LuLaRoe or LuLaNo: Calculation Flaw, But Still LuLaNo
November 2, 2016
I’ve received thousands of comments from many, many readers about my original piece: LuLaRoe or LuLaNo: Will Your Investment Pay Off? Quite a few commenters pointed out that the math I used in my article was not accurate. I read their comments, I evaluated my post, and I’m providing an updated article in response. I’ll cut to the chase: I made a mistake in my original calculation. I deducted the initial investment of $5,500 twice. But, the cautionary advice I gave still holds true. And I hope you can understand that in my effort to be completely transparent, I am providing this revised article.
What Happened With Original Calculation
Here’s where the confusion began: I posted a link to a LuLa in Love article. That article had a graph illustrating how you could repay your LuLaRoe investment in one month. The graph indicates that if you sell 70 products a month in the first month, you can pay back your $5,500 investment in LuLaRoe.
Assuming there’s 4 weeks in a month, you need to sell 280 LuLaRoe products in that month. The LuLa in Love article indicates that the gross sales will be equal to $9,240 if you sell 70 products a week, or 280 products in one month (70 * 4 = 280). The graph also states that your net profit will be $5,040.
If you’re following, here’s what we have so far:
$5,500 initial investment in LuLaRoe (this is the money you put up front to become a LuLaRoe fashion consultant)
$9,240 gross sales from selling 280 LuLaRoe pieces
$5,040 net profit from sale of 280 LuLaRoe pieces
What does that give you?
I have no problem admitting it.
There was a mistake in the original calculation. The initial investment was deducted twice. Theoretically, you can make back your money in one month from selling LuLaRoe products. You have to sell 280 at a 54% profit, with an average sell price of $33 per item in order to earn $8,780. But, in theory, yes, it is possible. If you sell the remaining 181 pieces for a 54% profit (or approximately $18 profit per piece), you can theoretically earn $12,038.
So if the basis of my initial calculation was wrong, what about it was right? Here’s where your head will start to spin:
For the above to be true, you still need to be selling each product for an average of $33 per piece.
You’ll still need to make an average profit of $18 per item, or at a 54% profit.
But wait a second: $33 * 381 items in your original investment kit = $12,573 in gross sales (or approximately the $12,500 retail value LuLaRoe boasts your investment kit is worth). A 54% markup on $12,573 is $6,789.42. ($12.573 * 0.54). We’ll call it $6,750, as $12,500 retail value * 54% markup is $6,750.
So, from your $5,500 you could potentially earn $13,750 profit.
Stipulations for LuLaRoe Profit
The stipulations, again, are that you must:
- Sell each product for an average of $33 per piece
- Earn approximately $18 or (or 54% of $33) in profit per item sold
- Sell all 381 pieces from your initial investment kit for the above price and profit
Here’s some food for thought: is 54% profit per item sold realistic? According to the Houston Chronicle, “Profit margins for retail clothes are generally within a range of 4 percent to 13 percent according to industry analysts.” (Source)
That means LuLaRoe’s expectation that you will be able to sell a product with a 54% profit margin is not on par with the industry average. (For the record, if you sold all your LuLaRoe for 4% profit margin, you’d make $228.60, or an average of 60 cents profit per piece sold).
despite calculation error, The truth about lularoe still hurts
Let’s get real. The wholesale cost of a LuLaRoe product selling for $33 retail is just $15. You get a 54% profit margin, giving you $18 per piece. That means you’re earning more than the product is even worth. 120% more. That is a 120% markup on LuLaRoe’s cost. LuLaRoe doesn’t get anything if you sell your inventory or if you lose it. Because, as with any wholesaler, the customer is the retailer. In this scenario, you are the retailer. LuLaRoe wins no matter what happens to your LuLaRoe “business”.
Now, many people have told me that LuLaRoe will buy back your inventory at 85%, minimizing the risk involved. You know what’s fascinating about that? Theoretically, you sell 10 pieces, you make $180 bucks, and you have 371 pieces left you decide to sell back to LuLaRoe. They’ll buy them back for you at 85% of the wholesale cost. Not the retail cost. So, $15 * 371 = $5,576 wholesale value of your leftovers. $5,576 * .85 = $4,730.25. That $4,730.25 is what LuLaRoe will buy your 371 pieces back for.
Here’s what that looks like:
So, you’ve lost $590 attempting to sell LuLaRoe. You may be asking, why isn’t the wholesale value added to this? Well, because you are not going to get the wholesale value back. You’re getting 85% of the wholesale value. Also, is this math looking funky to you? It’s because you won’t earn a 54% profit margin or $18 per item. If the wholesale value was $15 per item, the $5,500 initial investment would be worth more than that (381items * $15 = $5,715). But it’s not.
How You Know LuLaRoe is Not Worth It
Here’s how you know this is a bad investment: the company won’t even buy their own product back for 100%. They won’t take a return. If the product was any good, they would happily take it back. You can take your Macbook back after 14 days, even if you opened it up and used it. But you can’t get a refund for unused, tagged clothing? Get real.
I hope you understand that although my initial calculation had an error, the math just doesn’t add up in my opinion for LuLaRoe. It’s incredibly difficult to sell one thing to one friend. Imagine selling 381 things at $33 each. Does it mean you can’t do it? No. But I stand by my initial stance: LuLaRoe is not the way to go. You don’t have control of your LuLaRoe “business”. There’s no negotiation with the wholesaler. There’s no diversification of inventory. You have one brand. That’s it. Start your own online retail shop. Think that sounds impossible? Babywearing supermom Frogmama did it. You can hear her story here.
LuLaRoe or LuLaNo: Will Your Investment Pay Off?
May 19, 2016
If you’re reading this article, you’re either an avid BOTTLESOUP reader or you’re curious about becoming a LuLaRoe Fashion Consultant. Either way, you’ll enjoy this in-depth look at the LuLaRoe business model. By the end of this post, you’ll have a clear understanding of the company. Allow me to preface this by saying I am not a LuLaRoe Fashion Consultant and, thus, I have no skin in the game. This article is meant to be objective and informative.
Jamberry Facebook Parties: Why No One Sees Your Posts
April 5, 2016
Jamberry Facebook parties: an easy path to work from home success or an exercise in stupidity? You decide.
If you’re new to BOTTLESOUP, welcome! This is our 5th piece on Jamberry and the 3rd installment of our Tuesday Jam Series. Whether you love or loathe Jamberry, you’ll find these article informative, interesting and entertaining. Thanks for joining us!
Today, we’re going to discuss Jamberry Facebook parties. We’ve all gotten an invite to a Jamberry Facebook party.
At first, it was new. You’d see the invite and think, “Wow, what’s this?”
Then, it was puzzling. “Wait, why are 3 of my friends inviting me to Jamberry Facebook parties?”
After that, it became downright annoying. “OH MY LANTA ANOTHER ONE! WHY?!”
Finally, it stopped. “Wait, why are none of my friends inviting me to their Jamberry parties anymore?”
There are several reasons why your Jamberry party Facebook invites have slowed or stopped. Here are some of the major causes:
- The Jamberry market has become saturated. Since everyone and their mother has started their own Jamberry “business”, there’s no one left to become a customer. We’ve gone over this theory in the other posts but essentially Jamberry’s consultants are their primary customer. If a Jamberry Consultant wants to stay active, they must sell a certain amount of product per month. They can do this by selling to customers they find OR by purchasing the product themselves. Many end up purchasing the product themselves or resigning as consultants. There’s no shame in ending your Jamberry business; the majority of people in direct sales never turn a profit, ever. So, leaving is usually your best bet to avoid financial debt and disaster.
- The direct sales model is flawed. The reason the majority of Jamberry consultants do not profit from their “business” is complex. A major reason? No formal business training or experience. And, yes, this truly matters. Successful businesses are built based on business plans that have been carefully thought out. They’re not built by throwing $100+ at a company, agreeing to their terms and services, and selling a product with a small commission. Specifically related to Facebook parties: Jamberry consultants are not digital strategists. The majority do not possess the strategic foresight, planning, and technical knowledge to run a profitable social media campaign. If they did, that would be their job. They wouldn’t need to sell nail wraps for a $4 commission.
- Facebook’s algorithms keep spam at bay (and FB is pay to play, too). Since so many people infiltrated Facebook with their Jamberry consultant garbage, Facebook’s algorithms moderate the amount of visibility each Facebook user has about Jamberry. This is so Facebook users can enjoy a variety of posts and people instead of being spammed by the same company over and over again. If Facebook allowed the most frequently mentioned things to be prominent for free, Facebook would be a giant Starbucks advertisement. Instead, Facebook, as a corporation, has monetized its platform by offering paid boost/promotion for posts. If you choose to pay as little as $5 to boost a post, you’ll see a dramatic increase in exposure (just make sure your ad is in compliance with Facebook’s terms and services). Otherwise, an unboosted Facebook post sees an organic reach (organic reach means the number of people you reach without paying for ads) of just 2%. So, if you want to have a successful Facebook following, add that cost to your Jamberry budget.
- Unfollow/hide features. A lot of your friends are too polite to say this to your face, but they’re sick of your Jam spam. It doesn’t take a genius to figure out you’re trying to sell them something, and if you haven’t spoken with your “friend” in years but want their business, they’re going to end up feeling used. Instead of confrontation, they just unfollow your posts or hide your group. This way, your feelings don’t hurt and they are no longer bothered by your crap. KWIM?
If you’re a Jamberry consultant, you’ve probably had Jamberry Facebook parties. We encourage our audience to be real, raw and honest about their experiences. If you’re still drinking the Jam juice and too stubborn to admit your Jamberry business is not a viable career option, don’t worry: we’ll still be here and accept you when you’ve finally come to terms with it.
Next week, we’ll be sharing an in-depth and detailed Jamberry cost breakdown. It will be epic. See you, then!
Hidden Costs of Becoming a Jamberry Consultant
March 29, 2016
If you’re wondering if becoming a direct sales consultant for Jamberry sounds too good to be true, you’ve come to the right place. Here, with the help of been-there-done-that Jamberry consultants, we are delivering the exclusive, behind-the-scenes look at what becoming a Jamberry Consultant truly costs.
In this installment of the Jam Series, we’ll be looking at the hidden costs of starting your Jamberry business. This article is meant to inform you of the Jamberry Consultant start-up expenses in an easy to understand, straightforward manner.
Here are a few hidden costs of becoming a Jamberry Consultant:
- Starter-Kit. Jamberry is upfront about making an investment in your Jamberry business. So you may be wondering what’s the hidden cost in that? Well, for $99, you get some promotional materials, but there’s a catch: the promotional materials expire. This issue goes beyond your first few weeks with Jamberry. No matter how many samples or promotional materials you have, if Jamberry releases something new, you can no longer use the old material to promote your “business”. Also, it’s against the rules to create your own catalogs, brochures and even your own business cards. Since you’re running your own “business”, you may think it’s easy to get away with creating your own marketing materials. But think again. Your fellow Jamberry Consultants (AKA “Jamsisters”) will rat you out ASAP. Because killing the competition is the easiest way to get to the top. It’s biology. Seriously. Lions kill cubs. Veteran Jamsisters kill newbies. Oh, also: you pay shipping & handling for your starter kit. It comes out to $124, not $99.
- Promotional Materials. I touched on this, but after your starter-kit promo goods are gone, it’s your responsibility to refill and replenish your samples. And how are you going to sell a product you can’t check out in stores without samples? Catalogs are 10 for $6.50, or $0.65 each. That doesn’t sound like a lot, right? We’ll get back to that in a minute. In addition to catalogs, you’ll want business cards, 7-day challenge cards, envelopes, labels, stationary for those hand-written notes, etc. Are you seeing dollar signs yet?
- Shipping. In a perfect world, you wouldn’t have to ship your promotional materials to potential customers. In reality? Your friends list will be so sick of hearing about Jamberry that you’ll need to branch out and find new territory (or you live far from home, your college friends, etc.) To send out just the catalog, you need an envelope and 4 forever stamps ($0.49 * 4 = $1.96). If you take the envelope to the post office and have them weigh it, you can save $0.10 per catalog, but you’ll still be spending $1.86 + gas + time to send out your Jamberry catalogs.
- Website. After your first 3 months as a Jamberry Consultant, you’ll start being charged $10/month for your Jamberry website. That’s $120 a year, for those keeping score (and for those who want to get super technical, yeah, your first year would be $90 “only”). If you’re making sales, this doesn’t seem so bad, but then comes the monthly Personal Retail Volume requirement to really screw you over.
- Monthly Personal Retail Volume (PRV). In order to maintain your status as a Jamberry Consultant (you mean buying a starter kit and paying for a website was not enough?!), you must sell $200 in product a month. This $200 PRV does not include taxes or shipping and handling. It is purely the retail cost volume. In order to achieve this goal, you need to sell 13.3 nail wraps at $15/each per month. While that doesn’t sound like a lot, many consultants fall short and end up buying $200 in product by themselves to ensure they stay active as consultants. Of this $200, they receive $60 in commission (or in return, if they purchased the wraps for themselves), but after paying for their website, the commission is only $50. And, if they’ve promoted the product and purchased or sent materials, that also reduces the “profit”. Stay with me and let me break it down for you:
The average conversion rate from promotion to sale is 2.35% online. Yes, I’m talking digital. Let’s say you promote your Jamberry business on Facebook to a group of your friends and acquaintances. In order to make 13.3 sales, you need to have directly reached 565.95 (13.3/0.0235) people regarding Jamberry. This doesn’t mean people who are passively in your network; it means you need to have directly reached those 565.95 individuals.
But what about in person direct sales? Well, approaching someone about Jamberry for the first time in real life is the equivalent of a cold call. Only 2% of cold calls result in an appointment in traditional sales. That means you’d have to be in contact, directly, with 28,298 (565.95/0.02) people in order to maybe sell 13.3 nail wraps per month, assuming you can covert at 2.35% in real life.
For fun, let’s assume you want to reach 28,298 people with catalogs and samples in real life. You’d need to spend $18,292.70 to give each one of those people a catalog. Just a catalog. Samples? I’ll spare you the heart attack. By the way, you’d still only make $50 in commission after selling 13.3 nail wraps and paying for your website. So, you’d be in the red -$18,242.70.
So, online is definitely the way to go, right? If you send out 565.95 catalogs, you’ll spend $1,420.53 (565.95 * ($0.65+$1.86)) to make $50 in commission. -$1,370.53 Yes, I was nice and assumed you’d save the $0.10/mailer by bringing your catalogs to the post office.
Did you know that, on average, it takes a sales person 5 times to reach a person in order to close a single sale? So, you could send 5 catalogs to 565.95 people. That will cost you $7,102.67 ($1,420.53 * 565.95). But maybe you’ll sell a nail wrap to all 565.95 people after that. Let’s be optimistic and say that you achieve that. That would be $8,489.25 PRV. You’ll make 30% commission, which comes out to $2,546.77 commission. But, since you spent $7,102.67 to make that happen, you’re negative. Your loss is -$4,555.90, to be exact.
What more do you need to know?
6 Things to Know Before Becoming a Jamberry Consultant
March 22, 2016
If you’re a regular BOTTLESOUP reader, you know how I feel about Jamberry. And while I followed up my original post with some hands-on Jamberry consultant based research, the outpouring of support, encouragement and requests for more information has inspired me to continue writing about Jamberry. So, welcome to the first installment of my Jam Series. Posts will be going up every Tuesday. This week we’re going to discuss things you should know about Jamberry before you purchase your Jamberry Starter Kit and become a Jamberry consultant.
Here are a few preemptive FAQs:
Where are you getting your information about Jamberry?
I am in touch with multiple Jamberry consultants, who will remain anonymous at their request. I respect their right to privacy and will not be disclosing their identity on my blog.
Why do you hate Jamberry Consultants?
Real talk: I don’t hate Jamberry Consultants. I understand their ambition and respect that they want to hustle to the top. However, my knowledge and understanding of business, direct sales and MLMs (coupled with my thirsty nerd brain) allow me to separate wishful thinking and facts. I don’t think Jamberry Consultants are bad people; I think they’re optimistic people. (Side note: Did you know most people are optimists?) But optimism does not determine success. Reality does. And the reality is that you are more likely to win big at roulette in Las Vegas than you are to ever turn a profit with direct sales/MLM companies like Jamberry.
Why do you care?
Because I truly want people to succeed. Look, there’s nothing in it for me if you do or don’t sign up as a Jamberry Consultant. Absolutely nothing. I don’t earn a commission for every person I convince becoming a Jamberry Consultant is not a viable career path. My honest ambition is to bestow facts and information on my readers and hope they make an informed decision with their financial resources. Because wouldn’t you rather spend approximately $100 on a sure thing instead of throwing it in the figurative toilet? I know I would.
Ready? Let’s dive in. Here are 6 things you should know about becoming a Jamberry Consultant.
- The first month is exciting. Everything is new. It can be overwhelming. You’ve purchased your Jamberry Starter Kit. You’ve logged in to the Jamberry dashboard. You’re in the Jamberry Consultants Facebook pages. And you’re soaking in all the Jam Juice. You’ll feel empowered. At times, you’ll be apprehensive. But mostly you’ll feel like you’ve started something big. And in many ways you have. It takes guts to put yourself out there and sell a product.
- You’ll doubt yourself. Instead of questioning the company and its guidance, you’ll place the blame on what you’re doing. You didn’t work hard enough. You didn’t take it seriously. If only you would do more research, make more Facebook posts or solicit more friends you’d be on the top. Success is yours for the taking. It’s your fault if you fail. Blame the company? Pffft. Girl, it is all on you. At least that’s how Jamberry spins it. But did you know they hire people to promote and manage their company? Yet they rely on Jamberry Consultants, who pay for products, to do the grunt work, while regardless of the hours and effort you put in, your check will depend on how many nail wraps you sell through your Jamberry website. It doesn’t matter if people buy through the Jamberry site directly. It doesn’t matter how many people you’ve reached or women you’ve turned on to the product. Ask yourself this: when a company pays for a television commercial, do they pay the cost of the advertisement to reach the audience, or do they pay based on how many people take action on the advertisement? The answer is they pay for reach. You’re giving away the reach for free. Think about it.
- The women will become your sisters. It’s true: Jamberry is a sisterhood. Yes, that sisterhood is comprised of a male majority executive branch, but the Jamberry Consultants? Definitely majority women. And like real life blood sisters, they will rip your heart and soul out of your body and stomp on it for fun. These ladies aren’t your friends; they’re your competition for resources. Jamberry is like your parents. The Jamberry Consultants want the approval, attention, and respect of the company. They’ll throw you under the bus. They’ll rip clients out from under you. They’ll do anything they can to tear you down. Now, if someone says something bad about Jamberry or a Jamberry Consultant? Yeah, they’ll come to your rescue. But what does that really mean if the rest of the time they’re just holding you down?
- You’ll always have your nails done. You’re working for a nail wrap company, duh. But the extra product and samples you can’t pass on to anyone? Well, what else should you do with those wraps, considering selling on eBay is not allowed?
- Jamberry will make you crafty. Did you know that Jamberry Consultants are required to buy their own marketing materials? This means business cards, catalogs, samples and other promotional content must be purchased by you. Even your Jamberry website is an additional cost after the first few weeks. What will you do with all the extra expired catalogs you’re no longer allowed to use? (Wait, what? Yes. If a new catalog comes out, you are no longer allowed to use the old catalogs, even if you have 100 of them lying around.) I hear Pinterest has some great paper mache bowls you can make out of catalogs. Crafty. Before I move on to number 6, if you thought I was referring to “crafty” meaning manipulative, you’re right – but I didn’t think that needed much explanation. If you want to take the temperature on the attitudes of Jamberry Consultants, just read the comments on my other posts. Bitches be nasty.
- You’ll face a moment of truth. Maybe you’re one month in or a year into the game, but there will come a time where you realize, “Holy moly, I have spent a lot of time and energy on selling these nail wraps and I have nothing but some tacky Facebook posts to prove it.” If Jamberry truly gives any sort of value to women, it’s this: it will force you to decide who you truly are. Are you the kind of stubborn woman who beats the business to the ground, despite getting dismal results? Or do you have the integrity to realize you’ve been hoodwinked, admit it, and help other women avoid similar traps? (LuLaRoe and their $5k start up fees, anyone?)
In the coming weeks, we will be going down the Jamberry Consultant rabbit hole. You will be getting an exclusive behind the scenes look at what it really means to be a Jamberry Consultant. There will be screenshots. There will be gossip. And best of all, there will be hope. Stay tuned to the series and subscribe below so you don’t miss a post!