Mary Kay? Pyramid Scheme? Who Is Virginia Sole-Smith?
We’re pretty sure the name Mary Kay rings a bell. Of course, it’s been in the cosmetic business long before most of you have been born. Mary Kay Cosmetics is not something to sneeze at — it holds almost the same prestige as the big names in the cosmetics business. Think L’Oreal and Sephora.
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Table of Contents
Mary Kay Company Quick Overview:
The company was founded by the late Mary Kay Ash in Texas in 1963. It is a US-based seller of cosmetics that employs the MLM business model to sell its products.
Richard Rogers serves as the Executive Chairman to date. He is also the co-founder and Mary Kay’s son.
David Holl serves as President and Chief Executive Officer.
Mary Kay signs up independent distributors also called beauty consultants to sell and distribute products directly to people in their circle.
The company runs on five continents with over 35 markets. To mention but a few, Canada, United Kingdom, Mexico, China, and all the way down under in Australia.
Mary Kay products
Mary Kay’s product range includes makeup, of course, skincare products, body & sun creams, fragrances, and even “men’s grooming”.
Their bestsellers are the Oil-Free Eye Makeup Remover and the TimeWise® Miracle Set®. It includes a moisturizer, a cleanser, sunscreen, and a night solution. The aforementioned Mary Kay products are the popular ones.
MLM Review: Is Mary Kay an MLM?
Some reviews say that Mary Kay is definitely not into affiliate marketing nor does it look like that it is offering services for an affiliate program.
As mentioned earlier, Mary Kay Inc. is an American privately owned multilevel marketing company.
So right off the bat, Mary Kay is upfront that it is a brand that sells cosmetics and beauty products through a network marketing scheme.
In MLM businesses, the beauty consultants of Mary Kay sell and distribute the company’s products directly to those within their communities.
These beauty consultants are not employees and thereby do not receive a salary. The business model has been the object of criticism recently.
Several media outlets have investigated multilevel marketing companies and their get-rich-quick plans and services. They deemed it troublesome and somewhat akin to the pyramid scheme structure.
According to Direct Selling News, Mary Kay was the sixth largest network company in the world, with a wholesale volume of a whopping $3.25 USD billion in 2018.
That’s a huge amount of income in the highly competitive beauty industry and can definitely be called a million-dollar business. Perhaps that qualifies them to b considered a cosmetics giant.
When Mary Kay Ash founded the company, she probably never thought she would sell those skin creams like crazy!
Pink Pyramid Scheme rumors
However, despite the tremendous success of Mary Kay, the rumor mill is rife with stories about the company being a pink pyramid scheme.
So, is Kay a pyramid scheme? And that this company founded by Mary Kay Ash with an initial investment of $5,000 USD is not really about empowering women or giving services to them or offering business opportunities but more about ensuring women into what is called a pink pyramid scheme.
How true is that? How can a company that is over half a century old suddenly turn dubious? Let’s dig further.
What is a pink pyramid scheme?
A pink pyramid scheme is mainly a way of exploiting the salesforce.
Under this business model, the company’s sales staff is encouraged to purchase the products and then sell them to their customers.
For many of the consultants of Mary Kay, the financial returns are often minimal — which is really far away from the huge income that the company claims that women can earn by selling their products.
That’s why many people often ask is Mary Kay a pyramid scam or is Kay a pyramid scheme?
Pink Pyramid Scheme Report of Virginia Sole-Smith
Virginia Sole-Smith posted this report to share her experience with Mary Kay.
Her report is entitled “Pink Pyramid Scheme – How Mary Kay Cosmetics Preys on Desperate Housewives.”
In the report, Smith elaborated on how she encountered Mary Kay products and became involved in the business.
She detailed how members were pushed to sell the products.
She also mentioned that this business is not for the faint of heart.
Other reports show that in spite of the claims that Mary Kay earns an annual sale income of $3 USD billion, its salespeople are in debt with boxes of unsold facial creams, lipsticks, and what-not.
Quite a few of them earn some profit, but most of them don’t.
It looks like the sales director gets the bigger slice of the pie and the sales force just gets the crumbs or none at all. You can’t blame people if they wonder if Mary Kay a pyramid scam or Kay a pyramid scheme.
Now a business where only a few individuals earn decent money while the rest pay to play does sound a lot like a pyramid scheme.
The Federal Trade Commission tells apart between recruiting salespeople to sell a product, which is of course, ideally legal, and making money exclusively through some kind of fees for participation, which actually isn’t.
A fee is somewhat unclear but the FTC has charged some multilevel marketing companies with using pyramid schemes.
Some Mary Kay members struggle to understand how they could have fallen for the company’s ploys. Yet many of them carry on with defending their particular recruiter or sales director as not part of the scheme.
Mary Kay denies it and claims that it is just a simple business model where a person signs an agreement directly with the company, buys the products at a wholesale price, and peddles the product to her customers at a suggested retail price.
The profit is hers to keep. It is basically the person’s choice on how much product she wants to buy from the company and sell to the customers.
It should also be clear that Mary Kay does not use affiliate marketing as claimed by others.
So this brings us to the next question—
Is Mary Kay a Makeup Pyramid Scheme?
The Federal Trade Commission describes a pyramid scheme as a business where the main method of earning money is by recruiting and signing up others in joining the program and charging them fees for participation — not by selling products to the public.
Therefore the quick answer to the question “Is Mary Kay a pyramid scheme?” is NO.
On paper, Mary Kay is not a pyramid scheme. But perhaps, in practice, some say it looks like a pyramid scheme.
How does one join Mary Kay?
To get things underway as a Mary Kay beauty consultant, you’ll need $100USD to acquire the ‘Mary Kay® Starter Kit.’
It comes with retail-sized products to show to friends at parties, samplers that are allocated for your would-be clients, and business supplies and brochures with sales tips.
Mary Kay distributors can earn income through two methods. One, from direct selling to customers, and two, from a commission based on sales made by their downlines.
According to one review, Mary Kay consultants can get paid up to 50% gross profit on products when they sell them to customers at full retail price.
This is what they call an earned discount privilege. However, if you look at the small print or particulars, you will be led to ask the following pertinent question —
Can You Really Make Money Selling Mary Kay?
At first, the company will never mention to you that in order to receive the hefty 50% gross profit, which is also known as earned discount privilege, one needs to place a $400 retail order every quarter to sustain an active status and get qualified for it.
Like all the other networking companies in the cosmetic industry, Mary Kay distributors peddle their cosmetics and skin care products through a party plan or pop-up boutiques or online services using private VIP groups on Facebook or through a social media ad.
Consequently, there’s a lot that comes along with Network Marketing that many people struggle with.
Now, don’t get me wrong…
You can certainly make money with Network Marketing, but if you’re gonna put in the amount of grueling work with this business model (which, trust me, isn’t easy), you might as well bring in some REAL money while you’re learning the ropes.
The program that helped skyrocket my online business to $40,000+ per month is so simple that making money really does become second nature.
How much commission do Mary Kay consultants make?
Mary Kay actually gives a generous commission for all products, as mentioned earlier— 50 percent.
This is a gross revenue percentage that doesn’t account for marketing and business administration paid by the consultant.
Personal earnings or income will vary but an average beauty consultant who is eligible for commissions or bonuses can earn up to $5,569 in sales annually.
That’s not bad for Mary Kay’s consultants.
Again, if you look into the fine print, these numbers do not take into account the business or other related expenses. Sounds like a red flag and that definitely needs to be checked.
How much do you have to sell to get a Mary Kay car?
Yup. it’s possible to get a Mary Kay car.
Beauty Consultants who achieve the status of Mary Kay Independent Sales Director or higher than that position can in fact earn the use of a Mary Kay career car or incentive travel.
According to their website, “as of December 31, 2019, 62% of the 485 Independent Sales Directors and Independent National Sales Directors participated in the Career Car Program and 42% attended an incentive trip.”
Speaking of cars — you guys have probably heard of the notorious Mary Kay Pink Cadillac? A flashy pink car will definitely appeal to an average woman.
A review says that this is typical with multi-level marketing companies like Mary Kay.
They depend on countless recruitment of new customers who buy inventory packages in order to bring more sales and wealth from the bottom to the top of the, well, pyramid.
It’s like a device to entice people into the business. So the following question persists…
Is MLM a pyramid scheme?
A lot of people call Mary Kay a product-based pyramid scheme — by that it means many people at the bottom of the pyramid must purchase remarkable amounts of products so that those at the top of the pyramid can receive fat commission checks — win a car and go on a flashy vacation trip.
However, to answer the question of MLM is a scam, let’s discuss the differences between the two.
Multi-level Marketing or networking is essentially a marketing strategy that employs selling products directly to the customers— most often by word of mouth.
The difference between this kind of scheme and a legal MLM program is that there is no actual product that is sold in a pyramid scheme.
So not all MLMs are pyramid schemes. As is true with any venture, your financial gain depends on your ability to sell products or offer services.
Be wary of any company that guarantees you cash for doing nothing is not being honest with you. It’s just a device they use to dupe people.
Is Mary Kay a Pyramid Scheme MLM?
That question has been dealt with from the beginning. Yes, Mary Kay is an MLM company, which produces and sells cosmetic products.
Mary Kay has been around the business for so long — it is considered as one of the pioneers of direct selling, which gives them a good edge over other MLM companies.
Is Mary Kay Cosmetics an MLM?
Aside from that, the company also offers regular people the opportunity to work from home by getting their products at discounted prices and then selling them at retail prices.
It looks like a win-win situation if you come to think about it…
However, it’s not as simple as it looks —because Mary Kay is saving hundreds of thousands of money in marketing costs by letting their members do all the promoting and advertising from home.
Why is Mary Kay Not A Dual Marketing?
Mary Kay’s intention is to depart from being associated as an MLM. And they decided to call their business model a “dual-level marketing” program.
Mary Kay came up with that jargon and surely you ask,
What is dual-level marketing?
So the idea is that there are two sales of the product (company to consultant and consultant to customer) somehow means it’s this made-up term of “dual-level.”
If you look at it deeper, it simply is a multi-level marketing plan.
Perhaps it’s the reason for this next question.
Why is Mary Kay so expensive?
Well probably because its products are of ordinary quality and are well, pricey or overpriced. Besides that, women have a ton of choices on the Internet and in the stores.
There’s just no need to go through the hassle of looking up a Mary Kay consultant who will just probably try to sign you up as her downline.
Is Mary Kay a Global Brand?
Technically, yes it is. Their brand products are being sold in over 35 countries across the globe. From the United States to China, Mexico, Russia.
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Where Mary Kay falls short is in scalability.
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The great thing is how easy it is to scale. You don’t have to worry about:
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- Begging your friends and family to buy from you
- Recruiting people all the time
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Now, I know you probably have tons of questions…