Is Younique An MLM?

The List/January 26, 2022

By Elizabeth Mitchell

If you spend even a small amount of time on social media, it's a fairly good bet that someone you know is constantly posting about their business selling Younique skincare and cosmetic products. The company's motto is "Uplift. Empower. Validate." and they sell more than skincare and makeup; they sell an idea about female empowerment and about taking control of your own life by starting your own business selling the company's products (Younique). But how does the company's business model really work?

If you have a friend or acquaintance who sells Younique and you've questioned them about the business practices of the company, they've likely said something about direct sales, and asked, "if you would buy your skincare products from a store, why not buy them from a friend instead and support their business?" And while it's true that Younique is a direct-sales company, using consultants to sell its products directly to customers, that's not the whole story. It's also a multilevel marketing company, or MLM (via ScamRisk).

How Younique's business model works

According to Fundera, MLM "is a type of direct sales that some companies use to encourage independent representatives to sell products or services to an end consumer. The multi-level aspect comes from each individual representative's ability to recruit and onboard additional representatives who will pay a percentage of their sales to the person who recruited them." In other words, while a portion of consultants' income does come from direct sales, in order to be truly successful at an MLM like Younique, you also have to recruit more and more people underneath you. This is where comparisons to pyramid schemes come into play, as this system does look exactly like a pyramid. What separates it from an illegal pyramid scheme is that the consultants really are selling an actual product.

The truth is, however, that only 25% of all MLM consultants turn any profit at all (via Fundera). That means that a whopping 75% of MLM sellers never make a dime. How does this happen? Well, most of the time MLM consultants have to buy the product upfront and then try and sell it to other people. If they can't sell it all or if they aren't great at getting people to sell underneath them, they can end up with a garage full of product and are lucky to ever even break even. This is why, even though MLMs are, for the most part, legal, many people still consider them a scam.

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