LulaRoe’s questionable business model has often gotten the company into legal troubles and even in a Docuseries, LulaRich. If you’ve watched the show, then you must be wondering- Is LulaRoe still in business?
LulaRoe is a multi-level marketing company, and this type of business could easily resemble a pyramid business model. And this is exactly what happened with the notorious LulaRoe.
So keep on reading to find out the truth behind this company and to find out if it is still in business.
What is LulaRoe?
LulaRoe is a multi-level marketing company based in the U.S. that specializes in selling leggings, dresses, and shirts for women. The company was founded in 2012 by DeAnne Brady and her husband, Mark Stidham, and is headquartered in Corona, California.
As per the company’s website, LulaRoe was built to help others by providing them the freedom and flexibility to build a business at their own pace. As a result, the company has a multi-level marketing model.
So how this works is that LulaRoe enlists independent distributors who initially order inventory of $499, a huge reduction from the earlier price of $5000. Bonuses are given on every recruitment and inventory order then. However, these bonuses are the primary form of income for these independent distributors.
The fact that LulaRoe’s business model resembles a “pyramid scheme” has got it into trouble many times.
How Does LulaRoe Work?
LulaRoe claims to operate as a multi-level marketing company, where distributors first purchase inventory at a wholesale price from LulaRoe. To get started, distributors are expected to buy a stock of 33 items for $499.
Now, distributors can earn money by making direct sales to consumers. They earn by receiving commissions on the sales made by distributors recruited by them.
The sales can be made online on Facebook and other social media channels or offline via pop-up boutiques.
The Rise and Fall of LulaRoe
LulaRoe, during its initial few years, was everywhere! In 2014, LulaRoe’s bright-colored and unique designs of leggings, skirts, and dresses took over the internet.
In the same year, the company made a whopping $9.8 million in sales with over 750 distributors and just 23 employees. And by 2017, the company’s growth was massive, with a network of 80,000 distributors.
However, in the same year, dozens of customers, employees, suppliers, etc., filed lawsuits against them, citing quality issues, deceptive practices, and unfair refund policies, among others.
LulaRoe’s has been so infamous that Amazon made a docuseries on the company by the name “Lularich.”
In the series, a former employee revealed harsh realities and the pressure of working with LulaRoe. They also revealed how Lularoe abruptly ended their refund policy. A former consultant shared how she ended up filing for bankruptcy because Lularoe sent them torn clothing.
In the year 2018, LulaRoe started facing financial turmoil and layoffs. The company faced a lawsuit of $49 million from its chief clothing supplier for non-payment of bills.
Then, in 2019, the Washington State Attorney General filed a lawsuit against LulaRoe for running an illegal pyramid scheme. This resulted in LulaRoe paying $4.75 million in fine.
Rising complaints further led the company to an “F” rating from Better Beaureau Business.
Is LulaRoe Still In Business 2023?
After reading all the controversies that Lularoe has been a part of, you might be wondering- Is LulaRoe still in business? Shockingly, LulaRoe is still in business.
If you take a look at LulaRoe’s social media channels and website, you will see that everything is working as usual. Their Instagram is full of faces of smiling retailers with their success stories.
The company is also adding new sizes and introducing a new activewear range. They are trying to expand internationally. And in 2021, the company even managed to raise its BBB rating to “C.”
So, in spite of facing numerous challenges, LulaRoe is still in business and is expanding.
Is LulaRoe A Pyramid Scheme?
As shared earlier, in 2017, LulaRoe faced a lawsuit from the Washington State Attorney General for running a pyramid scheme.
This lawsuit resulted in a court order that prohibits the company from operating a pyramid scheme.
So, it can be deduced that LulaRoe was running a Pyramid scheme, but now it is making changes in its business model to fix the error.
How Much Can You Make By Selling LuLaRoe?
After purchasing the inventory, distributors can markup the price of items anywhere by 35–50% easily. This places most of the products in the range of $35–$65.
LulaRoe has not released any concrete numbers. However, you would need to sell $15,000 worth of products with a 40% markup price to recover your initial investment.
Apart from this, LulaRoe pays bonuses to those who build up a high-performing team. As per the company’s disclosure statement, they paid $2,064.77 on average as an annual bonus payment.
As per the same disclosure statement, these are the highest bonus payments:
- Sponsor: $44,542.23
- Coach: $888,005.01
- Trainer: $231,132.95
- Mentor: $2,472,957.68
Multi-level marketing companies like LulaRoe, Amway, etc., have faced significant impacts because of resembling a pyramid business model.
In LulaRoe’s case, this has resulted in the company facing hefty fines, which might have got you thinking- Is LulaRoe Still In Business? Although the company’s network has reduced considerably now, the company is doing fine as of now.
Will the company find its way back to its initial success? Only time will tell.
What differentiates LulaRoe from other MLM?
LulaRoe does not offer a fixed catalog, unlike other retailers. When you place an order, they send you a diverse array of styles, sizes, and colors to select and choose from. This also reduces competition among distributors as each of them has their selected stock.
How many retailers does LulaRoe has as of 2023?
LulaRoe currently has 17,000 retailers working with them. This is, however, a significant decline from the retailer network of 80,000 they had in 2017.
What are the main products of LulaRoe?
LulaRoe’s main products are brightly patterned shirts, leggings, and dresses. The company releases only 5000 copies of any pattern and typically never restocks any design.