 contacts? That’s $5K per month! Run your own numbers to see how much you could be making selling toothpicks for the TP MLM!

            Combine these two revenue streams and you have dual marketing!!!

            The absurdity should be obvious here. While not as extreme as the TP MLM, the dynamics in Mary Kay are EXACTLY the same. There is no market for $20 boxes of toothpicks, just like there is no real market for Mary Kay cosmetics even at Mary Kay’s “wholesale” price. Just like the TP MLM, Mary Kay reps are paying high retail, then trying to further mark up an already over-priced product. Very little product is ever sold this way.

            The real market, therefore, rests with those willing to pay these high prices “in spite of” the poor price point. And such a market exists only with you and your down-line. This, my friend, makes clear that the Mary Kay consultant IS the primary customer of Mary Kay. With a 70% consultant turnover, recruiting becomes essential to Mary Kay’s ability to move product.

            Mary Kay’s profits, therefore, are made by selling to their own sales force. They don’t care if any product is ever sold or even consumed outside the network. In fact, no outside sales are necessary at all for Mary Kay to make their profit. And if making money off of your personal product purchases is not enough, they’ll get you for training, sales and seminar fees as well. This after you already pay all the marketing costs of their products.

            With only negligible outside sales, we can confidently say that the consultants fund, out of their own pockets, the entire Mary Kay operation…all of it. Selling product to outside customers is not even part of their business plan!

            1. Mountaineer95

              I like your last sentence, and it reveals a lot: IF actual retail sales (to end consumers) was any factor at all to Mary Kay Corp’s success, then retail sales would definitely be a part of their business plan, and hence would be tracked in some way (so that MK Corp could ensure that they are meeting their goals in respect to that aspect of their business plan). But they don’t track retail sales at all. And they would never just assume that their consumer retail sales figure is just double their wholesale sales. Instead, they very closely monitor the wholesale sales ONLY.

              1. Char

                “But they don’t track retail sales at all. And they would never just assume that their consumer retail sales figure is just double their wholesale sales. Instead, they very closely monitor the wholesale sales ONLY.”

                Agree, to prove the point that:

                “Wholesale” is actually retail, hence they DO track retail. This IS the Mary Kay business plan: “Find customers and call them consultants so they’ll buy a $hit-ton of product”.

                Any product re-sold to Aunt Sally at double price, I call “double-retail”. And what fool pays double-retail? Not many. Therefore, actual retail market demand isn’t driving the business, but rather opportunity selling is with products attached. Voila, I present you a pyramid scheme.

        2. Lazy Gardens

          How much money? There’s making money and making a living. Two different things.

          1 – You would have to have TOTAL control over expenses, and the freedom to advertise and sell where you thought things would sell.

          2 – You would have to not be forced to buy a certain amount every quarter or lose your wholesale price. REAL manufacturers do give discounts for volume … but they don’t have only 2 prices, “wholesale” and full retail for their resellers. The discount increases with the size of the order.

          3 – You would have to NOT be supporting an upline. The “wholesale” price of Mary Kay is higher than what it would take for them to have a profitable makeup business … they have all their costs and their profits in the price consultants pay. And they have all the commissions, “free cars” and glam gifts built into that price too.

          4 – You would have to be selling things that aren’t being sold by a dozen others in the neighborhood, or by a major retailer, that are in demand …

  4. ran4fun

    Stephanie, I recently read an article in the business section of the local newspaper. It stated that most businesses aim for 10-11% profit margin. I asked the president of my husband’s company and he agreed, that is what they shoot for. So there is no 50% profit margin when you are in business. Even 33% profit margin is not feasible. The cost of doing business and paying taxes leaves a net profit of about 10% for successful companies. So a successful MK rep can sell $1,000 of product and expect a net income around $100.

    1. MLM Radar

      There’s a huge difference between product markup and profit margin. Product markup is before expenses and taxes. Profit margin is what you have left after paying expenses and taxes.

      That said, MK Corporate long ago figured out how to make sure you have a zero or negative profit margin. They do this by demanding that Directors meet a very high “production” quota or lose their units.

      The “production” quota is set just high enough for the Director to barely make it about half the time. But she only makes it if she uses all her current commissions to buy more products, places orders on her credit card, and squeezes her recruits to order products they don’t need. The game continues until the Director and her recruits use up all their available credit, or get discouraged and quit.

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