If you’re on Facebook regularly, you may have noticed postings from LuLaRoe Buy/Sell/Trade groups. In fact, quite a few groups on Facebook are focused on LuLaRoe, and these groups also often hold virtual parties via that social media platform.
What is LuLaRoe?
LuLaRoe is a company that sells merchandise to its “retailers” via direct sales/wholesale. The reason I put retailers in quotes is because these retailers are not employed by LuLaRoe; instead, they work as independent contractors and are called LuLaRoe Fashion Retailers.
The role of the LuLaRoe Fashion Retailer is to purchase clothing at wholesale from LuLaRoe and then sell it to customers at a markup. How much the clothing is marked up is at the discretion of the Consultant. However, to make a reasonable profit, Consultants have set prices higher than wholesale.
As is typical with many wholesale companies, LuLaRoe requires its Consultants to purchase a bulk quantity of pieces in their orders. The LuLaRoe Startup Kit, which is the kit that a beginner Retailer purchases, consists of 381 total pieces and costs roughly $5,500.00. That equals a wholesale cost of roughly $14.43 per clothing item.
Yes, you read that correctly- the minimum investment to become a LuLaRoe Fashion Retailer is $5,500. However, the company estimates that your clothing package is actually worth a retail value of $12,500. You are encouraged to price your items from $18-$65 in order to make a 40%-60% profit margin.
How do you sell LuLaRoe products? Retailers are advised to either host product parties 1-3 times per week. These parties can be conducted at home or online. The company estimates that you should easily sell 20 pieces per party.
LuLaRoe is especially known for its buttery-soft leggings, which come in a variety of patterns.
Other clothing items include T-shirts, skirts and dresses.
How does a typical LuLaRoe retail shop operate? Here’s one example:
- The LuLaRoe Fashion Retailer orders a LuLaRoe Startup Kit at $5,500.
- The Kit arrives in 3 business days at the Retailer’s home. The Retailer purchases additional and optional business items such as an ecommerce website, packing materials, address labels, printer and mannequins.
- The Retailer takes photos of the merchandise and creates online listings. She also joins LuLaRoe Buy/Sell/Trade groups on Facebook and other social media platforms.
- The Retailer holds regular in-home parties to sell her clothing items.
- Items are priced at markup. If all items are priced at $18, for example, that results in total retail sales of $6,858, which equals $1,358 in profit for the Retailer.
- Retailer ships items to buyers.
- Once all inventory has been sold, a new wholesale lot is requested from LuLaRoe.
So, is LuLaRoe a retail sales model that you should invest in? Here are some good and not-so-good points about this business model.
- LuLaRoe clothing seems to have a strong following, with its leggings being especially popular.
- Items can be sold at a markup and make money for the Retailer.
- The Retailer can sponsor new recruits and make a 5% commission from their product sales.
- Market oversaturation. The LuLaRoe market, at least in the U.S., is heavily saturated with Retailers. Here is a Retailer map that shows just how many Retailers already exist in the U.S. Market oversaturation not only leads to intense competition for customers, it forces some Retailers to just throw in the towel and sell their merchandise at loss. That’s bad for Retailers who are still trying to make a profit.
- Product quality may be an issue. Search for ‘LuLaRoe lawsuit’ on Google and you’ll find many news reports on how the company’s leggings rip during the first wear or wash. LuLaRoe is being sued for its defective products and for refusing to compensate customers who bought those products. That means if you bought those leggings at wholesale, you may end up eating the cost- and have completely unusable product. (Updated 4/28/2017: LuLaRoe is now offering refunds or product replacements of its leggings at the following site.)
- LuLaRoe clothing isn’t cheap. Even at its wholesale average price of $14.43, LuLaRoe clothing isn’t priced at rock-bottom prices. By comparison, major discount retailers like Wal-Mart and Target can not only match such clothing prices, but oftentimes even beat them. You, as the Retailer, will need to mark up your products even further to cover your business costs and shipping. It’s hard to tell if a customer will want to purchase a T-shirt marked up to $18 or more.
- You better like house parties. Want to throw a party at your house three times a week? That is something you will definitely need to consider as a LuLaRoe Fashion Retailer. Most customers want to try on the clothing that they purchase to make sure it fits them. Other customers want to feel the fabric and understand how it’s cut and sewn before taking out their credit card.
- That 5% commission is conditional. Yes, you can earn a commission check directly from LuLaRoe for any person you sponsor and who then buys and sells product. However, you only earn that commission if, in the same month, you also purchase at least $175 of wholesale merchandise from LuLaRoe. If you didn’t buy any extra stuff, or are just trying to unload what you already purchased, you miss out.
LuLaRoe: Overhyped and underwhelming?
Business opportunities always carry risks. However, in the case of LuLaRoe, it appears that the risks outweigh the gains. Between the fierce competition and the high amount of selling effort required with this business, you will be hustling to make your profit. Furthermore, there is the glaring reality that LuLaRoe’s actual customer is you, not the people who purchase your sourced clothing. Frankly, what motivation does the company have to work with and help you out once you’ve paid your $5,500 for clothing?
Are you a LuLaRoe Fashion Retailer?
If you are a current LuLaRoe Fashion Retailer or used to be one, we’d love to hear about your experiences with this company. Please leave your thoughts in the comments below.