Is LuLaRoe a Scam? (A $5,000 Pyramid Scheme Exposed?!)
Welcome to my LuLaRoe review!
Chances are, you've just came across some beautiful dresses or clothing on Facebook sold by LuLaRoe Consultants.
Or, you've even attended one of their "pop-up boutique parties" trying out different clothes.
And they claimed that you can stay at home and take care of your kids while making thousands of dollars per month selling these clothes.
No matter how you came across LuLaRoe, I must Congratulate you for taking your time to do your own research before buying into any "seemingly good" product or business opportunity.
That's the way to avoid scams and find the legitimate way to make money online!
Let me be completely transparent with you, I'm not associated with LuLaRoe in any form.
So, rest assured that I'm not here to pitch or sell anything to you.
Instead, I'm here to reveal to you some of the ugly truths that LuLaRoe Fashion Consultants don't want you to know.
And by the way, I've actually found an honest LuLaRoe Consultant who's willing to share those "behind the scenes" with us.
So, is LuLaRoe a scam? Or is it a pyramid scheme?
Here's the truth...
LuLaRoe Review Summary
Product Name: LuLaRoe
Founder: Founded by DeAnne Brady & Mark Stidham in 2012
Product Type: Clothing MLM Company
Price: Starting cost ranges from $5,000 to $7,000 and sometimes upward to $10,000
Best For: Ladies & Moms who are good at networking, selling and recruiting
Summary: The good news is that LuLaRoe is a legit MLM business. If you work hard enough using the right skills, you have the chance to earn a sustainable income. Their clothes may be good but the truth is that majority of the people FAILED at this business. It's extremely hard to make this profitable, especially you have to pay lots of money to the company and stockpile a ton of clothes in your house.
What is LuLaRoe?
First of all, before we get started, here's a video make by a LuLaRoe Fashion Consultant revealing the actual "behind the scenes" of this business.
It's pretty interesting to take a look:
LuLaRoe is an United States-based Multi-Level Marketing (MLM) company that sells women's clothing with unique and stylish print.
But since it's a MLM business, apart from just selling clothes, LuLaRoe is also selling a dream, a dream to "empower women to be financially independent or even financially free".
So, LuLaRoe's mission is not just to produce unique clothes to appeal females but more about providing an opportunity for people to make money by selling these stylish clothing.
But the question is...
How good are their clothes and can you really make comfortable income with them?
Let's start from their product line...
LuLaRoe Product Line
As you can see from the image above, LuLaRoe sells all kinds of clothing but focuses on ladies apparel and kids clothes.
There are also a few apparels for men but it's pretty limited.
Initially, they focused on selling maxi skirts:
But over time, they've expanded to all kinds of patterned leggings, shirts, and geometrically designed dresses.
By the way, they don't have a fixed product line because they only release 5,000 copies of any given pattern, and once a product has sold out it is generally not reissued.
To see the full collection they have, check out this link here.
Are They Worth It?
On average, LuLaRoe's products generally retail at around $18 to $65, depending on the style and the design.
Due to their unique and beautiful designs, customers did love LuLaRoe. That's why they're able to experience such a huge growth in just a few years time.
But because the company has grown too big & too fast, that the customer service, the support standard and the product quality took a plunge.
Many people have complained about the poor quality of the products and how some of them torn apart wearing just once.
In my opinion, the prices are quite reasonable and they do have product warranty so you can get a refund if your product is faulty.
But once again, from my research, I've seen complaints about how unresponsive and how long customers have to wait for their refund.
These are just some things you should take note should you decide to purchase anything from LuLaRoe.
I Created My Own 4-Figure Monthly Passive Income at just 21 Years Old!
How to Make Money with LuLaRoe?
Just like any other MLM businesses, there are 2 main ways for you to make money with LuLaRoe:
- Sell their products and earn retail commissions
- Recruit people and build your downline team to qualify for more overrides and bonuses
But before that, we need to first understand how to get started and qualify for these commissions...
How to Get Started with LuLaRoe?
Unlike other MLMs, there's no sign up fees or any Starter Kit you need to purchase in order to become their "Fashion Consultant", the term they use to describe their distributors.
What you need to do to get started is to submit an application form which can be found in their Business Overview document here.
One downside is that after you’ve submitted your application, you’ll have to wait between 6 to 10 weeks before you are approved as a Fashion Consultant, which is extremely long!
Although there's no sign up fee, but in order for you to start selling and making money, you need to purchase your own stock or inventory.
That's where expensive costs come in...
A survey of 215 current and former LuLaRoe Cnsultants has shown that the typical initial investment for this business is about $7,000!
Yea, you heard that right!
You have to place an initial order of around 275 to 300 clothing pieces (including leggings, skirts, dresses, tops, etc.) so that you have the inventory to sell.
And the price for this initial order ranges from $5,000 all the way up to $10,000 depending on the items you choose. (That's why average around $7,000 to start)
By the way, you can't choose the designs!
That's just the initial inventory package...
Don't forget there are still different monthly order requirements to meet depending on your rank.
- As a Consultant (the lowest starting rank), you need to order a minimum of 33 pieces per month to stay active and qualify for commission.
- If you're at the rank of "Sponsor", a minimum order of 175 pieces per month is required.
- As a "Trainer", a minimum order of 1,750 pieces from your entire downline team is required (This means you have to recruit people and make them purchase as much inventory as possible)
Your sponsor will probably tell you "buy more, sell more" because they want to make money as well.
But that's the exact reason why a lot of Consultants are simply getting themselves further into debt, instead of actually making profits.
What You'll be Doing as a LuLaRoe Consultant...
As a LuLaRoe Consultant, there are 3 main tasks you need to do:
- Create a list of prospects to talk to (mostly your friends & family)
- Post your products on Facebook and try to sell them through social media
- Host home parties like pop-up boutiques, open-house or online Live Stream to sell your products or the business opportunity
But before all these marketing and selling campaigns, you have to first spend thousands of dollars to purchase inventory from LuLaRoe at wholesale price like what I've just explained earlier on.
After that, you need to:
- Keep these stocks in your house
- Bring them to your dress-up parties where your friends and neighbors can come and shop
- Bring back home all the stocks you're unable to sell
- Purchase more inventory
- And repeat the process
Just like the "behind the scene" video I shown you in the beginning, you have to handle all the product photography, packaging and shipping if you are selling through social media as well.
It's a ton of work.
As you can see from the video in the beginning, the woman is literally burnt-out!
LuLaRoe Compensation Plan
The commissions you can earn depends a lot on your rank.
As a Consultant, you can only earn retail commissions from selling the products at around 35-50% retail commission rate.
As a Sponsor, you can earn a 5% override commission from your direct downline in addition to your retail commission.
As a Trainer, you can also earn an additional 3% commission from the sales volume of your recruits' recruit (and all of your downlines from the second level onward)
For more detailed explanation on LuLaRoe's compensation plan, please watch the video below explained by LuLaRoe's Consultants:
LuLaRoe Ugly Truths Revealed!
1. Only in the US
If you're still reading this but you're not from the US, I'm sorry to tell you that LuLaRoe is not for you because it only opened for the US market.
So if you're from other countries, you may want to check out My Top Recommendation Here!
A lot of MLMs today don't require you to keep inventory. Customers can order directly from the company and the products will be shipped directly to them.
But LuLaRoe doesn't have that benefit.
Like I've explained earlier on, you need to literally purchase the products at wholesale price from LuLaRoe and keep them in your house as inventory.
So, a lot of Consultants end up having lots of unused & unsold clothes in their houses.
Ladies, I know having lots of different clothes in your wardrobe is like a dream come true.
But when you want to sell them and are unable to do so, those literally become a nightmare.
Just take a look at the following screenshots:
This one is actually taken from the compensation plan video I showed you earlier on.
Can you see you really need to have space in your house to keep the large amount of inventory for this MLM business?
And this screenshot below is taken from the video I showed you in the beginning of this review:
You don't just need to keep these inventory, you also need to pack them and mail them one by one to your customer.
Honestly speaking, this is not the right way for you to work towards your time & financial freedom if you need to spend time doing these stuff.
Most importantly, I believe every single Consultant has a ton of "dead stock" in their houses which they're unable to sell.
3. Troublesome Parties & Recruiting
Apart from the large amount of inventory you have to handle, like I've explained earlier on, the main way for you to build your LuLaRoe business is to host those dress-up parties for people to try the buy clothes.
The troublesome part is still on the stocks because you have to bring them with you wherever you go.
If not, you don't have the actual product for people the try and that's one of the main downsides for this business.
By the way, don't forget that you're not just bringing clothes. You still need to bring a lot of things like hangers and cloth stands, which are definitely quite heavy to bring around.
Also, they're still relying on the traditional way of recruiting.
So, if you're not good at networking, selling or recruiting, you'll definitely have a hard time doing this.
4. Extremely Expensive Startup Costs
To be honest, LuLaRoe is the MLM company with the most expensive startup cost I've ever seen so far.
Spending $5,000 or $7,000 or even $10,000 just to get started with a network marketing business is ridiculous.
The way they are buying stocks is like investing in a traditional franchise. But network marketing shouldn't be done that way.
Also, don't forget the expensive monthly order requirement as well.
Your upline/sponsor will probably pressure you to reinvest by purchasing more and more clothes as they often claim that's how you recoup your investments and profit in the long run.
5. Lawsuits after Lawsuits
If you're willing to do more research on yourself, you'll find out that LuLaRoe has actually received numerous criticism and lawsuits from both distributors and consumers despite they're still a relatively new company.
People have complained about their business model, product qualify, customer service, etc.
In October 2017, a class action lawsuit was even filed in California accusing LuLaRoe of being a pyramid scheme.
What's even worse is that LuLaRoe allegedly advised its distributors to borrow money, take out credit cards, and some were even asked to sell their breast milk as ways to buy additional inventory.
I have no proof to show for these claims but it's just something to keep in mind, in addition to all those expensive inventory you have to purchase.
6. LuLaRoe is Falling
LuLaRoe was only founded in 2012.
This company is considered a "baby" if you compare it to other MLM companies like Nikken, which has been in business for over 40 years.
However, just take a look at the interest/popularity of LuLaRoe over the past few years:
As you can see, it only started to become popular in 2016 but it's already declining since 2017.
No matter what, it's still too early to give any conclusion because it hasn't even been in business for over a decade.
7. Most People FAILED!
This is one of the most important things you need to look at when considering a MLM business opportunity.
According to the company's income disclosure statement, the average annual commission earned by LuLaRoe's eligible distributors in 2016 was only $2,118.54/year!!
That's only $176.55/month, barely enough to pay some bills...
And 72.63% of all LuLaRoe Retailers didn't make anything in 2016 because they were ineligible.
I can totally understand why for such a large percentage of people being ineligible for commission.
It's definitely because of all the expensive monthly inventory they must purchase in order to stay active.
What I Like About LuLaRoe...
1. Leveraging Social Media
No matter what, at least LuLaRoe is still leveraging social media, especially Facebook, to market their products because the Internet and social media is definitely the future.
After reviewing so many make money opportunities, I can see that majority of the MLM companies are solely relying on the traditional recruiting, hosting parties and stuff.
Although LuLaRoe relies heavily on such strategies as well, they're not completely ignoring and missing out on the social media part.
They don't just post their products on Facebook for sale. They also have members Facebook Group and sometimes they even do Live Streams as well.
This is a great way to reach a wider group of people who are not within your region.
2. Product Warranty
LuLaRoe has a 6-Month Warranty for its products and a "Happiness Policy".
The 6-Month Warranty protects customers from any defects in workmanship for their products.
And the Happiness Policy makes sure that customers are happy with their products. So, if you're unhappy with your purchase for any reason, you can request for the refund within 20 days.
All the details can be found on their website.
But I've also seen quite a few complaints regarding their poor experience with LuLaRoe's customer service.
Some even complained that they are unable to get the full refund despite having the warranty and the policy.
Just something to keep in mind.
Is LuLaRoe a Pyramid Scheme?
This is a very common question. Like I've mentioned, even the company has received official class-action lawsuit accusing them for being a pyramid scheme.
In my opinion, LuLaRoe is NOT a pyramid scheme because they have real products to offer and their distributors are not paid based on the number of people they recruit.
Instead, they're paid based on their retail sales and the sales performance of their downline team, not directly on recruitment.
So, those people who call LuLaRoe a pyramid scheme are usually the ones who have failed before or had pretty bad experience with the company.
You shouldn't listen to them.
At the same time, you shouldn't listen to those Fashion Consultants from the company as well, simply because they have an agenda.
Is LuLaRoe a Scam?
Similarly, LuLaRoe is not a scam. It's a legitimate MLM business opportunity and it's possible for you to make real money.
But you should really stay away from this company because:
- The startup cost (at least $5,000) is way too much
- And the success rate is too low (evident from their income disclosure statement)
Anyway, LuLaRoe has only been around for less than 10 years so it's too early to conclude anything.
But the fact that it has received so many lawsuits & complaints within just a few years of operation is definitely a RED FLAG that you should beware.
Bottom line: Don't trust companies that promise you a full-time pay for part-time work.
Such opportunity simply doesn't exist. This is very clear as you can see from the "behind the scene" video I showed you in the beginning.
How I Make a Living Online...
I'm not a fan of MLM, not because it's illegal or not profitable, but because of all the restrictions and the expensive costs involved.
Instead, Affiliate Marketing is my top recommended business model for anyone to make money online.
The reason is simple...
- You don't have to recruit anyone to make money
- You have the freedom to promote any products you want and not being restricted to only promote the products from one MLM company
- It's Free to get started
In fact, with affiliate marketing...
I've personally created a 4-Figure Monthly Passive Income Stream and become financially independent at just 21 years old without any College degree or working experience!
Through my own hard work, I went from a broke restaurant waiter to living my dream laptop lifestyle in less than a year's time...
If you want to discover the secrets of how I did it at such a young age, click here!