Don't Sell Younique: Why Multi-Level Marketing is Practically a Scam

By Jared Hammer on November 11, 2017

Love makeup and want to get into the industry? Multi Level Marketing is NOT the way to go.
(Photo by kinkate from Pexels )

Do you want to work from home? Do you want to be your own boss, make your own hours, and have everything your way? These are the kind of appeals Younique makes to convince you to buy their $99 starter kit and start selling their products.

On their recruitment page, you can also see a video where the sibling owners claim that Younique is an “incredibly easy, social media, internet based business” that empowers sellers and customers alike. Never forget the wisdom in the phrase “if it sounds too good to be true, it probably isn’t,” because Younique is not the “exciting business opportunity” it claims to be.

Younique has become increasingly popular among students as a way to supplement income through school. Given the potential flexibility of the job, the promise of ease, and the fact that you don’t need any qualifications or even have to show up to an interview, it’s not all that surprising why so many people seem to be joining and pushing their product.

I’ll fully admit my aversion to Younique is partially fueled by being a constant target for sales presenters. Once they find out I perform as a drag queen, my use for copious amounts of makeup makes me a business opportunity. I always explain that my makeup needs are different from their demographic and that I’m already satisfied with theater makeup, but too often I’m being met with a lecture about how much I need their “superior,” overpriced makeup. Buying their products they say, will “transform my life,” but I’m not a believer in the life-changing power of a tube of lipstick.

In all honesty, despite how irritating and pushy I’ve found Younique sales presenters to be, my true distaste for the brand is that its yet another Multi-Level Marketing scheme (MLM).

I’m not just hating on Younique. Really, I’m hating on all MLMs, as they are a business venture that makes a large chunk of their revenue off of employees who fail. According to the Federal Trade Commision, 99 percent of people who work under an MLM lose money in joining the business. Within that remaining 1 percent, the average annual income is merely $5,000.

Despite those dismal numbers, MLM companies are a 36 billion dollar (and growing) industry. For an amusing and informative look at how MLM’s operate, watch this clip from John Oliver, where he explains how MLM businesses are just a few details short of being illegal pyramid schemes.

MLM reps often describe the excitement of the growing power of their business model by showing how, if 1 person recruits 5 people who each recruit an additional 5 people in turn, the numbers add up very fast. This notion, however, is highly reductive. As you can see in the image below, you can only do this 14 times before you exceed the 7.6 billion population of the world.

When MLM companies describe how quickly they can grow by each person recruiting five more, they fail to acknowledge how quickly this process exceeds community size and prospective markets (Image from Wikemedia Commons).

MLM businesses offer a lot of incentive to recruit, as you receive a commission on the sales of those below you. Additionally, they offer rank mobility with special perks and rewards for those with a lot of recruits and high sales. For a breakdown of how Younique’s status system works, click here.

The main problem with the status structure of MLMs is that they require employees to maintain their sales revenue and team of underlings or risk losing the ranking they worked for. Commonly, after making initial sales to family, friends, and neighbors, most presenters run out of customers. To avoid losing their status, many presenters will spend their own money on months when sales are low. This terrible strategy is a key component to why so many people lose money by working for MLMs.

One thing that Younique does well when compared to other MLMs is that their return policy allows for full value returns two weeks after the sale and an 80 percent value refund within 15-30 days. After that though, there’s no getting your money back. They will still accept returns at 31-90 days, but only for in-store credit.

As far as MLMs go, this is a gracious policy, but it still causes trouble for employees. Those who fail to sell the product they purchased typically give themselves more than two weeks to empty their wares, and losing 20 percent might be incentive to keep the product and hope to still sell it. Before long the 90 days is up, and they’ve completely lost their chance to get their money back. With this in mind, it’s really no wonder that sales presenters can be so pushy.

In short, Younique and other MLM companies are not worth spending the money it takes to buy into them. The “easy social media based business” takes a ton of work and persistence in order to become profitable, and most likely, like the bottom 99 percent, you are statistically expected to lose money in jumping on the bandwagon. If you think you’re the top 1 percent and will happily build an army of underlings to push overpriced makeup, by all means, go for it.

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