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Life not so rosy for women selling Mary Kay cosmetics
Mary Kay is a storied brand in the beauty products industry. But an investigative story in Harper's Magazine suggests the company's success comes at the expense of the women who sell the products.
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Tess Vigeland: What image pops into your head when I mention Mary Kay cosmetics? The pink cadillac, right? Well-attired women holding parties with potions and lipsticks and all manner of beauty aids to sell. It's an almost mythical success story in the anals of American business. But there's more to that story and not all of it is pretty. Virginia Sole-Smith wrote the cover story for the August issue of Harper's. It's titled is "The pink pyramid scheme: How Mary Kay cosmetics preys on desperate housewives." Welcome to the program.
Virginia Sole-Smith: Thank you for having me.
Vigeland: So the first party that you ever went to was really a recruitment meeting as much as a tool to sell makeup. How much were you told you could earn as a Mary Kay consultant?
Sole-Smith: So in the magazine article, the first party that I attend -- the first party that I attended ever for Mary Kay -- was hosted by a senior sales director named Daria Rocco. What Daria painted the picture of was that we could expect to make an executive-level income or a corporate-level income, those were the terms she used. She was driving one of the pink Mary Kay cars out in the parking lot, it was brand new and gorgeous. She was wearing a beautiful Mary Kay suit. She was the very picture of success.
Vigeland: And what kind of income are we talking about?
Sole-Smith: What I was then told when I met with a recruiter, she told me that if I held one skin-care class a week, I would be able to earn $17,040 a year. She also told me, 'A lot of my consultants are making $100 an hour.' In reality, the best that we were able to figure out for actual numbers is that of the U.S. sales force of 600,000 women, maybe 300 of them are making six figures. The rest are, at best, making $25,000-30,000 a year. It's really a minimum wage or a sub-minimum wage job.
Vigeland: And you use the phrase, "the best we were able to figure out." This is not a public company, so it's not easy to get numbers like this.
Sole-Smith: All they tell us is that they do $3 billion in wholesale orders a year. They don't track retail sales. So we don't know, once you buy your inventory from Mary Kay, how much of it ends up in the retail market; we don't know how much the consultants are actually pocketing as their salary.
Vigeland: What's really striking in this story is the women that you interviewed who ended up with thousands of dollars in debt, marriages fallen apart because of this endeavor. How is it that so many of these consultants get in over their heads when it only costs $100 to start up?
Sole-Smith: Right. Mary Kay loves to say that. It's a very low barrier to entry. A hundred dollars, all it gets you is a couple of samples, some sales brochures, some catalogs to pass out to your friends. But it doesn't give you everything you need to really run the business. So as soon as you buy that $100 starter kit, you're at your orientation, step one to launch your business and be successful is place your inventory order -- before you've made a single sale, before you've even met with a customer.
Vigeland: And you mentioned in the article that when you said, 'Well I don't have that kind of money' up front, they suggested that you apply for a Mary Kay Rewards Visa card.
Sole-Smith: They certainly did. Antonella explained to me that she actually discourages her sales recruits from spending cash on their products. She said the better way to go would be to open up this credit card. When I said to her that I'm not looking to go into any credit card debt, she she said, 'Oh no, no, it's not debt. It's an investment in your business.'
Vigeland: You do point out that the Federal Trade Commission has never taken any action against Mary Kay. The federal government has not done anything. But you do bring up the phrase Ponzi scheme. What is the difference between Mary Kay, as you describe it, and a pyramid scheme?
Sole-Smith: The FTC defines a pyramid scheme as a business where the primary way you make money is by recruiting others to join the program and charging them fees for participation -- not by selling products to the retail public. Really, the only way to make money is by recruiting other people to sell products as part of their sales unit, which they then get paid a commission off of every time those women place a wholesale order. And that does look like a pyramid scheme.
Vigeland: What's been the reaction from the company?
Sole-Smith: So they want to have it both ways. They really want to say, 'Oh we offer tons of support for our women. We are there for them every step of the way. But if they're doing badly, it's not our fault. They're just independent business people.' And I don't think that works.
Vigeland: Virginia Sole-Smith is a New York-based journalist. Her article in the August issue of Harper's is "The pink pyramid scheme: How Mary Kay cosmetics preys on desperate housewives." Thank so much for joining us.
Sole-Smith: Thank you for having me.
Vigeland: We called Mary Kay for a response. This is what they said:
Mary Kay has a long and strong history as a premiere skin care and color cosmetics company - we've been in business for almost 50 years. We have more than 2.4 million independent beauty consultants in more than 35 countries worldwide selling our products and for the vast majority of them, it's been an extremely positive experience. That said, of course, like anyone who starts a small business, it may or may not be a fit and no entrepreneur is guaranteed success - it's a lot of hard work. Different people start a Mary Kay business for different reasons - some are looking for just a little extra income; some, especially with the current downturn in the economy, are looking for a new career; some are looking for the social aspects.
What's true for every independent beauty consultant is a simple model - she signs an agreement directly with the company, purchases her products directly from the company at a wholesale price and then sells the product to her customers at a suggested retail price. If she sells a $13 lipstick and bought it for $6.50, the profits are hers to keep. It's each person's choice on how much product she wants to purchase from the company to sell to her customers. What's also true for everyone who starts a Mary Kay business and isn't pleased: if she does decide to buy inventory, she can return any products she purchased and we will refund 90 percent of the purchase price within one year of purchase. The incredible and continued interest in Mary Kay along with the longevity, reputation and success of the Company speaks for itself.
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As a new Mary Kay consultant, I would like to clear up a few things:
1. You do NOT have to recruit people in order to make money from a Mary Kay business. Although this is one way to INCREASE your income with Mary Kay, you are perfectly capable of turning profits on your own depending on how much time and effort you are willing to contribute to your business.
2. Referring to the starter kit as "a couple of samples" is completely erroneous. The starter kit is stocked full of about $400 worth of products, including FULL-SIZED tubes of foundation and a FULL-SIZED TimeWise Miracle skin care set.
3. Although new consultants are strongly encouraged to place orders for inventory early on in the start of your business, this is not required. I have not yet placed an order for inventory because I cannot afford that type of investment this early in my Mary Kay career, but I hope to be able to do so within the next year. From the very beginning my MK mentors have repeated over and over again that purchasing inventory is an INDIVIDUAL decision. It just depends on whether you have the resources to make that kind of investment, and how far you would like your Mary Kay Business to take you.
At the end of the day, businesses like Mary Kay are not for everyone. You have to have the time and energy to put into the business in order to really make the kind of money you want from it. Also, not every sales unit is the same. I am lucky enough to have a VERY supportive director as well as an adoptive director that lives closer to me (since I was recruited during a visit to my parents' house), but not everyone who takes the Mary Kay opportunity is this fortunate. The amount of support you have coming into the business can have a large impact on what type of experience you end up having.
I am a Mary Kay beauty consultant coming up on a year in the business. I feel the need to respond because so much of this is just not accurate. I will mention that in addition to my Mary Kay business which I run part time, I also run a successful retail business with my husband for the last 13 years. I started my Mary Kay business because I love make-up and wanted to do something fun as a distraction from my full-time business. Any good business person, male or female, should do their due diligence before investing in any business start-up. I did. I understood the $100 starter kit was just that- a starter. I also understood that customer's love instant gratification thus the need to have inventory. Mary Kay does not require you to keep inventory on hand- you can have every customer order direct shipped from the company and never keep so much as a lip gloss at your house. Further more, it is entirely possible to run a Mary Kay business, as I have, without recruiting any one and simply doing the direct person to person sales that the company is built on.
The very first thing you learn is that your Mary Kay success is directly correlated to how much EFFORT you put into it. No one is going to sell the product for you. Saying your Mary Kay business just didn't work but not accepting blame for that failure is like saying "oh hey I tried that gym thing but it just didn't work for me". That is ludicrous. Similar to the gym, the results you get are predicated upon the amount of effort you put into it. If you only solicit your friends and family, you likely will fail...and that is applicable to any business model. If you're not willing to step outside of your comfort zone and approach woman you don't know, then this is not the business for you. But to insinuate that Mary Kay is a guileless company that tricks all these innocent women into putting themselves into debt is just so far fetched.
Bottom line: If your business doesn't work then it's most likely because you are not working at it.
I become a consultant with Mary Kay way back in 1988. I lasted about 4 months. One day I attended a job fair, looking for an administrative assistant position within any corporation who had openings. At 22 years old, I was underemployed as a receptionist at a public utilities company, my ultimate (dream) goal was to make a living in the performing arts. Mary Kay had a recruitment booth set up and, of course, I knew of the MK brand and I walked over thinking they were selling makeup. A MK woman, about 35, quickly explained the sponsorship to me. I politely took the literature, but I did give her my resume, which had my phone number. Of course, the MK woman, whose initials were HB, had an answer for every question I asked. She told me how MK could help me fund my acting career, invited me to seminar, I met other middle age woman who loved MK and all of them had overcome some hard luck story that usually included a husband/boyfriend doing them wrong. Long story short, she heavily suggested I purchase the starter kit for only $99.00. That was a lot of money back in 1988, but I did it. It didn't end there. After hearing negative comments from my own boyfriend, being stood up at parties and meeting with people who sampled but never purchased. I would shyly try to tell HB that I didn't want to work with MK any longer. Of course, then I would be invited to yet another seminar, private discussions with HB's upline, the tapes, a big seminar trip to Boston. Then I was told to be successful I would have to buy $600 in inventory. I'm sorry to say that I fell for it and proceeded to dupe my boyfriend into lending me the $600.00. I lied and told him that I wanted to take acting classes at HB Studios (a legit acting school in NYC). Since my upline's name initials were HB I asked him to make the check out to her lying to him that it was the acting school. I look back at that and cringe. I received all these products. I called people, tried to plan parties, made gift baskets, set up a booth in flea market, bothered friends, told co-workers about MK, no one was really interested. I made only "pity" sales; a friend who would purchase one lipstick or a hand cream and nothing else. I shared with one of my co-workers how I was struggling and she told me something I'll never forget. She looked at me and pointed out my facial acne and replied, "How can you sell skincare products with your skin so bad?" With that I closed shop. Her comment woke me up, she wasn't a friend, yet, this co worker was the only one who spoke up! I realized HB and her upline wasn't interested in me, but making their quotas. Now, I will say that at 22 years of age, the last thing I wanted to do spend my free time with women my Mom's age. So I didn't really put a lot into it and that's what is needed to become successful at anything.
I think this is just a little ridiculous. They prey on "desperate housewives"?? Seriously?? This makes women who actually do decide to take on this venture for Mary Kay sound like they are just big morons who have so little going on upstairs that they are easily suckered into a "pyramid scheme". And I suppose that the Mary Kay company should try to get people to sell their product by telling them they will fail?? They could never ever earn a car? I live in a small town, do not work for Mary Kay but did recently go to a Mary Kay party. Yes, the women hosting this party where "higher ups" in the company but they had also dedicated 11-15 years with this company. There is something to be said for dedication on their part which did lead to success and their longevity with this company. There were a total of 4 women, 2 were working on their 5th-7th car. One was working on their 1st and the other had just started. The 2 that had earned cars had been with the company 11-15 years. I think of myself as an average woman. I have 3 children, work and also purchase makeup. I dont see why woman who join a company to sell skin products, cosmetics, etc should be deemed "prey". I myself love cosmetics. I have them from many different makers. I love Estée Lauder!! It's one of my faves! But I have never been offered the opportunity to sell this product unless I want to work for the store that has makeup counter in it. There are lots of women like me that love cosmetics. Why not try to make a little extra money or at the very least get ages items discounted. I think it's a huge leap to find the definition of pyramid scheme and apply it to Mary Kay. Fact is there are women that do earn cars from this company. There are women, that while raising a family have managed to make a good living from this company. These women can choose how much time they want to put into this company while still working part or full time job, not to mention the full time job of being a mother. I think calling Mary Kay a scheme would be Acceptable if there was no real way to make money. Fact is, you can make some great money in this company, meet new people and open yourself up to new opportunities. I see positive things from this company, not negative. And it is a "sales" job. If you apply yourself and "sell" you will in fact make money. You can EARN a car. These things are true and very much so tangible.
Obvious story is obvious. Like Amway, anyone with the tinest bit of common sense realizes this is a scam, from start to finish. If it wasn't, they'd be willing to show hard data, buy back their product at 100% rather than 90%, or better yet, not make you buy inventory.
The entire structure is dependent on continually adding new 'sales' people, and the only way they can succeed is to add more 'sales' people under them. The actual products aren't the focus of the business, they're the distraction.
I'd question anyone who says otherwise without hard evidence, especially since simple math shows it's a failure.
If a friend comes over to your house to sell you on selling Amway or Mary Kay, throw them out. They're not your friend.
If a person buys a membership to a gym and still stays out of shape do we write an article attacking the gym? Of course not, that wouldn't make sense. Just because someone buys a starter kit with Mary Kay (which is an incredible value by the way) and then "trys" it for all of two weeks doesn't mean Mary Kay doesn't work. The company is amazing and I have been with them for over 4 years. It does take work and effort. Most small businesses fail after a short while. It takes work but I have found after earning several company cars and having a lot of success that Mary Kay does work if you work it. I would like to know how long this person "tried" doing one party a week. Did they really use the support of their Director and stick with it long enough to see results (like 6 months or more)? I agree with the person who said that $100 an hour isn't bad....and certainly more than min. wage! If you only work your business 3 hours a week and even make $100 that's more than working at some retail shop. The inventory helps me take better care of my customers and where can you start your own business with a 90% guarantee for a year?! Most small businesses cost thousands and thousands to start with no guarantee.
Amen! And most companies need a year to really get off the ground. You see a return on your (very small) investment a whole lot sooner. And you do have a ton of support. You also do not have any kind of deadlines or quotas to meet. Not a lot of "profitable" sales jobs offer that flexibility or freedom. I say f you are interested in becoming a salesperson then be smart. Have an idea in your mind of what you expect. Make sure that what you expect from the company is parallel to what you expect of yourself. Like any job, work hard and you will be successful. But if you are still hesitant ask questions. Figure out what makes you so hesitant and ask a Mary Kay representative. They are there to answer your questions, ALL of your questions. They are not there to force you to sell, but to offer you the opportunity to be part of a multi-billion dollar company that is in fact a household name. Who doesn't recognize the Mary Kay name? And how can a company that has been in business this long be a bad thing??
Just because Mary Kay has been around for 50 years does not make it any less of a pyramid scheme. Bernie Madoff was engaging in a Ponzi Scheme for well over 20 years, probably a great deal longer and wasn't caught until certain conditions were met. If the historic market crash hadn't happened, I have no doubts that Bernie would still be scamming people. Sometimes the biggest scams are the ones that are held in plain sight. I'm afraid that Mary Kay falls into this category.
I've never been in Mary Kay but I have been approached numerous times about the "opportunity". As a business owner myself, one I might add that I started from scratch when I was 17, I have learned a great deal about how things work. And the things i have heard from the Mary Kay sales flunkies have given me pause to wonder, just how big is this scam anyways? I assumed for years that it was just boisterous overly made up women hawking way too expensive makeup for pin money. But this is not the case.
The business model from what I have seen (and ms. Sole-Smith points this out) is to entice women, many of them complete novices, into purchasing obscene amounts of inventory for their "businesses" before they have sold anything! This is because their "up-line" gets a commission on the big inventory packages. All sorts of tricks, cons and manipulations are put into place in order to cajole women into purchasing inventory. In fact, a new rep who comes in without an inventory package purchase of $600 or more is considered "unqualified". Inventory package levels have alluring names like "emerald stars" or "pearls" - which sounds great - but a pearl order ($4800) that rots in the basement accruing credit card interest each month is no pearl!
The other thing that bothers me is that you can never ever get a Mary Kay rep to actually show you an accounting statement for a year or several years that shows that they actually made MONEY. I'll hear all sorts of income claims like "executive income" and when it comes time to "show me the money" then I hear the stories - how they used to make a lot of money but now they don't because they don't have time, or because their health is poor, or because they really don't work their business anymore. The bottom line, is that there is no way that the overwhelming majority of Mary Kay reps can make money in a sustainable fashion, because they are always on a hampster wheel to find new recruits, talk them into big packages, to account for the old reps that dropped out and sold back their inventory. (Mary Kay doesn't mention this, but when women sell back at the 90% refund, the "up-line" takes a commission hit of upwards of 25%, ouch!)
I am really grateful that Ms. Sole-Smith has written about this great American fraud, the size of which is akin to the scraps of Bernie Madoff's Ponzi Scheme, and I hope this dialogue will prevent more innocent women from being preyed upon.
PS Should any Mary Kay reps decide to slam me, I am 100% open to reviewing your financial documents that demonstrate that you made money, after expenses, for at least 2 years. SHOW ME THE MONEY - it would absolutely be a first.
Shame on you NPR and Tess Vigeland for not doing your homework and offering this woman airtime. I'm surprised that as a journalist, you didn't consult an expert, like someone from the Direct Selling Association, for example, or at least bring in a counter experience. You just let one person and HER experience drive this story.
Is she credible because she tried and failed?
I've been a consultant in network marketing for 2.5 years. I rep a different company, not Mary Kay. I earn over $6k/month and growing, and I did build my business part-time, along side my full time public relations firm.
So here's a different perspective. We do not carry inventory. We show our products and then client's orders are shipped directly to their doorstep.
We offer a business with products people can sell and a system to build a thriving 'volunteer' sales force. As consultants, if we and our team do not sell products, like any other business, we do not make money.
We can earn off of our direct sales, thus even without a team and still earn.
Just like any other business, we can earn more than the people above us, even if they've been in the business longer than us. How? Try doing your research.
The way Mary Kay was represented in this story is not the industry standard, how a solid business is built, and certainly NOT how we build our business.
It's a shame Ms. Sole-Smith got a voice on NPR, because it's one story and one-sided. Network marketing can offer a VIABLE and ETHICAL opportunity for people to take control of their financial futures.
Compared to starting any other business, network marketing takes as much work to make successful, but with less risk and overall financial investment. Like any other entrepreneur, we get paid for our vision, commitment, and hard work.
Regarding the comment about the consultants on the plane. When was the last time you heard people that excited about their job?! Isn't that a good thing amidst layoffs, over-worked, and under-paid Americans? Just because they were openly celebrating success, doesn't mean they were trying to "recruit" you.
The positive stories I have from my team alone are countless to how this opportunity has helped to change people's lives, beyond just financially.
There are over 75 million consultants worldwide. “Mad Money” market guru Jim Cramer recently told his CNBC viewers: “Direct selling has never gotten its due from Wall Street. It’s time we recognize that the direct sales model works, and it works well.” There is little question why financial notables like Cramer, Warren Buffett, Ray Chambers and Suze Orman have touted businesses based on direct selling.
Maybe NPR, you should find out why.
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