[Inside the Pink Pyramid] Why Mary Kay is Only The Beginning

Investigative Fund Virginia Sole-Smith Mary Kay Direct Sales Industry

 

Today’s look at why Mary Kay is just the tip of a pyramid-shaped iceberg — is brought to you by the Investigative Fund, who asked me to dig deeper into the direct sales industry as a whole. I’ve been getting so many great emails from folks who have read the Harper’s story or heard one of the NPR interviews last week and one thing everyone asks is: “So what about [Avon, Amway, insert-your-direct-sales-of-choice-here]? Are they as bad as Mary Kay?”

The short answer: Most likely, yes. Sorry.

Of course, the real answer is more nuanced than that. There are lots of idiosyncrasies among the various business models, and that means some play out better than others for the sales force. For example, if you don’t have to buy inventory to make money — like, really don’t have to, not the Mary Kay “it’s not required, but…” version — you’re going to be way ahead of the game.

But bottom line: These are businesses that market lucrative income opportunities and recruit by the tens of thousands without disclosing the full story about said opportunity. That makes the direct sales industry lots of money and gets its workforce into lots of trouble. And this is no accident — the industry has been lobbying furiously against tighter regulations and disclosure requirements since the 1970s.

Get the full story — including which presidential candidate relies heavily on the direct sales industry for campaign contributions! — over on the Investigative Fund here. 

Filed under Career Opportunities, Customer Cult, Government Watch, Mary Kay, Press

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3 Comments

3 Comments

  1. Heather Cook
    Posted July 30, 2012 at 3:36 pm | Permalink

    Hi, Virginia:

    A few weeks ago, I was at the airport waiting for my son’s flight to arrive when I saw a copy of Harper’s in one of the gift stores. I bought the magazine because I saw the cover story. I tried selling Mary Kay back in college (about 20 years ago) and I signed up to sell Premier Designs Jewelry last November. I attributed my Mary Kay failure to just being too young to really take it seriously. Fast forward 20 years and I’ve got $2,000.00 in debt tied to Premier Designs; a company which also preaches the “you-can-have-it-all” philosophy. After reading your article, I feel embarrassed and ashamed for being caught (again) in the multi-level marketing noose.

    I think the most embarrassing thing about it is that I have a Masters Degree, and yet I didn’t have enough sense to ask the proper questions. Premier touts their marketing plan as “50-50.” The reps are told that we get to keep 50% of the profit at the end of the party and a party usually averages $500 in sales. What they fail to mention is that the hostess incentives and any other promotions come out of your 50%.

    They recently started pushing recruiting parties with the incentive that your potential reps can get approved by Premier for credit on the spot. The kit plus the membership fee comes out to about $1,500.00. You don’t have to buy a kit, but it is “recommended.” Sound familiar? I was told that I would make my investment back in 6 parties. That never happened. The director encourages people to pass the cost of the incentives onto the clients, and my sponsor told me that sometimes you have to lie to get bookings. I have tried talking to the marking department, but they danced around the issues and claimed to be a “Christian” company. They even said they were “so lucky” to have someone like me working for them.

    I really thought I was smart enough to know when I was being ripped off, but here I am, $2,000 in the hole (the kit, the membership, the catalogues, the additional samples, the ProPay fees, etc). The worst part is that I work for a bank in Anti-Money Laundering Compliance and I let myself be taken advantage of by “Christian” people who are as unscrupulous as the criminals I deal with on a daily basis.

    Thank you for your honest article about the pitfalls of multi-level marketing companies.

    Heather Cook
    Pittsburgh, PA

    • Posted July 30, 2012 at 3:42 pm | Permalink

      Hi Heather,

      Thank you so much for sharing your story. I know it’s not easy when you’re feeling embarrassed and ashamaed — especially because these companies have cleverly set things up so anyone who doesn’t do well with their business model feels like it’s “her fault.” But it’s so important to get these stories out there and let everyone know they aren’t the only one who “messed up.”

      I also don’t think you should beat yourself up for not knowing better. Having sat through these sales pitches, I completely understand how persuasive they are! It’s a very skillful design, set up only to emphasize the promises and potential… but not to disclose any of the facts that would make you reconsider your investment.

      So, again, thanks so much for posting here and helping to raise awareness. Best of luck to you!

      Cheers,
      Virginia

  2. Joni
    Posted June 5, 2013 at 4:10 pm | Permalink

    I have sold Premier for 13 years–and you do keep 50% of the retails sales and send Premier the other 50%. In addition, you send in the tax, shipping and handling. (which you have collected from the customers). You DO NOT pay for the hundreds of dolllars in Free jewelry that the hostess receives.
    You pay a “jeweler share” of $8 (no matter how much free the hostess earned), and you pay $3 for each $25 bonus (up to 4) that the hostess earns (if any). The MOST you would pay for the free jewelry from any jewelry show is $20–and I have had a hostess earn over a $1000 in free before! My average hostess earns $300 in Free jewelry–and I average about that evey time I have a show. It’s not a “get rich quici scheme”. You actually have to work to make money. With any business, there are expenses–which are all tax deductible. If you have a few shows–you should be able to pay back your investment. I have helped jewelers get started without buying a kit–they earn enough free jewelry from their training show to get started.
    I feel bad that you didn’t have a good experience. I’m sure your upline will help you in any way that they can! I don’t think you understand how it all works!

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