The multi-level distribution system that Younique follows has often been questioned. The popular concern is whether it is a pyramid scheme in reality that Younique follows?
The Important Fact About Younique and Similar Systems
Before you read the rest of this article, let me tell you something important:
In most cases, there is no clear border between MLM and pyramid schemes. Some of the things that companies like Younique do, look like MLM and some of the other things they do, make them closer to be known a Pyramid scheme. However, this is not the problem that 99% of people have.
Whether Younique is an MLM that is mixed with some pyramid shape features, or it is just a pure legitimate MLM, the most important question is, can you really make money with them?
What companies like Younique do, is not illegal. Younique is a legitimate American multi-level marketing company. They use a multi-level marketing system to sell beauty products. And, multi-level marketing is not illegal, when there are real products to sell. It becomes a pyramid scheme when there is no product and the top members make money based on the membership fees the members of the lower levels pay. Younique does have real products, and so it is not a 100% pyramid scheme.
Therefore, although some of the things that Younique does, make them look like a pyramid scheme, they are not a 100% pyramid. However, making money with them is a different story. It is not easy to make money with these kinds of systems because generating sales and referring and recruiting is what 99% of people cannot do.
So, What Should You Do?
Knowing whether Younique is a pyramid scheme or not, is not that important. As I mentioned above, Younique is a legitimate MLM that looks like a pyramid somehow. However, it doesn’t mean that now that you know this, you can join them with peace of mind and make a fortune with them. There is an important problem with businesses like Younique: 99% of people cannot make any money with them. They just waste time and money and then will give up.
Now, if you don’t want this happens to you too, then forget about joining programs like Younique. Join a program that makes money for everyone, and anyone is a winner with it, not a program that you must pay fees, generate sales and recruit members to make some commissions. Watch the presentations on this page and then submit your email to receive the sign up code.
Now… here is the rest of the article:
Is Younique a Pyramid Scheme?
Given the huge opportunity and the kind of money making options that exist in the beauty industry, often the thin line between multi-level marketing and pyramid scheme gets convoluted quite easily. The dynamics of the direct sales market, especially in cosmetic industry, is such that you tend to either avoid it or get stuck with serious monetary implications.
Let us understand the details of Younique’s business model first before deciding whether it is a pyramid scheme or just an aggressive direct marketing strategy.
Well, Younique is a cosmetic range comprising of eye, lips, face and skin care products. Founded in 2012 by a brother sister duo, it attracted over 200,000 presenters by the end of 2015 and there started the whole concern of a potential Younique pyramid scheme taking shape and raising the possibility of jeopardizing the financial future of the many involved, especially towards the base of the pyramid.
Well, we all know that the brand Younique is identified by the product it sells and one simple test could be trying to understand whether it really is a legitimate on the basis of two aspects:
- Inventory Loading
- Retail Sales Quantum
Overall Younique offers cosmetics around $19-29 per item. On a broad level, this is not a terribly expensive pricing scheme for a non-drug store cosmetic brand. It has a high range face cream close to $70. However, what really made people sit up and take notice of the brand is the Moodstruck 3D Fiber Lashes+ mascara which is supposed to boost eyelash by almost 400% and the potential sales of this product could be a serious indicator of Younique’s essential margin and validity of its business claims.
Does Data Indicate Presence of Younique Pyramid Scheme?
Let us now understand the Younique revenue picture to grasp the fallacy in the system properly. You can say that like most MLMs, Younique provides you with an opportunity to sell their products. You sell their product and earn money and also by recruiting more sales persons who would sell more products.
Now, every presenter or sales representative who joins the company starts off at the White Level, where they earn 20% commission. Of course, as a basic level representative, you need to buy a starter kit worth $99 and need to sell at least $125 worth products within the first three months. It does not matter who is the end user; you could even buy $125 worth products for your own consumption. As long as the company logs $125 sale per representative, you are good to go.
This is pretty much how many other cosmetic firms like Avon also do business, but the point is Younique sells all its products completely via social media. You access potential clients and fresh recruits via social media pages.
Quietly following a typical and well-camouflaged pyramid scheme, a representative moves to the next Yellow level on finishing $1,000 worth products and the commission increases to 25%. Pink is the next level, and at this stage, you need to recruit at least one person selling under you, adding a fresh layer to the Younique pyramid Scheme.
Your personal sales at this stage must exceed $250, and people under you have to clock an aggregate sale of $2,000 to help you maintain the Pink level. Along with the 25% sales commission, you also earn an additional 3% on the total sales made by your circle. Well, at this stage the graph is sure veering towards application of force to make business thriving:
- You need to maintain basic levels
- Your recruits need to maintain certain sales numbers
- Your commission increases in sync with the increase in circle
- Creating a fresh layer of recruits become mandatory
At this level, can you say with conviction that this is just an aggressive direct marketing strategy? Well, in my opinion, the weights tilt more in favor of a possible pyramid scheme where only the top level stands to gain.
Do All Members Make Money in Younique?
If you are still not convinced, let me pose you another question. By December 2015, Younique boasted of a spectacular rise in the total number of recruits to a whopping 200,000. The point is are all of them making the same kind of money and earning the returns that were promised initially. Even a ballpark study would reveal that not more than 5% of these recruits would be earning an income that would justify the effort and returns promised.
Therefore, it would not be wrong to assume that close to 95% of the recruits who join Younique fail in their business initiative and perhaps also book severe monetary losses. Would it still be rated as an opportunity? Even if we go back to the FTC definition, it would be rather hard to define the Younique business arrangement anything but a pyramid scheme.
The question is, can you undermine the claim by saying that perhaps it is not a kind of business that you might be successful in and your individual aptitude might be at play? However, when you find close to 95% of the joiners in this scheme suffer a similar fate, it is hard to rubbish off claims of a potential illegal pyramid scheme.
At this stage, you can say that why don’t we let the Younique product do the talking? After all, even the Federal Trade Commission has listed the retail sales numbers as a true mirror of a company’s authenticity. At the point when recruits are supposed to buy $125 worth of cosmetics and need to maintain a steady sales number above $1000 and when your recruit circle has to make average $2000 worth sales, the thin line between aggressive product marketing and forced sales to create a pyramid layer increasingly begins to fade, and doubts start becoming stronger.
Pyramid Scheme or Aggressive Direct Marketing Strategy?
At this stage, the argument favoring a Younique pyramid scheme seem to be far more plausible than any MLM related suggestion. While the retail sales are clocked, it is very hard to judge if they are real sales undertaken by absolutely satisfied customers or forced sales undertaken by hapless recruits frantic to maintain their status and recover at least some bit of their investment in the overall scheme of things.
Additionally, with the bulk of sales undertaken on the social media and the customer feedback being almost singularly overshadowed by existing rep perspective or potential recruit views, verifying the authenticity can be a major exercise. In this scenario, the argument seems to veer increasingly towards an illegal pyramid scenario in which close to 95% joining Younique are experiencing losses.
Now, do you still want to spend your time and money on this? Definitely not. Therefore, work with a system (here) that not only it is not a pyramid scheme, but also everybody is a winner in it.