Mary Kay

Mary Kay Inc. is an American privately owned multi-level marketing company.[3][4][5][6][7] 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.[8] 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.[9][10][11]

Mary Kay Inc.
TypePrivately held company
IndustryMulti-level marketing
FoundedSeptember 13, 1963 (1963-09-13)
Dallas, Texas, U.S.
HeadquartersAddison, Texas, U.S.
Key people
Richard R. Rogers, Executive Chairman
David Holl, CEO
Deborah Gibbins, Chief Financial Officer
ProductsCosmetics, skin care
RevenueUS$2.8 billion (2020)[1]
Number of employees
Staff 5,000
Salespeople 3.5 million worldwide (2015)[2]
Websitewww.marykay.com

Business model
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 when they recruit others to begin selling under their distribution network. Mary Kay distributors must purchase a $100 starter kit to qualify.[12] Mary Kay releases few details about the average income of its sellers.[12]

Starting in 1963 with 318 consultants and sales of $198,154,[13] the company exceeded $500 million in sales through 220,000 consultants by 1991.[14] In 1995, its sales had grown to $950 million, including $25 million in Russia.[15] 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.[8][16]

In March 2020, Mary Kay closed operation in Australia and New Zealand.[17][18]

Manufacturing plants

The company's primary manufacturing plant is in Dallas, Texas.[19] A second plant was opened in Hangzhou, China, to manufacture and package products for that market.[20] 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 awarded to Independent Beauty Consultants/Directors as company-paid, two-year leases, and Consultants/Directors who choose to buy the cars at the end of the two year lease period are only allowed to resell them to authorized dealers. After the lease expires, the cars are repainted before being resold.[21]

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.[22][23] The specific qualifications for earning the car depend upon the country, and vehicle that is desired. If those qualifications are not met, then the Independent Beauty Consultant/Director has to pay for a portion of the lease of the car for that month. Meeting the qualifications entitles the Independent Beauty Consultant/Director to pay no monthly lease and 85% of the car insurance, or a pre-determined cash compensation award.[24] In 2011, a solid black Ford Mustang was introduced as an incentive.[25] In 2014, a black BMW was introduced in its place, although the pink Cadillac remains the top reward for those Independent Directors whose units purchase over $100,000 or more of MK products at wholesale cost in a year. Internationally, the cars available also vary depending on the regions and countries.

Earnings for salespeople

There are two ways for Independent Beauty Consultants to earn money in Mary Kay: recruiting and retail sales.

Recruiting commission earnings

"Recruiting commission earnings" reflects the commission and bonuses of 4, 9 or 13% that one earns from the wholesale purchases of MK products by their team or unit. These bonuses come straight from Mary Kay corporate and not from the Independent Beauty Consultants' team or units pockets. It does not include income from retail sales nor does it include income from the Mary Kay tools business.[26]

Retail sales earnings

Mary Kay Independent Beauty 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.

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.[27] An 85% per annum turnover figure has been calculated, based upon the data supplied by Mary Kay (Canada).[28] 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 argued 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.[29] In this case, Woolf was terminated from her position as Independent Sales Director because her unit failed to make production for three consecutive months. Woolf contended that her firing was illegal, because she was suffering from cancer.[30]

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 Independent Beauty Consultants, and that Touch of Pink's use of the Mary Kay trademark in reference to Mary Kay products it sells is deceiving.[31] The jury found in favor of Mary Kay and awarded a judgement of $1.139 million.[32]

On 20 July 2009, Mary Kay, Inc., sued Pink Face Cosmetics for trademark infringement.[33] 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.

References
  1. "Mary Kay". Forbes. Archived from the original on April 21, 2022. Retrieved February 12, 2021.
  2. Mary Kay Company Quick Facts Mary Kay Company Quick Facts Archived February 2, 2017, at the Wayback Machine Retrieved 2017-01-28
  3. "Multi-Level Marketing or Illegal Pyramid Scheme?". Government of Michigan. Archived from the original on February 8, 2020. Retrieved February 7, 2020.
  4. Richards, Laura (January 22, 2019). "How MLMs — multilevel marketing schemes — are hurting female friendships". The Washington Post. Archived from the original on January 13, 2020. Retrieved February 7, 2020.
  5. Hicken, Melanie (January 10, 2013). "The money behind Herbalife, Mary Kay and others". CNN Money. Archived from the original on January 13, 2020. Retrieved February 7, 2020.
  6. Ebert, Alex (April 30, 2018). "Trade Group for Amway, Mary Kay Wants States to Limit Labor Suits". Bloomberg Law. Archived from the original on January 22, 2021. Retrieved February 7, 2020.
  7. Gaby, Del Valle (October 22, 2018). "Multilevel marketing companies say they can make you rich. Here's how much 7 sellers actually earned". Vox. Archived from the original on May 11, 2020. Retrieved February 7, 2020.
  8. Direct Selling News, May 2, 2018: DSN Announces the 2018 Global 100! Archived March 30, 2019, at the Wayback Machine Retrieved 2019-03-16
  9. 2011 Press Kit The Company Archived July 14, 2011, at the Wayback Machine
  10. Mary Kay Company Information page Archived August 8, 2007, at the Wayback Machine
  11. Mary Kay At-A-Glance — June 2006
  12. Hicken, Melanie (January 10, 2013). "The money behind Herbalife, Mary Kay and others". CNN Money. Archived from the original on September 24, 2019. Retrieved April 12, 2014.
  13. "Mary Kay Ash". 20th Century American Leaders Database. Harvard Business School. Archived from the original on January 7, 2013. Retrieved October 20, 2010.
  14. 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 October 5, 2010. Retrieved October 20, 2010.
  15. "Company Retrospective". Mary Kay (UK). Archived from the original on December 26, 2007. Retrieved October 20, 2010.
  16. MK Corporate Press Kit 2006 Archived July 11, 2007, at the Wayback Machine
  17. Hall, James (March 6, 2020). "Mary Kay blames 'market conditions' for closing Australian operation". new.com/au.
  18. Macdonald, Megan; Higgins, Kate (March 6, 2020). "MLM make-up brand Mary Kay announces exit from Australia and NZ, citing 'market conditions'". ABC News. Retrieved August 26, 2022.
  19. Hoopfer, Evan (November 5, 2018). "Take a look inside Mary Kay's new $100M DFW facility". bizjournals.com. Archived from the original on May 9, 2022. Retrieved December 6, 2021.
  20. "Hangzhou Mary Kay Cosmetics Co in Beauty and Personal Care (China)". www.marketresearch.com. Archived from the original on October 1, 2021. Retrieved October 1, 2021.
  21. Clanton, Brett (June 27, 2006). "Mary Kay Inc. Loves Cadillac, and the Feeling Is Mutual". The Ledger. Archived from the original on March 28, 2019. Retrieved May 21, 2014.
  22. "Mary Kay Sales Director Earnings: Less Than Minimum Wage". Pink Truth. November 13, 2015. Retrieved April 5, 2018.
  23. Lopez, Jonathan (August 14, 2021). "Here's How Much It Costs To Get A Free Mary Kay Cadillac". GM Authority. Archived from the original on August 15, 2021. Retrieved June 2, 2022.
  24. Brochure: Mary Kay Career Car Plan Guidelines — February 2005.
  25. "Ford Mustang revs up as Mary Kay's newest ride". www.leftlanenews.com. Archived from the original on March 13, 2012. Retrieved April 5, 2018.
  26. "Earnings Representation 2019". marykay.ca. Archived from the original on February 28, 2019. Retrieved March 17, 2019.
  27. Mary Kay Letter to the FTC regarding proposed changes in the rules governing MLMs. Archived July 3, 2007, at the Wayback Machine
  28. Mary Kay Canadian Earnings Archived 2007-09-29 at the Wayback Machine
  29. Order List:544 US
  30. "FindLaw's Court of Appeals of Texas case and opinions". Findlaw. Archived from the original on October 1, 2021. Retrieved October 1, 2021.
  31. Mary Kay Inc. v. Amy L. Weber, Scott J. Weber and Touch of Pink Cosmetics, 601 F Supp. 2d 839 (N.D. Tex February 20, 2009).
  32. LJ (April 4, 2009). "Mary Kay Wins Lawsuit Against Touch of Pink Cosmetics". PinkLighthouse. Archived from the original on April 12, 2018. Retrieved April 10, 2018.
  33. "Mary Kay Suing Another Product Liquidator". Pink Truth. July 23, 2009. Retrieved April 11, 2018.



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