Is LuLaRoe a Pyramid Scheme or MLM? [Review]

If you’re reading this, you’re probably curious about LuLaRoe and wondering if it’s a good way to make money online. Maybe a friend or family member has told you about it and you’re not sure what to think.

As an online entrepreneur, I have reviewed many similar online opportunities over the years. So I can tell you what you need to know.

Before we dive in, though, I want to make it clear that I’m not affiliated with LuLaRoe in any way. That means I’m not getting paid to write this review. I’m just here to give you an honest and unbiased look at this program.

And at the end of the review, I’ll even share with you the best alternative to LuLaRoe that I’ve found for making a full-time passive income online. Sound good? Let’s go!

What is LuLaRoe?

LuLaRoe is a multi-level marketing (MLM) company that’s all about women’s clothing, with a focus on tights that come in some pretty cool and unique prints. And here’s the kicker: each print is only made in limited quantities, so if you’re lucky enough to snag a pair you won’t have to worry about running into someone else wearing the exact same thing.

To buy LuLaRoe products, you’ll need to hit up one of their Independent Style Stores – either in person or online. But, here’s where things get a little sticky. There are some folks out there who are concerned that LuLaRoe might actually be a pyramid scheme scam.

You may also want to read our article on the top MLM companies.

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Is LuLaRoe A Pyramid Scheme?

No, LuLaRoe is not a pyramid scheme. Let me explain why.

Firstly, what is a pyramid scheme? Well, it’s a type of scam that recruits members with the promise of money or services in return for enrolling others. The organization behind the scheme will share a percentage of the fees paid by each new recruit, creating a chain where members at the top receive the most benefits while those at the bottom lose out.

However, LuLaRoe is different. While members do have to pay a fee to join, they don’t have to rely solely on recruiting others to make money. They can sell LuLaRoe’s products and earn a profit that way.

In fact, LuLaRoe offers a range of fashionable and comfortable clothing items for women, children, and men. Members can purchase these items at wholesale prices and then sell them at a retail price, keeping the difference as profit. This means that members can make money by selling products, rather than just by recruiting more people into the company.

You may read our article on the difference between MLM and pyramid schemes here.

Check out the short video below to learn more!

Is LuLaRoe a Scam?

Well, legally speaking, LuLaRoe is not a scam. According to the Oxford Living Dictionary, a scam is defined as “a dishonest scheme; a fraud”. But let’s talk about whether it’s worth your time and effort.

Can you actually make money selling LuLaRoe products? It’s no secret that most LuLaRoe representatives did not earn any money. But there are a few success stories out there. These people had to put in a lot of hard work and effort to make it happen. And, unfortunately, many of them achieved this success by aggressively recruiting others.

On top of that, LuLaRoe uses some disingenuous and irresponsible marketing tactics to attract new members. This has led some to view the company as a scam.

Who Founded LuLaRoe?

LuLaRoe all started back in 2012 when Deanne Stidman and her partner Mark decided to start the company. These days, Mark is in charge of running the show.

Now, Deanne had already made a name for herself in multi-level marketing before getting involved with LuLaRoe. But it wasn’t until recently that the company’s growth really took off. According to experts, LuLaRoe has been skyrocketing in popularity.

Just check out the numbers from September 2016. LuLaRoe had over 38,000 specialists and 77,000 consultants on board. And get this – Forbes predicts that LuLaRoe’s sales in 2016 will reach a staggering $1 billion! That’s a lot of leggings and dresses, folks.

What Products Does LulaRoe Offer?

LuLaRoe is a fun and trendy clothing company that offers a wide range of products. The brand is most popular for its vibrant leggings, but it also has a variety of other items such as skirts, dresses, and knits.

The unique thing about LuLaRoe’s products is that they come in limited edition patterns. This ensures that each item is one-of-a-kind and adds to the exclusivity of the brand.

The clothes are produced in different countries like China, Vietnam, and Guatemala. LuLaRoe is transparent about their manufacturing process, which means that their global reach doesn’t bother them. However, some people have raised concerns about the quality of the clothes.

One of the main complaints is the lack of standard sizing. You might need a small size for one product, but an extra-large for another. Additionally, some customers have reported that the clothes are extremely thin, which causes them to tear or wear out quickly.

Despite these issues, the brand’s unique and colorful designs are what make LuLaRoe stand out. However, the low quality of the clothes is a concern for many customers.

With LuLaRoe’s rapid growth, some customers worry that the company may produce more low-quality items in the future. Only time will tell if LuLaRoe can address these issues and improve the quality of their products.

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How to Make Money With LuLaRoe?

If you’re interested in starting your own clothing business from home, LuLaRoe might be an option to consider. LuLaRoe is a company based in Corona, California that uses a multi-level marketing model to sell their clothes. As a style consultant for LuLaRoe, you can sell their clothes and also hire others to sell on your behalf.

To get started, you’ll need to purchase an initial inventory of LuLaRoe clothing at a wholesale cost, and then sell them to your customers at a higher retail price. You can also train others to sell for you, and earn a percentage of their sales as compensation. This is where the multi-level marketing aspect of the business comes in.

However, some people have criticized LuLaRoe’s business model, claiming that it resembles a pyramid scheme. Before you can earn incentives and commissions from LuLaRoe, you must make a certain number of sales. Unfortunately, many consultants struggle to meet these sales quotas and miss out on bonuses as a result.

LuLaRoe’s Compensation Plan

As a LuLaRoe Fashion Retailer, you sell clothing through Pop-Up Boutiques and earn a commission on your sales. The percentage you earn can range from 35% to 50% of the company’s total sales, depending on the compensation plan. To stay in business, you need to sell at least 33 items per month.

But if you want to make a consistent income, the best way is to build a team and earn bonuses from the sales made by your downline. This is where things can get confusing for some people, and they may start thinking it’s a pyramid scheme or a scam.

LuLaRoe offers six different ways to make money, including being a retailer, sponsor, trainer, coach, mentor, or ambassador. It may seem overwhelming, but the more you learn about each role, the easier it becomes to understand.

While MLMs like LuLaRoe may make it challenging for ordinary people to understand their compensation plans, it’s still possible to earn a decent income as a LuLaRoe distributor.

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Drawbacks of Joining LuLaRoe

If you’re considering joining LuLaRoe, there are a few things you should know before taking the leap. Here are some of the most important drawbacks to keep in mind:

The Good Reviews are Written by LuLaRoe’s Affiliates

You may have come across glowing reviews of LuLaRoe online, but it’s important to take them with a grain of salt. Many of these reviews are written by affiliates who are being paid to promote the company. 

As a result, their opinions may be biased and not entirely trustworthy. To get a more accurate sense of what it’s really like to work for LuLaRoe, try seeking out reviews written by non-affiliates instead.

Very Few People Can Make Money With LuLaRoe

One of the biggest challenges with MLMs like LuLaRoe is that very few people actually make money. In fact, statistics show that anywhere from 72.5% to 99.9% of MLM members lose money. This is due in part to the fact that MLMs often have strict sales quotas that require members to continually sell products in order to stay active and earn commissions. 

If they don’t meet the quota, they won’t get paid. This can lead many members to lose a significant amount of money before they even start recruiting others.

Losses From LuLaRoe Are Reframed As Investments

It’s not uncommon for LuLaRoe “uplines” (the people who recruited you) to try and reframe any financial losses as “investments” in your business. This is a tactic to keep you invested in the MLM scheme and striving for financial freedom in the future. 

However, in reality, most people don’t make back the money they’ve invested and end up with a negative return on their “investment.”

LuLaRoe is a Cult

One of the most concerning things about LuLaRoe and other MLMs is their cult-like company cultures. Critical thinking is often discouraged among representatives, and those who ask too many questions may be chastised or isolated. 

MLMs often expect representatives to prioritize the company over their personal lives, which can lead to the breakdown of relationships with friends and family. Leaving an MLM can also result in being ostracized and labeled a failure or bad influence.

You May Need to Purchase LuLaRoe Products Yourself

One of the disadvantages of joining an MLM like LuLaRoe is that you may need to purchase the products yourself each month. This can be a problem if you don’t have a large network of friends, family, and neighbors to sell to. Unfortunately, this can lead to losing money rather than making it.

LuLaRoe Products are Overpriced

Another issue with LuLaRoe is that their products are overpriced. This can make it difficult to sell them, as there are many other brands that offer similar products at lower prices. 

You may find that your prospects can buy the same product elsewhere for a much cheaper price, which can make it challenging to make any sales. As a result, many people who join MLMs only focus on recruiting instead of selling actual products.

LuLaRoe’s MLM Business Model Has a Bad Reputation

The MLM business model has a bad reputation, and LuLaRoe is no exception. While some people have benefited financially from joining an MLM, most people are left with a lot of useless products they were unable to sell. This is because the distribution of commissions is skewed towards the top. 

The majority of those in the top tier and pioneers make the most money, while those at the bottom may not even break even after a few months. Because of this, many people do not see LuLaRoe as a legitimate business opportunity.

Exaggerated Claims of Income

Like many other MLM companies, LuLaRoe makes exaggerated claims of income. However, the reality is that very few people make a good living promoting LuLaRoe.

 In fact, less than 41% of its distributors are active, and over 99% of LuLaRoe distributors never make a profit, according to LuLaRoe’s payouts to distributors. This can be discouraging, especially for those who have invested a lot of time and money into the business.

Recruiting is the Key to Success

One thing to keep in mind is that MLMs often focus heavily on recruiting new members. Unfortunately, this is true for LuLaRoe as well. In fact, eight out of ten ways to earn money with LuLaRoe require recruiting others. While it’s technically possible to earn money by selling their products, to make a living, you’ll likely need to recruit others.

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How Much Does It Cost To Join LuLaRoe?

If you’re thinking about becoming a professional LuLaRoe seller, you might be wondering about the costs involved. Well, to get started, you’ll need to purchase a starter kit of items from the company. But how much does that cost exactly?

The starter kit for LuLaRoe comes in at $499, and it includes 65 pieces of LuLaRoe clothing, chosen at random. That’s a significant upfront payment, but LuLaRoe uses these prices to show that they are a legitimate business. After all, real clothing stores also need to purchase their supplies in advance to prove that they’re the real deal.

However, there’s one major issue with buying a collection of pre-production items: you have no idea what you’ll get. Some might argue that it’s not fair to pay $499 for random pieces when you can’t even choose which designs or clothing items you want to purchase.

And here’s another potential problem: what happens if you’re unable to sell all of the clothing items you receive? According to some reports, LuLaRoe offers a buy-back guarantee, but there have been conflicting accounts about how easy it is to get a refund on this stock. Many reviews suggest that it’s difficult for specialists to recoup their losses.

If you do decide to take the plunge and purchase a starter kit, you’ll be able to start selling the same clothes to other women and earn money as a representative. But it’s worth weighing up the costs and risks before making any big decisions.

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Final Verdict

If you’re thinking about joining LuLaRoe to make some extra cash, you might want to think twice. In my experience, it’s not a great way to earn a living. Let me explain why.

First of all, getting started with LuLaRoe can be tough. You’ll spend a lot of time trying to find people to join your downline, and that can be a real challenge. You might even feel like you have to pressure your friends and family to sign up, and that’s not a lot of fun.

And even if you do manage to recruit some people, you’ll still have to deal with your upline constantly pushing you to buy more Business Support Material. It can be a real struggle to balance your expenses and income.

Unfortunately, statistics back up my experience. According to a case study on the FTC’s website, 99% of people who join MLMs like LuLaRoe end up breaking even or losing money. That’s not a great success rate.

Plus, the pressure to succeed in an MLM can be overwhelming. It’s one of the main reasons why people leave these types of businesses.

Instead of trying your luck with an MLM, why not consider starting your own online business? You’ll have more control over what you promote, and you won’t have to pressure anyone to join your downline.

If you’re interested in learning how to build a legit and sustainable online business, keep reading. In the next section, I’ll share my tips for making passive income online. 

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Is There a Better Way to Make Money Online?

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You may read our article about the difference between MLM and affiliate marketing.

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You might be wondering, how much can you earn with Wealthy Affiliate? Well, there are countless success stories of people who have made a substantial income using the platform. For example, a 21-year-old student was able to earn $7,395 in just one week by applying what he learned in Wealthy Affiliate.

You can read our full review of Wealthy Affiliate here.

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