Among the influx of Candy Crush invitations and event reminders, you may have noticed requests to join a LuLaRoe Facebook group in recent months.
Upon launch, LuLaRoe was simply a fashion brand specializing in kitschy patterned leggings, but it has since exploded into the latest craze in multi-level marketing. Anyone can sign up to be a LuLaRoe sales consultant, and the company touts itself as a means to make a little extra money, develop entrepreneurial skills and learn how to manage a business.
Though LuLaRoe reportedly made $1 billion in profits last year, boasts 80,000 independent sellers and recently announced a partnership with Disney, the company is currently facing scrutiny for faulty products and poor leadership.
Here’s a rundown of what you need to know.
How was LuLaRoe started?
The company was founded in 2014 by DeAnne Stidham, a former network marketer, who runs the company with her husband, CEO Mark Stidham. The website describes Stidham’s plight as a formerly single mother who was inspired to start the business after a run-in with two dress wholesalers that inspired her to sell end-of-season dresses to friends and family members. Motivated by the positive reception, she started LuLaRoe to help other mothers like herself run their own businesses from home. “LuLaRoe exists to provide an opportunity for people to create freedom by selling comfortable, affordable, stylish clothing, and offering its retailers the independence to set their own pace and schedule,” the site reads.
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LuLaRoe is often described as a ‘multi-level marketing company.’ What does that mean?
Multi-level marketing is a business strategy in which direct-to-consumer companies sell product through appointed brand ambassadors who receive a cut of the sales. They are also incentivized to recruit sellers: They receive an additional percentage of sales made by the employees they bring on board. LuLaRoe functions much like its multi-level marketing predecessors (think: Mary Kay and Avon). The difference is that, instead of schilling beauty products at Mary Kay parties held in living rooms, much of the sales are conducted through social media in the form of VIP Facebook groups formed by sales reps. In order to purchase products, you must be invited to a group by a LuLaRoe employee.
What types of products does LuLaRoe offer, and how to sellers get them?
While LuLaRoe is best known for its soft, colorful patterned leggings, its reps sell other styles, including shirts and dresses. Leggings sell for $25, shirts go for $35, and dresses range from $45-$75. Independent fashion retailers are required to pay between $5,000 and $6,000 out-of-pocket on inventory and a business starter kit, which includes promotional materials and a training booklet. Any unsold product can be sold back to the company.
What makes people so crazy about these leggings?
Exclusivity. LuLaRoe products aren’t available for sale online and can only be purchased through members of its sales network. Additionally, every retailer is provided different inventory, based on factors like geographic area and regional preferences. The design team creates 400 new fabric designs a day that are used for 5,000 garments, according to Business Insider. Many of these patterns aren’t duplicated, so it has become a hobby to hunt for new styles.
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What’s going on with this lawsuit against LuLaRoe?
The company is being hit with a class-action lawsuit, following numerous complaints that its leggings tear easily. “Customers have complained that the leggings are of such poor quality that holes, tears and rips appear before wearing, during the first use or shortly thereafter,” plaintiffs Julie Dean and Suzanne Jones wrote in the lawsuit. “The leggings have also been described as tearing as easily as ‘wet toilet paper.’”
Is LuLaRose doing anything about it?
LuLaRoe has admitted that recent products were defective and changed former policies that denied refunds or exchanges. On its website, it recently included a banner on the homepage instructing customers with faulty products to file a claim for items purchased between January 1, 2016 and April 24, 2017.
How do the independent retailers feel about all of this?
Not great. Many have expressed disillusionment with the company following last week’s remarks by CEO Mark Stidham in which he called out consultants for sluggish sales and recent resignations, rather than address problems with the products. “You cannot wrestle with the pig without getting a little mud on ya’. Don’t wrestle with the pigs, ignore them,” Stidham said, in a now deleted video conference clip, as reported by Racked. The company has called these comments motivational and not intended to be disparaging.
