Can Multilevel Marketing Companies Like Beauty Counter and Sseko Ever Be Ethical?
A few years back, I wrote a long investigative story about one particular multilevel marketing company, Lularoe. I had a distaste for this company from the get-go, because the marketing was all about female empowerment, but the product was the opposite of ethical or sustainable: cheap, synthetic leggings that came with zero information about where or how they were made.
When I dug deeper, the story got much more sinister. The leggings were so cheaply made they would fall apart after one or two wears. Even worse, women who joined this direct sales company found themselves going into debt, losing friends, getting divorced, losing their homes, and going bankrupt. They were promised financial freedom. What actually happened is that they were scammed.
I never did find out how and where those leggings were made. That they were probably made in a sweatshop was almost beside the point, when I had my hands full covering the damage to women right here in the U.S. But that question and the inherent wastefulness of the MLM model continued to bother me. The way most MLMs are set up, they don’t need to make a good product. The sellers purchase inventory from the company, push it on all their family and friends, and are told that if it doesn’t sell — because it’s ugly, overpriced, or just a useless product that nobody ever asked for — it’s their fault for not working hard enough or being enthusiastic enough. It’s American overconsumption at its worst.
Maybe you’re wondering what an MLM is? If you have time, I really suggest to read my story about Lularoe, and also listen to the first season of the amazing podcast The Dream. All your questions will be answered.
But the simplest way to describe it is a company that makes a product but doesn’t sell any of the product itself. Instead, people (mostly women) sign up to sell the product for the company, by hosting parties or selling online. They pay a sign-up fee and buy inventory, and in return keep a percentage of the sale price. Avon, Amway, Mary Kay, Doterra, and Young Living are all MLMs.
MLMs are compared to pyramid schemes, because of their recruitment structure. At the top, you have the founders. Below them, there are a few top-level sellers, who each recruit a team to work under them, who recruit a team to work under them, and so on until it’s exponentially expanded and there are no more people left to recruit. All the money earned by those at the bottom is siphoned up through the structure so that the people at the top make many multiples of people at the bottom.
The difference between a “legit” MLM (if they exist) and a non-legit MLM lies in whether you can earn a fair income without recruiting anyone underneath you. If you can’t, then the unstable structure will eventually collapse and bring down everyone except the people at the top. If you can earn enough without recruiting anyone, then the size of the company and number of sellers will stabilize at a size the market can bear.
It’s a really confusing industry, like walking into a hall of mirrors where everyone is parroting the same lines about “Run your business!” “Think positively!” “If you don’t work hard, your business won’t work!” Whenever you meet someone who is in an MLM, they’ll tell you that their MLM is different. The product is great, the community is so warm and nice, and their uplines are incredibly supportive. The thing is, it’s really hard to tell if any of that is true. MLMs and their sellers are incredibly secretive about how much they actually earn, and the industry has managed to lobby itself out of having to be transparent about their financials. Honstly, many of them are like cults.
MLMs, which promise economic freedom and part-time work you can do at home, tend to entice women who have few other economic opportunities, either because they live in a depressed rural or suburban area, they’re raising kids and can’t find a good part-time job with flexible hours, or they’re vulnerable immigrants with a poor grasp of English.
The industry reached its peak in 2015 at $36.1 billion in sales. It has since leveled off, but now, since the pandemic-related lockdowns hit America, MLMs have used the economic chaos and fear of public spaces to recruit new members by promising them the ability to earn money from the safety of home. Nevermind the retail landscape for everything but skincare, pajamas, and knitting kits has been obliterated.
That is the big thing that is missing from the MLM pitch. Yes, abundance thinking and a positive mindset can help you succeed in business. But even more important to finding success as an entrepreneur is a healthy sense of skepticism and the ability to assess business opportunities before you take a risk on them.
So now is the perfect time for me to do the story I’ve been wanting to do for probably three years. I’m going to tap into my past experience writing about personal finance for women, and assess two companies who claim to sell ethical and sustainable products: Sseko Designs and Beauty Counter. There are many more MLMs in this space who claim to sell “plant-based cleaning products” or essential oils or other vaguely eco products. I can’t go through them all, but these two examples will give you the skills to look at any that are pitched to you with a critical eye.
There are a few things I’m going to assess for these two brands to see if they represent a legitimate, ethical business:
1. Is it possible to make more than a minimum wage per hour selling the product? Most MLM sellers earn less than 70 cents an hour according to one study, and a 2018 AARP survey of 1,000 MLM participants found that only 25% of respondents made a profit. But since that survey drew on voluntary respondents, it’s likely skewed. Another earlier study found that less than 1% of all MLM sellers make a profit.
If you get just a dozen women who are making a lot of money, the tippy-top of the pyramid, then that’s enough to put them on stage and tell everyone that it is possible to be rich if you work hard enough. That’s why those inspirational conferences and social media posts by the top sellers can be so misleading.
2. Is the compensation structure and potential risks and drawbacks communicated clearly before you sign up? One tricky thing about MLMs is that it’s very difficult to figure out what you need to do to turn a profit. The compensation structures are difficult to parse, and MLMs aren’t legally required like other franchises to give you the information you need to make that determination. They also tend to surprise you with all the costs that are usually covered by a company if you are a salesperson, such as conferences and travel costs, inventory, samples, a car to get around in, catering for promotional events, etc.
3. Are the products priced the same as similar products from regular companies? Another thing that MLMs do that is shady is set the “wholesale” price at a level that is closer to a retail price (because really, you are the customer for their product). This makes it more difficult to sell the product to your friends because they can just go online and find something similar for a better price, without all weirdness of buying from their friend.
4. Are you required or encouraged to load up on inventory? The worst MLMs will have a starting buy in the hundreds or thousands of dollars of inventory that you don’t get to choose. Even if you never sell one thing, the company has already made its profit, on you. Then, your upline and the compensation structure incentivizes you to buy more inventory every time your sales slow down. The company isn’t incentivized to ever make a good product that will sell.
5. Is it easy to sell the product and find customers? Another downside to MLMs is that every time you sign up someone to sell underneath you, you’re creating a competitor who has many of the same social contacts. The market eventually becomes saturated, and even the most successful sellers see their sales dry up. But before that happens, they drive everyone they’ve ever met crazy while trying to sell them product.
6. Is the culture of the company supportive or exploitative? MLMs is that they can create an atmosphere of bullying and cult-like behavior, where sellers who don’t find success (most of them) are belittled, gaslit, and told that they failed because they weren’t positive enough or they didn’t try hard enough.
7. Are the brands themselves as transparent as their ethical and sustainable competitors? If there’s a better company that is not an MLM, you could just buy from it and support transparent, full-time wages instead of exploitative gig economics.
There’s so much more to discuss, but those are the main points. So let’s take a look, shall we?
Most multilevel marketing companies sell the cheapest, lowest quality crap of dubious origins and materials. But Sseko Designs, founded in the progressive city of Portland, says its product is made ethically made by artisan workshops in Uganda and elsewhere. And unlike other MLMs that talk about female empowerment solely in the sense of getting American women to sign up to be sellers, this company helps fund education for Ugandan girls. Could it be the unicorn good MLM?
Co-founder Liz Bohannon told Forbes she quit her first job after a few months and bought a one-way ticket to Uganda with no idea what she would do when she got there. She founded Sseko in 2009 to provide income to academically gifted girls in Uganda who had tested into local college but were unable to earn money for tuition. She started by asking them to make a pair of flip flops where customers could choose the lace-up ribbon to put in it. Essentially, a leather sole with holes.
“In the pre-influencing world of ethical fashion at the time, they were a kind of status symbol in the niche, and most women I knew blogging on the topic owned a pair,” Wise says. (Sseko also pitched EcoCult around the same time, but I never ended up featuring the shoes, as the style didn’t appeal to me.)
When Bohannon and her husband went on Shark Tank in 2015, they were planning on releasing closed-toe shoes and were in the process of raising money from private investors in a seed round. The husband-wife duo was planning on hiring a sales team which would put them in the red for at least two years, a sticking point that was belabored by the investor TV personalities. Is this why they made the pivot they did to an MLM structure, which offloads all the marketing expenses to eager, inexperienced women? Because not long after, they started laying the groundwork for direct sales by creating a Facebook group for their most loyal bloggers and influencers. (“I wouldn’t really point to their feedback as a driving motivation for switching our model,” Bohannon said when I asked her. The feedback that actually aired was quite a bit different than our actual experience ‘in the tank.'” )
“It became clear that the initiative was a way to build a foundation for their direct sales program,” Wise says. “I left the group and emailed Liz again to tell her I didn’t like the direction they were headed.” Wise has a strict anti-direct sales policy on her blog and stopped promoting the brand. Later, when a rep from Sseko asked her to change some of the language on a direct sales critique she wrote, Wise refused.
The brand had fully switched to a multilevel marketing model by 2018.
Can you earn a fair income selling Sseko?
One person told me that Sseko Designs has had a record-breaking month for onboarding new sellers. While the ethical aspect of the brand is emphasized more than the financial opportunity, Bohannon does promise financial freedom in the promotional video on the site. But is that true? Let’s go through the sign-up process and see if we can make a determination of whether this is a good fit.
If you click the Join button, it brings you a page that says “Purchase your kit >> Get Started >> Rock Your Business!”
It reminds me of that old South Park episode where the gnomes are pitching a business plan:
Phase 1: Collect underpants.
Phase 2: ?
Phase 3: Profit!
Anyway, here you’re encouraged to go ahead and purchase the starter kit, which costs $149, and which Sseko claims has more than $370 worth of product. “Sseko does not make a healthy or sustainable margin on our starter kits,” Bohannon says.
Sseko says “Create an impact, find community, and make a profit in your first year or we will buy back your starter kit.” The entire Starter Kit must be returned with all the packaging unopened, or else they will charge a 15% restocking fee. And items that were used, even for “display purposes” cannot be returned. I asked Bohannon and she said that as long as the products are completely free of damage, you can return them for a refund.
But if you want, you can decline to purchase the starter kit and instead apply and schedule a call to talk to one of their representatives on staff to get a feel whether this is a good opportunity.
Sseko’s model will look familiar to anyone who has ever sold Doterra oils or other MLM products. The simple version is that you earn 20 to 30% commission on your sales depending on your level within the organization, and up to 11% commission on your team sales, plus bonuses. And you get a 50% discount on buying Sseko goods for yourself, plus free gifts.
But the actual compensation plan detail is dizzying in its complexity. I spent a long time staring at it trying to puzzle through what it meant in practice.
Luckily, Sseko does provide an income report. (Not all MLMs do.) And it says the average Fellow earns $33 a month, and the median is $16. (A median is often a more accurate expression of what you can expect than an average. For example, if one person makes $2,000 and nine people make $10, then the average is $209, and the median is $10.) These figures exclude Fellows who did not earn anything (16% of all associates). If it did, the average and median would both be pulled way down. Bohannon says that many of their sellers have signed up just because they love the brand and want to get a discount on the product, which pulls their income numbers down. You could do this and be a casual shopper for six months until they would “retire” you.
So let’s think about what that means in practice. If you are at the Fellow level, which is about half of all Sseko sellers, and you are doing the median, if you spend more than two hours a month on trying to sell Sseko products then you make less than minimum wage.
This is a really important point that I want to emphasize. If you are only making $16 a month selling Sseko, you will likely be told you need to put in the work if you want to make more money. But the question is whether if you put more hours of work, your additional earnings per hour of work will outpace the federal minimum wage. On this point, Bohannon told me via email, “One of the places where MLMs can be so manipulative and predatory is when they promote this gospel of “Get Rich Quick.” That is obviously misleading and deceptive and never, ever true. You very rarely are going to be able to earn a full-time income working 10 hours a week. For reference, I would say that upwards of 70% of women in our community are working 5 or less hours a week on her Sseko business.”
This is the question you need to ask every woman who pitches you their MLM: “How many hours do you spend a week and a month selling?” Most women won’t know how many hours they work, they’ll give you a ballpark estimate that is likely undercounting and not including all the things they have to do to sell, like commuting to parties, putting up Instagram posts, etc.
So that five hours is a helpful data point. Combine it with the fact that 88% of their sellers are at or below the level where they earn an average of $3,091 a year. At that income, five hours of work a week for 50 weeks would yield an income of $12 an hour. She continues, “Of our top earning community, on average even those women are working about 15 hours a week on their businesses.” At that level of work, the Senior Mentor level (1.3% of all sellers) would be earning $28 an hour.
What’s the most you could make if you got in on the ground floor in 2016 and brought in hundreds of women underneath you? In this case, all the numbers for the Senior Director (high, low, median, average) are the same, so there must be only one Senior Director out of 2,500 sellers, who makes $105,360 a year. The next level down makes an average of $52,000 a year. Only 2.3% of all sellers make a full-time wage.
Bohannon says that over 85% of Sseko’s revenue (pre-COVID 19) came from online sales through affiliate links and virtual trunk shows. So I contacted a blogger who is a Sseko Fellow. She agreed to speak to me on the condition that if the article was negative, I wouldn’t include her responses, because she really likes the company. She was very kind and sweet, so I’m just going to share with you the math that she shared with me. It took a little cajoling. The first time I asked, she didn’t give me numbers. But eventually, she said that she spends probably 10 hours a month promoting Sseko on her blog and social media when it has a new product launch, and in that same month would make “above average for a Senior Fellow.” So I’m going to say probably around $300. That comes out to $30 an hour.
She also said that if she spends $300 to $400 on discounted product for herself to take photos in, she will sell over $1,000 in product as a result. So that comes out to more than $600 per month. That’s a wide range, but let’s say she earns between $300 to $600 each month in profit. The highest affiliate revenue EcoCult earned for one single brand on EcoCult last month was $375 off a 19% commission rate for Pact Organic Underwear. As EcoCult has twice the traffic the Fellow’s blog does, then in her case, the affiliate relationship seems to be working really well for her. (And would work amazing for EcoCult if we decided we approved of the product.)
But keep in mind, she’s got the benefit of leveraging a decade’s worth of investment in her blog and refining her influencing skills in order to sell a product that she honestly adores. For someone who doesn’t have more than 60,000 visitors a month and almost 20,000 followers on Instagram, it’s going to be a whole lot harder to do her numbers online.
So it seems that you can make above minimum wage selling Sseko.
Does Sseko encourage you to buy a lot of inventory?
Unlike the worst MLMs, you do not need to buy, handle, photograph, and ship out inventory. Orders are placed through but to Sseko, who ships everything out themselves. That helps a lot when it comes to earning a fair hourly wage for your work. You do need to buy at least $500 a month in product for resale or else you will become inactive, but Sseko nods to the criticism around pyramid schemes by saying that not more than half of those purchases can be just shopping for yourself.
So you can definitely become high seller without purchasing a ton of inventory.
Is it easy to sell Sseko product?
The founder says in a video that anyone can be a successful seller, even if they don’t know many people, don’t feel stylish, and have never sold anything. Most of the selling is based on hosting trunk shows in someone’s home or online. But you do have to find someone to host your first trunk show. And then find someone else to host your next, and so on.
In a cynical way, selling Fair Trade product this way actually makes sense. Many Fair Trade companies sell based on the emotion of pity. Please buy this so-so bracelet to support women in Uganda! Combine that with the social pressure of being at a friend’s home for a trunk show, being fed cheap champagne, and having a friend smile at you and urge you to support your those poor Ugandan girls, and it must be impossible to go home empty-handed. Bohannon says in Q1, the average trunk show yielded over $700 in sales.
And Sseko does seem to represent something new and different for people who are used to the typical MLM. Bohannon says, “One of our top sellers who lives in rural Indiana on a farm in a very blue collar community would tell you that before Sseko she primarily shopped at Walmart and had never spent more than $15 on a pair of sandals. Now, not only does she have a KILLER ethical wardrobe of shoes and apparel and accessories, she has built this amazing team of women from her community that are now incredible advocates for Sseko and ethical fashion.”
Just be cautious about basing your potential success on the success of your friend who is asking you to sign up. Unless you have an entirely different social network or geographical area to market to, she is your competitor and you will be fighting with her for market share.
Are Sseko’s retail prices fair?
Again, this is complicated by the fact that the wages paid to the women who make the products are supposedly not exploitative. I looked at the products that come in the Starter Kit and compared them to what you can find on similar artisan fashion sites. For ease of comparison, I round up Sseko Design’s prices from $0.99, which is a psychological trick to make things look less expensive.
The sandals with foam bottoms, a thin layer of leather for the sole, and cotton ribbon upper are $50. (They’re not fancy.) An all-leather sandal on Accompany is $47, on Made Trade for $84, Cano for $87, Able for $88.
So overall, Ssekos prices are most of the time a little bit cheaper than the ethical artisan industry standard. However, it seems that Sseko uses lower-quality and less sustainable materials for several of its products than its competitors. And the replaceable sandal ribbon is way overpriced. Sseko sell s64 inches of red cotton ribbon for $9.99, when you can buy three yards (108 inches) of the stuff for $3.89 on Etsy. The profit margin on those ribbons must be insane.
When it comes to the style, there are a couple of standout things (love the look of this rainbow skirt that’s made in India) but otherwise, I do think that Sseko represents low-end design compared to the artisan jewelry, sandals, and leather goods we tend to feature on EcoCult.
Sseko has a return policy for buyers, too. “If you’re not 100% satisfied with your product, we’ll take it back!” If you bought it from a Fellow, then you have to return it through her. As I reported in Quartz, this policy relies on the professionalism and goodwill of a seller who may be on her way out the door or desperate for cash. She could go MIA once you contact her for a refund.
What is the culture like?
In this horrifying (but unverified) Reddit post, a woman describes as a 16-year-old being urged to sell Sseko to other psychiatric ward patients when she was suffering from a manic episode. So apparently, preying on women who are in vulnerable states goes on in Sseko, too. Hopefully, because it attracts women who care more about where the product comes from than other MLMs, it’s a somewhat more kind culture. The blogger who is a Fellow says, “The fellows community is AMAZING and I truly love being a part of it! It’s amazing having colleagues both here and abroad that share a similar vision and mission!”
Is Sseko itself ethical and sustainable?
Before Bohannon responded to my emailed questions, I was very skeptical of the company, because they don’t provide a lot of information on their website attesting to their ethics of the Ugandan workshop. Sseko is part of the Fair Trade Federation, which certifies its financial structure. It is not a B Corp like several of its competitors. It says it pays its Ugandan work-study scholars and employees above market rate, but it doesn’t reveal on the website what that number is. I would think that the workshop must be at least visually good, since they bring top-selling fellows in for a visit, but they do not have any certifications attesting to the workplace. They list the names and pictures of all current and past graduates, and provide details on the various other artisan workshops they source from in Ethiopia, Kenya, Peru, and India.
When I asked Bohannon, she said the lowest wage they pay is $150 a month (and that she could provide me with the living wage calculations they did) and they provide overtime when necessary, breakfast and lunch, transportation, health benefits, retirement matching, 21 days paid vacation, and up to 30 days paid sick leave. (The Ugandan minimum wage is currently about $34 per month.) She says that the Ugandan authorities inspect the workshop once a year to renew its license. I think they should start providing this information on their website, perhaps in a social report that people can download.
In terms of environmental sustainability, this is where it really breaks down. On the site, it’s sometimes hard to tell what materials the items are made out of, and there is no mention of toxicity, carbon footprint, waste, repairs, or a takeback system. I asked the blogger what the rainbow chiffon skirt was made out of, and she said it was rayon and polyester. The emphasis is on empowerment, not on sustainability.
When it comes to commodities like coffee, I think a Fair Trade certification can be really helpful to choose between two coffee brands. I also support that Madewell helped get a leading denim factory in Vietnam certified by another organization, Fair Trade USA, which puts a cherry on top of an already popular product that would sell anyway. However, I personally don’t think marketing fashion purchases through the lens of pity is empowering. It’s insulting. At this point, there are many gorgeous upscale brands made in Africa and run by African-American entrepreneurs that are a pleasure to buy and wear. These brands show the beauty and luxury inherent in traditional African craft, instead of giving young women shoes to glue together during their gap year, and then selling those shoes to white people in the U.S. as a charitable project. It’s telling that when Sseko tried to expand into closed-toe shoes, which require real artisanship, they failed quality control and were quickly discontinued. Their boots, along with the rest of the most beautiful product, are now made in India and other workshops around the world.
The general ethos behind the brand — a white Christian with no professional experience shows up in Africa to help and founds a fashion brand to alleviate poverty — has widely been panned by the ethical fashion community in the past few years. “I liked what Sseko stood for, but now that I know more about the history of white American missionary activity in Uganda and the exploitative dynamics of related ‘industries’ like social enterprise and international adoption, I think I could have pressed for more information around their business practices,” Wise says.
Is Sseko’s model effective?
“We are really passionate about using the MLM model as a way to make socially conscious fashion something that is less exclusive and more accessible to communities who largely do not participate in ethical fashion,” Bohannon says. She said in her email that Sseko would have shut down by now due to the Pandemic if it were selling wholesale, especially since it is still paying full-time wages to the Ugandan employees while they shelter at home. (I’m assuming not to all the workshops that make their other products, however.) I sort of believe it, as another ethical brand that tried to do the same for its workshop employees has had to do so. But that brand employs U.S. employees at $15 an hour for all its product, which is a much, much taller order.
I could perhaps get behind this if selling fashion were a better way to separate women in the U.S. from their money than straight charity. But it doesn’t necessarily seem like it.
Sseko is a for-profit, private company. So there is not much transparency into its finances. It does say that for every $100,000 in sales, it can employ two people fulltime for one year and send one to college. As of 2019, Sseko was actively supporting 25 university scholarships, had supported 67 in the past, and employed 61 people full-time in Uganda. They claim they are the largest non-agricultural exporter from Uganda.
But is it true that, “creating economic opportunity can create a more lasting impact that some charities,” as Liz Bohannon said on Shark Tank in 2015? If you wanted to support female education in Uganda, you could donate directly to the highly-rated charity Camfed, and for the price of the Sseko Starter Kit, could pay for a year of high school education for one girl. Camfed has supported over 1 million girls in five years on the fundraising model.
And when I think about educational scholarships available to young women in the U.S., that is how we do it. We give grants to young women. We don’t ask them to engage in unskilled labor for nine months to earn the educational grant.
So no, this for-profit model doesn’t seem to be more effective than a well-run charity.
Sseko does not seem to be doing any active financial damage to women, either here or in Uganda. Do I wish it were more transparent? Yes. It’s not doing itself any favors by keeping all the information Bohannon shared with me secret. But the numbers that she shared do point to a business model that, while not hugely scalable, employs women at a livable wage as sellers and as workshop employees.
And that is how women in the U.S. should think of this opportunity, as a way to potentially earn a part-time, above-minimum wage doing something that is more enjoyable than other opportunities available to them, such as working at Walmart or in an Amazon warehouse. If you’re the kind of woman who is comfortable and familiar with the MLM model generally, then this is a way less risky opportunity than selling Lularoe leggings. And if you’re a Christian woman who is comfortable with the ethos of missionary work, then I don’t see you having any problem with Sseko’s model.
Personally, as a secular woman living in New York who counts as friends many successful entrepreneurs of color, I cannot get past the narrative that this pushes, of a white Christian woman with zero experience heading to Uganda thinking that the answer to its woes is to start a fashion brand using charitable language to sell low-quality shoes. Personally, I’m ready to move on to the next phase of ethical fashion: structural changes to developing countries that allow indigenous-owned businesses — especially ones making upscale artisan fashion that is traditional to the culture — to thrive.
Also, the products have no transparency around sustainability. That is the final reason I would never promote this brand on EcoCult.
When I first heard of Beauty Counter, I just thought it was another non-toxic skincare company. I linked to its site in a couple places, but unlinked it when a stranger emailed me asking me to join her team and I realized it was an MLM.
Still, I haven’t heard any sinister whispers about BeautyCounter the way I have about other MLMs. It continues to garner positive press in publications like The New York Times and WWD, and has been sold in Target and on Goop. It was the most Googled beauty brand in 2018, and raised $65 million in investment capital the same year.
It was founded by a seasoned sales executive, Gregg Renfrew, as a clean beauty company in 2011. She published a Never List of toxic chemicals that BeautyCounter would never use, and a large part of selling for the company involves sharing educational videos, being an activist, and rallying for better government regulations around the chemicals in personal care products. In that sense, it’s not so different from Patagonia, an activist outdoor apparel company that frequently advocates for protecting public lands.
The part where the cognitive dissonance comes in is Renfrew’s quote to The New York Times, when she says, “The Trump administration is focusing on undoing regulations. They’re anti-regulation. And we are asking for regulations. That puts us at odds with the administration.” She’s talking about regulating chemicals in personal care products, but when it comes to regulating MLMs, well, she and this administration would be on the same side. Trump loves MLMs and even had his own, and Betsy Davos is part of the Amway family.
If BeautyCounter really is a better opportunity and more ethical than other MLMs, than just like it would benefit BeautyCounter to have better regulation on chemicals, wouldn’t it benefit BeautyCounter to have better regulations around MLMs?
Does BeautyCounter encourage inventory stuffing?
When you sign up, you’re encouraged (but not required) to buy the product starter kit, ranging from $132 for men’s products to $595 for the best sellers, so you can talk about them confidently. Every year you’re billed another $50. You get a 25% discount on purchases for yourself, and can get up to 35% commission on sales. You have to do $1,200 in Qualifying Volume (QV) every six months, which includes orders for yourself and for others.
One thing that is better about BeautyCounter compared to other MLMs is that you don’t have to handle, photograph, and ship out product yourself. You promote the product in one-on-one consultations and pop-ups, and then your customers either order in the store using your name or order on your website. Another thing that is better about BeautyCounter is that it’s a product that clients will use up and need refills for. Once they’re in the system as your client, that pretty much sticks unless they take the initiative to detach themselves from you, so whenever they order more product, you continue to get that commission.
One seller mentioned she went a little crazy overbuying product last year and this year she’s being more mindful. But overall, it seems like you do not have to buy a lot of inventory to find success.
Can you earn a fair income selling BeautyCounter?
To sign up, you have to pay $50 to $98 for the digital marketing tools, which include promotional materials and your own BeautyCounter website where your clients can order.
BeautyCounter does share an income disclosure, and says as of December 2019, it had over 44,000 Independent Consultants in the United States and Canada. Their figures do include all consultants, even if they had no sales, but don’t reflect expenses. Some things I noticed: 82.2% of the consultants are at the first level and earn on average $46 a month, which is higher than Sseko, especially since it includes consultants that earned $0. At the next level up, we have 10.2% of the total consultants who earn on average $336 per month. According to my calculations, about 88 women, or 0.2% of the 44,000 consultants, earn over $120,000 a year in revenue (not including expenses). Only 1.2% of the consultants earn over $32,000 a year.
These numbers are higher than Sseko, but still not that impressive. And like all other MLMs, the company says that how much you earn is dependent on how much work you put in, and that many of their consultants choose to only work a few hours as a hobby, or become a consultant to get that discount on products that they would buy anyway. With the floor for remaining a consultant, you would only have to make a two to three sales a month to continue to qualify for the discount.
So I turned to the only person I know who sells BeautyCounter to ask her some questions.
Is it easy to sell BeautyCounter’s products?
I met Amy over a year ago at an ethical fashion event, not long after she had moved to New York City from Nashville. She told me that along with being a freelance marketing consultant, she sold for BeautyCounter. I was curious if this company was as bad as other MLMs, so I said yes when she invited me to a store event. Unfortunately, very few people came (I bought a mini sunscreen stick) so I don’t think there’s any way she could have earned back the $150 the store charges to consultants so it can pay the sales associates to keep the store open after hours.
But since then, she says she’s found her selling groove, and now does about $1,300 a month in commission at the Senior Manager level, which puts her in the top 5% of of all consultants. Half of her sales are to New Yorkers, and after realizing that, unlike suburban women, we would never go to a pop-up party to try skincare samples, she switched tactics. Now she does one-on-one consultations at the BeautyCounter store in the East Village, which takes about an hour (two including travel time to and from her apartment). Or she does them over the phone, which takes about 20 minutes. She says the average order is $100, so that’s not a bad return on her time investment.
Additionally, she spends a little over $150 a month total on new product to try for herself, stamps to ship out samples, and free shipping and $10 store credits to entice new clients. And she spends about 10 hours a week on marketing and following up with leads, mentoring her team members (who she admits are pretty inactive) and researching the products and ingredients.
So overall, that comes out to about $30 per hour. That’s lower than her $45-per-hour rate she charges for her consulting services, but equal to what the Christian blogger makes pushing Sseko, even though Amy doesn’t have a decade-old blog. Even as a marketing professional, it did take Amy a year of leveraging the networking events at the all-women coworking space The Wing, where talking about your side hustle and business is encouraged, to get to this level of sales. But the fact that MLMs are virtually unknown in New York City gives her an opening. She explains her side hustle to women here as being similar to an influencer or brand ambassador.
It’s worth noting that because of the organic nature of finding leads, if she ramped up her hours, she wouldn’t necessarily be able to ramp up her sales, so she may always have to keep this her side hustle with a bonus of discounts on the product that she likes anyway.
Are BeautyCounter’s products fairly priced?
In New York at least, Amy says that BeautyCounter’s closest competitors seem to be the multi-brand non-toxic beauty store Credo. So let’s compare.
The 1.7 oz day moisturizer (which got an award from Women’s Health) is $49 ($29/oz). On Credo. They range from $18/oz to $62/oz.
The 1.35 oz tinted SPF moisturizer is $45 ($33/oz). On Credo, they range from $27/oz to to $46/oz.
The 3 oz charcoal cleansing bar is $26 ($9/oz). Herbivore Naturals’s charcoal bar sells at Credo for $3/oz.
The 4.23 oz eye makeup remover (which won an award from Cosmo) is $25 ($6/oz). On Credo, they range from $1/oz to $11/oz.
So it seems overall that BeautyCounter is in the middle of the range of competing non-toxic skincare products. (Except for that super expensive soap! What’s that about?) And the fact that several of the products have won awards seems to indicate it’s a high-quality product that women actually want. In fact, I just checked EcoCult’s guide to affordable non-toxic skincare, and BeautyCounter is listed as the 5th most affordable, between OSEA and Shea Brand. I totally forgot it was in there. So yeah, it’s good value.
What is the culture like inside BeautyCounter?
This YouTube video made by someone who quit BeautyCounter is the most chill “I quit an MLM” video I’ve ever seen. She lists all the things that are terrible about MLMs in a very clear-eyed way. But she’s referencing the most notorious MLMs like Lularoe or Younique, and not BeautyCounter. She says, “If you really want to join an MLM, BeautyCounter does seem to be the best because the products actually do work.” She notes that she got some weird vibes when she was selling, but it never rose to the level of what happens at other MLMs.
Amy notes that she really likes selling for BeautyCounter because it’s not just about pushing product, but education and advocacy. “I don’t have to push sales out over and over. I can push advocacy out, and information, like the mica documentary we just put out. There’s no way I could do network marketing outside of Beauty Counter, I would go crazy.”
Is BeautyCounter’s products themselves sustainable and ethical?
For three years the beauty company has put out an extensive social report, which lists its sustainable and ethical bonafides. It’s a B Corp, a third of its products have been verified as safe and non-toxic by the Environmental Working Group, it offsets its carbon and water footprint, and has donated $2.4 million in cash and product to charitable causes. It’s committed to reducing it’s emissions according to science-based targets, uses lifecycle analyses to choose sustainable packaging, and has dug deeply into the supply chain of the ingredients it sources for the products, which are almost all manufactured in the U.S.
The best part is BeautyCounter unleashes its consultants to march on Capitol Hill and meet with state legislators to support bills like the California Safer Salon Bill and the Safer Sunscreen Bill in Hawaii.
There’s way more. The report is long and detailed — it’s one of the clearly-written and comprehensive sustainability brand reports I’ve ever seen. Color me impressed.
Honestly, I did not want to like BeautyCounter. But the more I researched, the more I came to the conclusion that, as far as MLMs go, it seems to be the least shady. You don’t have to load up on inventory or go deep into debt to join, its product is high quality and priced fairly, it engages in legitimate advocacy instead of missionary-adjacent charity, and its culture doesn’t seem as toxic as other MLMs.
And as far as beauty companies go, it’s extremely transparent, sustainable, and ethical. The fact that it effectively leverages its independent sales consultants to make systemic change? I can’t find anything to criticize there either. I think it’s fantastic.
Is it completely immune to every criticism of MLMs? Well, no.
I really like Amy as a human being, but because I was aware of MLMs, I felt uncomfortable seeing her around The Wing because I didn’t want her to try to monetize our relationship. (A common side effect of joining an MLM is ruining old and new friendships.) Then again, it seems that everyone at The Wing is trying to monetize relationships in some way, so that vibe is par for the course. And my discomfort was less from anything she had done, and more from my past crazy experiences reporting on a terrible MLM. She admitted that she does reach out to people she hasn’t seen in a really long time to see if they’re interested in buying BeautyCounter, but says that now that she’s gotten, “not weird” about it, 75% of the responses are positive. And yes, there is a yearly conference which charges $350 for tickets and has consultants pay their own way for travel. (It was put online for free this year due to the Pandemic.)
At the end of our interview, Amy told me that I could sign up for an affiliate link for $50 and start earning. I looked at what EcoCult was earning from affiliate relationships with other skincare brands like OSEA, and realized that it would become one of the highest-paying affiliate relationships we have, and require no more work than any other affiliate relationships. Which is to say, about 20 minutes of set-up, and then it would run itself.
You know, I might just sign EcoCult up. I guess Hell is having a cold snap.
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