MLM Makeup Sales Falling
Written by Frosty Rose
While researching Mary Kay’s repeated claim of being the Bestest Best Makeup in the Whole Wide World, I fell into a (surprisingly interesting) internet rabbit hole. Euromonitor International, which did the most recent “partnership” study confirming that MK is the #1 Direct Selling Brand of Skin Care and Color Cosmetics, does more than just receive payment to confirm companies’ own top opinion of themselves, as it turns out.
In an article titled, “Direct Selling in North America: Adapting to Changing Consumer Behavior in the Beauty and Personal Care Industry,” the author shares some pretty damning evidence on the state of the direct sales model in North America.
While the overall tone of the piece was waffling, and did not take a hard line against direct sales, the data it shared indicates that direct sales has its lowest ever share of market saturation. Remember when I said Linda Toupin used to tout that Mary Kay alone controlled 10% of the cosmetics industry? Nope! The entire direct selling industry in 2022 commanded less than 10% of all beauty and personal care sales.
While there was a slight bump in 2020, attributed to sky-high unemployment (way to take advantage of the vulnerable!) and the need to connect (and lonely!), 2021 saw a sharp decline in consumer interest, and 2022 was even lower, bringing the trend in line with the 2017-2018 trend.
Mary Kay was listed as one of the few direct sellers that was able to increase market share in 2022, but the only evidence to back this up comes from Mexico, and the author shared no numbers or evidence to back up her claims. Hopefully, whatever newbies joined to bump the numbers all wake up (or run out of room on their credit cards) quick enough to ship those front-loaded orders back to Corporate and get a refund.
Tellingly, only 4% of North American respondents to Euromonitor’s survey said that they were influenced in their purchases by direct selling agents in 2022. Unsurprisingly to anyone living in the 21st century, consumers are more likely to be influenced by previous personal experience or recommendations from friends or family (apparently Aunt Sally who’s still wearing Downtown Brown lipstick and blue sparkly eyeshadow doesn’t count).
The author ends with a few recommendations for the industry to remain relevant into the future. I, for one, hope Mary Kay and the rest of the MLMs like it ignore all this advice and continue their downward spiral into irrelevance.
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So even biased sources can’t cover over the sad reality of MLM decline.
Something to think about…
“Hopefully, whatever newbies joined to bump the numbers all wake up (or run out of room on their credit cards) quick enough to ship those front-loaded orders back to Corporate and get a refund.”
Considering the outrageous cost of Mary Kay products, when you remove the commission overhead, Mary Kay is likely still making a decent profit on returned product. Remember that most of the high product cost goes to bonuses for the upline, which they reclaim on returns.
Its not hard to imagine for a $100 order, $80 goes to bonuses and $20 goes to MKC. MKC’s actual cost is probably more like $5. This means instead of a 400% margin on a sale, they only make 100% margin on a return (remember, bonuses are not paid on returns, so MKC does a charge-back to the sales force on returns).
My numbers may be off a little, but trust me, Mary Kay Corporate still pockets a profit on those returns. There’s no way MKC would have a policy that would allow them to lose money on any sale.
I assert that they still make a profit on those returns. The question, really, is how much.
The corporation makes a profit on the sales to IBCs, and the cost of the commission is baked in to the cost of the product. Returned product and claw-back commissions probably doesn’t contribute significantly to it.
I still dont understand why people would buy a face cream through a rep/consultant, I can buy a cream on my phone from sephora and I dont need to find a sales person. I can order a face cream in about a minute on the sephora app. Why is the consultant still relevant in this transaction?
The consultants try to push “personalized service.” But not every consultant is willing to, or capable of, providing expert service. Not all of them are good at makeup application. They don’t want to drive an hour to deliver a makeup remover, and they don’t want to pay for shipping. I’ve seen videos of IBCs and SDs who can’t pronounce product ingredients correctly, and then laugh about it. It’s unprofessional.
Some of the product claims are outrageous. I heard a Director say that the MK clay mask “sucks the poison from bug bites” and that the mask “removes the stink from your armpits.”
The consultant serves two purposes in the eyes of MKC:
1) They are the primary customer of Mary Kay
2) They provide an avenue for “pity participation”, whereby folks will get involved only to placate a loved-one
The big money in retail sales is found by figuring out a way to sell your product/service to strangers. That typically assumes you find a way to demonstrate the “value” of your offering, through advertising and organic referrals, coupled with building customer trust that the price is right for the quality.
You’ll never make bank relying on the pity of F+F…that well is only so deep, and personal relationships get quickly strained when money enters the picture. Besides, Mary Kay Corp is not in the business of selling product to end-consumers. Rather, they are in the business of selling products to their sales force.
Ooh, shady. Great detective work, Frosty Rose. Always good to see them caught out in their lies.
Mary Kay is “the #1 Direct Selling Brand of Skin Care and Color Cosmetics” .. so they are the big frog in the shrinking MLM cosmetics pond?
That is a great way of putting it — MK is likely the big fish in the wee little pond and attempts to be an industry leader in that wee little pond. The potential problem is all of the fishies flopping about, trying to be that big fish, too. They all think THEY are the big fishy. Unlike the latest Friday critic, I hope that pond continues to be poisoned.