Lies About Inventory
Mary Kay lives and dies by initial inventory orders. That is where corporate makes their money, because the initial order is almost always the MOST a consultant will order in their tenure with MK. Sales directors make their money with initial inventory orders. This is what sustains a unit.
So there is a huge incentive to get new consultants to place big orders. Below is a typical piece used by recruiters to convince you that you must have inventory. (Of course, no one held a gun to your head. You made the choice to place the order. But remember that choice was made based on false information like this.)
Benefits of stocking inventory in your home:
- Higher Sales – Women want their products as soon as they try them. Your sales will be 50% higher if you carry inventory to give immediately to your customers.
- Less Returns – Women do not usually change their mind once they have the product in their hands. If they have to wait for product they can change their mind about their order due to money stress, or husband.
- Confidence – You are more likely to actively work your business if you have product on your shelf. You will feel like a professional and have more confidence in your sales ability.
- Motivation – Your inventory will motivate you to do your business when you lack self-motivation. Product sitting on your shelf will get you out there selling! It’s instant cash!
- Profit – You will see a profit quicker from carrying inventory. If you have to place orders, it takes longer to see profit. Also you can see a higher commission level from your sales, since you will need to order less often,
- Higher Reorders and Less Customer Drop-off – If you are able to immediately service your customers once they run out, they will learn to depend on you. If you have to place an order to the company, they may look for another consultant who carries inventory.
- Less Frustration – The consultants who do not carry products tend to get frustrated with their business and sometimes to the point of quitting. Not carrying inventory is one of the most common reasons for consultant dropout.
My favorite is the lie about more profit. What? You profit more because you don’t have to wait for an order? And a higher commission because you need to order less often? That’s just silly. You profit the same amount on an order whether or not you have thousands of dollars of products in your basemen.
Having inventory eats away at your profit each day due to interest charges on your credit card. It eats away at your profit every time a customer orders something you don’t have, and you have to place another order that will likely include other unneeded stuff just to make the minimum order.
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They can fancy up the language all they want, but half of their reasons boil down to “having inventory makes you want to get rid of it.”
But if a customer doesn’t want to wait for you to order something for her, and you don’t carry inventory, you’re no worse off than you were before. If she wants the one thing missing from your “full store” and doesn’t want to wait, you’re losing a customer AND you’re still hundreds or thousands of dollars in the hole.
And given how MK just lurves to discontinue, reformulate, make special edition items, and other shenanigans, they effectively make it impossible to have a complete full store (and most of it winds up being obsolete crap you can’t sell anyway).
If having inventory is so important, stock up from GOOB sales instead of paying MKs ridiculous “wholesale” prices. Win/win for you and the exiting consultant. Then, if your business takes off you can decide if paying full MK “wholesale” for your merch is superior to paying pennies on the dollar for GOOB sale merch. And GOOB sale merch promises a much higher retail margin!
I’ve been through many “let’s increase profits” campaigns in real businesses. The first step is NEVER to increase inventory levels, whether it’s parts to make product or product we made or product we resold. It was to lower inventories by ordering less, selling more, adjusting prices – whatever was appropriate to get those shelves less crowded.
Inventory is a money loser until it sells – cost of storage, insurance, interest payments, loss to spoilage and obsolescence, labor to handle it … the ideal “profit level” for inventory is as close to zero as you can get it without losing too many customers.
The benefit of stocking inventory:
I, your friend recruiting you, will make a commission off of your order…..with this opportunity.
Did you know that the bigger inventory package you buy today, the more commission I make. And, the more people I can convince to buy inventory packages, the higher I climb the MK ladder.
I need you, my friend. All you have to do is sign up and order, and I make money. You never, ever have to sell it if you don’t want to – so no pressure there. Isn’t that wonderful?!
Okay, which package would you like? Just imagine how beautiful your shelf will look with so many products. You personally will have many color options to play with and wear. It will be like you’re shopping in your very own store.
You’ll be getting 50% off retail today, so you might as well get the biggest package possible to make your shelf look the most beautiful, and me more money. And as an added bonus, you’ll be helping Mary Kay Corp. maintain their billion dollar status with your large order. Isn’t that fantastic!
“You never, ever have to sell it if you don’t want to – so no pressure there. Isn’t that wonderful?!”
Bingo Char! Just keep ordering and recruiting. That’s all that is required. Just donate/toss that product, since it has nothing to do with the Mary Kay opportunity anyway!
All that inventory has to be unboxed, labeled, put away, tracked and managed. You don’t have inventory scanning devices like CVS does…it will take time and energy. You’ll be encouraged to pay someone to do this for you. Can you afford that?
You might “sell more”, but it’s because you’ll become desperate to get rid of it. You’ll start selling at a discount. Less profit. Gotta make room for the new stuff, and you want to earn that pretty bracelet. (Your family will be so proud of you!)
If you do sell something, be ready to mail it to the buyer. You’ll pay for packaging materials and shipping costs. Include samples and MK Look Book, at your expense.
Because you’re desperate to clear out inventory, you’ll offer to drive the product to the customer’s home or workplace. Yo, gas is expensive. Add tolls and parking as required.
You signed a MK Consultant Agreement. This means MK controls how/where you sell, and how you can advertise. You are not CVS or Walgreens.
Inventory can be a millstone around your neck.