Mary Kay

Last updated
Mary Kay Inc.
Privately held company
Industry Multi-level marketing
FoundedSeptember 13, 1963;57 years ago (1963-09-13)
Dallas, Texas, U.S.
Headquarters Addison, Texas, U.S.
Key people
Richard R. Rogers, Executive Chairman
David Holl, CEO
Products Cosmetics, skin care
RevenueUS$3.6 billion (2019) [1]
Number of employees
Staff 5,000
Salespeople 3.5 million worldwide (2015) [2]
Website www.marykay.com

Mary Kay Inc. is an American privately owned multi-level marketing company. [3] [4] [5] [6] [7] [8] According to Direct Selling News, Mary Kay was the sixth largest network marketing company in the world in 2018, with a wholesale volume of US$3.25 billion. [9] Mary Kay is based in Addison, Texas. The company was founded by Mary Kay Ash in 1963. Richard Rogers, Ash's son, is the chairman, and David Holl is president and was named CEO in 2006. [10] [11] [12]

Contents

Business model

Mary Kay corporate headquarters in Addison, Texas Mary-Kay-Addison-TX-6737.jpg
Mary Kay corporate headquarters in Addison, Texas

Mary Kay sells cosmetics through a multi-level marketing model. Mary Kay distributors (called beauty consultants) can potentially make income by directly selling to people in their community, and also receive a commission on wholesale purchases made by people they recruit into the distribution network. Mary Kay distributors must purchase a $100 starter kit to qualify. [13] As a private company, Mary Kay releases few details about the average income of its sellers. [13]

Starting in 1963 with 318 consultants and sales of $198,154 [14] , Mary Kay gradually expanded its reach first within the United States, then internationally. The company exceeded $500 million in sales through 220,000 consultants by 1991. [15] In 1995, its sales had grown to $950 million, including $25 million in Russia. [16] As of 2017, Mary Kay’s continuous multinational expansion had seen its sales grow to $3.7 billion with 2.5 million consultants, 39,000 directors and 600 national directors. [9] [17]

Manufacturing plants

The primary manufacturing plant is in Dallas, Texas. A second plant was opened in Hangzhou, China, to manufacture and package products for that market. A third plant was opened in 1997, in La Chaux-de-Fonds, Switzerland for the European market. The Swiss plant closed in 2003.

Cars

In 1968, Mary Kay Ash purchased the first pink Cadillac from a Dallas dealership, where it was repainted on site to match the "Mountain Laurel Blush" in a compact Ash carried. The Cadillac served as a mobile advertisement for the business. The following year, Ash rewarded the company's top five salespeople with similarly painted 1970 Coupe de Ville cars. GM has painted over 100,000 custom cars for Mary Kay. The specific shade has varied over the years from bubble-gum to soft pearlescent pink. GM had an exclusive agreement to sell cars of the specific shade only through Mary Kay. The cars are offered to distributors as two-year leases, and distributors who choose to buy the cars are only allowed to resell them to authorized dealers. After the lease expires, the cars are repainted before being resold. [18]

Mary Kay has different car incentive levels for its consultants. Independent Beauty Consultants and directors can earn the use of a silver Chevrolet Malibu or a cash compensation of $425 a month. Independent Sales Directors can also earn a black Chevrolet Equinox, Chevrolet Traverse, Mini Cooper or $500 a month. Top performing Independent Sales Directors can choose between the pink Cadillac XT5 or XT6, or cash option of $900 a month. [19] The specific qualifications for earning the car depend upon the country, and vehicle that is desired. If those qualifications are not met, then the distributor has to pay for a portion of the lease of the car for that month. Meeting the qualifications entitles the distributor to pay no monthly lease and 85% of the car insurance, or a pre-determined cash compensation award. [20] In 2011, a solid black Ford Mustang was introduced as an incentive. [21] In 2014, a black BMW was introduced in its place, although the pink Cadillac remains the top reward for those distributors whose units purchase over $100,000 or more in a year. Internationally, the cars available also vary depending on the regions and countries.

Earnings for salespeople

There are two ways for consultants to earn money in Mary Kay:

Recruiting commission earnings

"Recruiting commission earnings" reflects the commission and bonuses of 4, 9 or 13% that one earns from the wholesale purchases of their team or unit. These bonuses come straight from Mary Kay corporate and not from said consultants team or units pockets. It does not include income from retail sales nor does it include income from the Mary Kay tools business. In 2018 Mary Kay (Canada) claimed the following incomes for its salesforce: [22]

For Mary Kay (USA) National Sales Directors, the 2006 median gross income (prior to business expenses) was $175,443. [23]

Retail sales earnings

Mary Kay consultants earn a 50% gross profit on products they sell at full retail price. There is no tracking by the company of actual sales. The quoted figure of US$1,057.14 per year (2015) for the average consultant derives from dividing the annual wholesale sales by Mary Kay Inc., by the number of Mary Kay consultants. This figure does not account for product returns, eBay, auctions, sales at a discount, and purchases by "personal use consultants"—all of which would lower this figure.[ citation needed ]

Consultant turnover rate

A 68.6% per annum turnover figure has been calculated based upon information supplied by Mary Kay (USA) to the Federal Trade Commission. [24] An 85% per annum turnover figure has been calculated, based upon the data supplied by Mary Kay (Canada). [25] That document excludes individuals who earn a commission and are in the company for less than one year. It also excludes individuals who are in the company for more than one year but do not earn a commission check.

Court cases

Woolf v. Mary Kay Cosmetics

The 2004 court case Woolf v. Mary Kay Cosmetics was originally decided in favor of the plaintiff, Claudine Woolf. In doing so it marked the first time [26] that workplace rights could be applied to independent contractors who worked from their home. This decision was stayed and then reversed after an appeal. The Supreme Court denied certiorari on 31 May 2005. [27] In this case, Woolf was terminated from her position as director because her unit failed to make production for three consecutive months. Woolf contended that her firing was illegal, because of her medical condition she was suffering from cancer.

Liquidator court cases

In May 2008, Mary Kay, Inc., sued Touch of Pink Cosmetics, a website that sells product from former Mary Kay consultants at heavily reduced prices. The company claims that Touch of Pink interferes with its business by offering to purchase inventory from discontinued consultants, and that Touch of Pink's use of the Mary Kay trademark in reference to Mary Kay products it sells is deceiving. [28] The jury found in favor of Mary Kay and awarded a judgement of $1.139 million. [29]

On 20 July 2009, Mary Kay, Inc., sued Pink Face Cosmetics for trademark infringement. [30] The specific issue appears to be the use of the Mary Kay name, in selling Mary Kay products on eBay and other Internet venues for less than the wholesale cost of the products.

Related Research Articles

Mary Kay Ash

Mary Kay Ash was an American businesswoman and founder of Mary Kay Cosmetics, Inc. At her death, her personal fortune was $98 million. Her company had more than $1.2 billion in sales and an international sales force of more than eight hundred thousand in at least three dozen countries.

Holiday Magic was a multi-level marketing organization, founded in 1964, by William Penn Patrick (1930–1973) in the United States. Originally the organization distributed goods such as home-care products and cosmetics.

Nu Skin Enterprises

Nu Skin Enterprises is an American multilevel marketing company that develops and sells personal care products and dietary supplements under its Nu Skin and Pharmanex brands. Nu Skin was founded in 1984 in Provo, Utah. The company originated in the United States and began its first foreign operation in Canada in 1990. One year later, the company began operations in Asia with the opening of Hong Kong. In 1996, the company listed on the New York Stock Exchange. The company markets its products in 54 markets through a network of approximately 1.2 million independent distributors.

In re Amway Corp. is a 1979 ruling by the United States Federal Trade Commission concerning the business practices of Amway, a multi-level marketing (MLM) company. The FTC ruled that Amway was not an illegal pyramid scheme according strictly to the statutory definition of a pyramid scheme, but ordered Amway to cease price fixing and cease misrepresenting to its distributors (participants) the average participant's likelihood of financial security and material success.

Essendant American office supply distributor

Essendant, formerly known as United Stationers, is a national wholesale distributor of office supplies, with consolidated net sales of $5.3 billion. Essendant stocks over 160,000 items including traditional office products, office furniture, janitorial and break room supplies, technology products, industrial supplies and automotive aftermarket tools and equipment. Essendant is headquartered in Deerfield, Illinois and also has operations in Dubai, United Arab Emirates (UAE). The company operates as an online retailer and sells industrial tools direct to consumers. As of February 13, 2015, Essendant employed approximately 6,500 people.

Multi-level marketing (MLM), also called network marketing - or sometimes pyramid selling is a controversial marketing strategy for the sale of products or services where the revenue of the MLM company is derived from a non-salaried workforce selling the company's products or services, while the earnings of the participants are derived from a pyramid-shaped or binary compensation commission system. An MLM strategy may be an illegal pyramid scheme.

USANA Health Sciences

Usana Health Sciences, Inc., or USANA, is a Utah-based multi-level marketing company that produces various nutritional products, dietary supplements and skincare products. Usana products, most of which are manufactured at the company's West Valley City facility, are sold in 24 countries via a network of independent distributors. Most of Usana's independent distributors make less money than the cost of the initial qualifying purchase.

In bookkeeping, accounting, and finance, net sales are operating revenues earned by a company for selling its products or rendering its services. Also referred to as revenue, they are reported directly on the income statement as Sales or Net sales.

Beachbody American multi-level marketing company

Beachbody LLC is a privately-held American multi-level marketing company that uses direct response infomercials, e-commerce, and individual sales consultants to sell home-exercise videos and dietary supplements. The company was founded in 1998 in Santa Monica, California. Their products include P90X.

Market America is a multi-level marketing company founded in 1992 by JR and Loren Ridinger. Headquartered in Greensboro, North Carolina, the company employed around 800 people as of 2016. The services offered by the company include household cleaning supplies, jewelry, personal care products, auto care, cosmetics, dietary supplements, custom websites, water purifiers, and weight management products. A 2017 lawsuit accused the company of being an illegal pyramid scheme.

Tastefully Simple, Inc. is a U.S.multi-level marketing company that sells meal kits and other prepared food products. The products are sold through a network of home-based commissioned distributors and online. As of 2019, the company employed roughly 75 people at its headquarters in Alexandria, Minnesota.

Young Living is a multi-level marketing company based in Lehi, Utah that sells essential oils and other related products. The company was founded in 1993 by Donald Gary Young, a controversial figure previously convicted for the unlicensed practice of medicine.

doTerra is a multi-level marketing company based in Pleasant Grove, Utah that sells essential oils and other related products. doTerra was founded in 2008 by former executives of Young Living and others.

Rodan & Fields, LLC, known as Rodan + Fields or R+F, is an American manufacturer and multi-level marketing company specializing in skincare products. Katie Rodan and Kathy A. Fields, creators of Proactiv, started the Rodan + Fields brand in 2002 and sold it a year later. They relaunched the brand in 2007 as a multi-level marketing firm.

LuLaRoe is a United States-based multi-level marketing company that sells women's clothing. LuLaRoe was founded in 2012 by Deanne Brady and her husband Mark Stidham, and is currently based in Corona, California.

SeneGence International, Inc. is a privately owned American multi-level marketing (MLM) company that sells skincare and makeup products, including the LipSense product line. The company was founded in 1999 by Joni Rogers-Kante who is the CEO and chair. The company is headquartered in Foothill Ranch, Lake Forest, California, with facilities in Sapulpa, Oklahoma.

Scentsy is a United States-based multi-level marketing company that sells scented products including wax warmers.

Younique American multi-level marketing company

Younique is an American multi-level marketing company (MLM) that markets beauty products. The company was founded in 2012 by Derek Maxfield, who serves as CEO, and Melanie Huscroft, and is headquartered in Lehi, Utah. Between 2017 and 2019, Younique was 60% owned by Coty, Inc.

Mary C. Crowley (1915–1986), was the founder and CEO of the Texas-based Home Interiors and Gifts, Inc., which became one of the largest direct sales home furnishing operations in America. She was considered to be one of the leading businesswomen in the United States in the 1970s. Crowley was also a published author of works on women in business, and on self-improvement for women.

Pure Romance is a United States-based multi-level marketing company that sells adult products including sex toys.

References

  1. https://www.forbes.com/companies/mary-kay/#6be3165c2bc9
  2. Mary Kay Company Quick Facts Mary Kay Company Quick Facts Retrieved 2017-01-28
  3. "Multi-Level Marketing or Illegal Pyramid Scheme?". Government of Michigan. Archived from the original on 2020-02-07. Retrieved 2020-02-07.
  4. Richards, Laura (2019-01-22). "How MLMs — multilevel marketing schemes — are hurting female friendships". The Washington Post. Retrieved 2020-02-07.
  5. Hicken, Melanie (2013-01-10). "The money behind Herbalife, Mary Kay and others". CNN Money. Retrieved 2020-02-07.
  6. Olen, Helaine (2012-07-20). "Mary Kay Preys on Women". Forbes. Retrieved 2020-02-07.
  7. Ebert, Alex (2018-04-30). "Trade Group for Amway, Mary Kay Wants States to Limit Labor Suits". Bloomberg Law. Retrieved 2020-02-07.
  8. Gaby, Del Valle (2018-10-22). "Multilevel marketing companies say they can make you rich. Here's how much 7 sellers actually earned". Vox. Retrieved 2020-02-07.
  9. 1 2 Direct Selling News, May 2, 2018: DSN Announces the 2018 Global 100! Retrieved 2019-03-16
  10. 2011 Press Kit The Company Archived July 14, 2011, at the Wayback Machine
  11. Mary Kay Company Information page Archived August 8, 2007, at the Wayback Machine
  12. Mary Kay At-A-Glance — June 2006
  13. 1 2 Hicken, Melanie (10 January 2013). "The money behind Herbalife, Mary Kay and others". CNN Money. Retrieved 12 April 2014.
  14. "Mary Kay Ash". 20th Century American Leaders Database. Harvard Business School . Retrieved 2010-10-20.
  15. Camerius, James W.; Clinton, James W. (1993). "Avon Products, Inc: Developing a Global Perspective" (PDF). Washington, DC: Direct Selling Education Foundation. Archived from the original (PDF) on 5 October 2010. Retrieved 2010-10-20.
  16. "Company Retrospective". Mary Kay (UK). Archived from the original on 26 December 2007. Retrieved 2010-10-20.
  17. MK Corporate Press Kit 2006 Archived July 11, 2007, at the Wayback Machine
  18. Clanton, Brett (27 June 2006). "Mary Kay Inc. Loves Cadillac, and the Feeling Is Mutual". The Ledger. Retrieved 21 May 2014.
  19. "Mary Kay Sales Director Earnings: Less Than Minimum Wage". Pink Truth. 13 November 2015. Retrieved 5 April 2018.
  20. Brochure: Mary Kay Career Car Plan Guidelines — February 2005.
  21. "Ford Mustang revs up as Mary Kay's newest ride". www.leftlanenews.com. Retrieved 5 April 2018.
  22. Earnings Representation 2018 Retrieved 2019-03-17
  23. "US National 1206 Commission" (PDF). archive-it.org. Archived from the original (PDF) on 3 July 2007. Retrieved 5 April 2018.
  24. Mary Kay Letter to the FTC regarding proposed changes in the rules governing MLMs. Archived July 3, 2007, at the Wayback Machine
  25. Mary Kay Canadian Earnings Archived 2007-09-29 at the Wayback Machine
  26. "Law.com". Law.com. Retrieved 5 April 2018.
  27. Order List:544 US
  28. Mary Kay Inc. v. Amy L. Weber, Scott J. Weber and Touch of Pink Cosmetics, 601F Supp. 2d839 ( N.D. Tex February 20, 2009).
  29. LJ (April 4, 2009). "Mary Kay Wins Lawsuit Against Touch of Pink Cosmetics". PinkLighthouse. Retrieved April 10, 2018.
  30. "Mary Kay Suing Another Product Liquidator". Pink Truth. July 23, 2009. Retrieved April 11, 2018.