Tuesday, December 16, 2008

Pink Truth: Mary Kay and Liquidators

Pink Truth seems to think they have a lot of business savvy... about Mary Kay?

... And we are back...

Didn't even miss a beat...

HA!!

Perhaps I will weave the long tale for you some day...

Ahhh I can picture it now. Warm fireplace inside. Cold.. snow falling.. outside. Hot cup of coffee next to me. In-laws 'cozy' 72" plasma screen gently displaying the best game of the season. Me, tapping out the long story of how it came to be that my laptop, disgustingly infected with some stupid virus/spyware/something-or-other nonsense, was gloriously redeemed to its original (factory) condition... and how after much consternation and animated conversation with customer*ahem*service the function and form thereof was restored.

But, as I said, that is a story for another time.

Back to talking about how great and wonderful, or, how insidious and outrageous Mary Kay is.

Are the liquidators the bad guys?

Is Mary Kay?

Is this just the way that businesses wrestle with each other to establish generally accepted and followed practices and guidelines?

Is a "normal" company (say Macy's for instance) "liquidating" their products the same thing as the Mary Kay liquidators that are being challenged?

That last one I honestly don't know myself. I know next to nothing about liquidation. I do suspect though that, like with most things, you can't just call yourself a liquidator and "viola" you are a liquidator.

What are your thoughts.

p.s. Thank you Miranda for sharing in my pain. It is somehow less painful knowing that someone else out there is pulling out their hair while attempting to dialogue with a non-moving progress bar... **cheers**

7 comments:

  1. No one is a bad guy. Liquidators are just businesses that have found a niche in the market. They offer a valuable service to active and inactive consultants. They are similar to Big Lots in that they take closeouts, excess inventory, etc., and sell them to the public at a reduced price.

    Mary Kay has no control here. If they do not want reduced, older inventory on the market, they should take the money they are using to sue liquidators and use it to investigate director frontloading. If they do not want liquidators, they should do as other companies do and accept unsold inventory back from their retailers (the consultants). Then they can dispose of it and write it off.

    I think it's great that consultants who make business errors or people who are frontloaded are able to recoup some of their losses. Mary Kay only offers a buy back if you quit and then they ban you from the company. What is a consultant supposed to do when they have $3600 in profit-level inventory and then they are told that the entire line will change in a very short span? Mary Kay won't take back the old product the way MANY cosmetic or other types of companies do. The consultant can't order new stuff because it's not out. They tenatively order and sell old in the meanwhile--if they are decent at selling. What if they're just starting out? How do they get rid of the inventory and still remain in Mary Kay? How do they sell old stuff when only new is desired by the consumer? They sell to a liquidator at a reduced cost. They recoup a *tiny* amount of their loss. By the way, does this actually violate their contract? If you sell a large order to another individual, how is that a violation? What is the specific contractual obligations regarding this specific situation?

    I think Mary Kay is stupid to waste time and money pursuing this. Liquidators aren't killing business. The ratio of liquidators to consultants is insanely out of proportion. Ebay isn't killing Mary Kay either. Part of the appeal of Mary Kay is personal service-- not offered by ebay sellers.

    And, if it is hurting business, then Mary Kay needs to admit that there is a great problem with frontloading then they have claimed. All that inventory is coming from somewhere. It comes from frontloaded, disgruntled consultants. People who were persuaded to join when they weren't meant for sales. Unscrupulous consultants and directors who ignore their agreement. All of these are a sign that Mary Kay has a problem that needs to be contained from within. Not by suing people who take advantage of Mary Kay's errors. That's just what liquidators are. Businesses who have found a way to capitalize on Mary Kay's mistakes.

    Mary Kay has frontloaders in the top ranks. All you have to do is look at their unitnet sites and look under any section marked inventory. Pam Shaw is a frontloader. She trains her directors to do the same. Imagine if Mary Kay made an example of some of these nationals. Don't you think it would put some fear into people to start doing the right thing? I think so. Don't you think that would eliminate some of the excess inventory that hurts the business of honest consultants when it's flushed onto the market? Why take records from liquidators? It's not their responsibility to make sure consultants don't violate their agreement. It's Mary Kay's. The inventory isn't stolen and it's not against the law to buy inventory, even if it violates an agreement between two other parties. It's not even against the law for a consultant to sell to a liquidator. It's just a contractual violation. All of which is Mary Kay's responsibility to enforce. Not a liquidator. They have no right to violate the liquidator's customer privacy.

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  2. Your Mom,

    I always love your comments. You do a great job of putting thoughts into words and making your point clear for the readers.

    You said:

    "No one is a bad guy."

    But it sounds like you think that Mary Kay is the bad guy here for going after and bullying the liquidators.

    Am I missing something there?

    I am very curious to see what some of the other readers have to say on this one. Particularly in response to your comment.

    As I mentioned, I don't know enough about Mary Kay's policies, the contracts, what these liquidators are doing, or the law to comment much myself.

    That is not to say that your assessment is right... or wrong. As I said, you laid out your argument very well and I think it is quite convincing. But as we all know, there are always two sides (actually usually a lot more than two) to every story.

    What does everyone else think about this subject... "The Liquidators"?

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  3. Dave, is the compy back to normal now? I keep finding things I still have to do to mine.

    The progress bar, or the little browser icon thingy going around and around or... AAAH GAHHHH stabby stabby. Took like 20 minutes the other to convince my computer to talk to my printer again. I just wanted to print a recipe!

    I think the liquidators are A-okay. People and companies liquidate all manner of merchandise when they need to sell if off at low prices. Furniture, makeup, you know all those outlet stores... it's a common practice. Consider people selling things on ebay or craigslist. Suppose I have an old HP laserjet printer to sell. I post an ad saying it is a (whatever year) HP printer. I would be flabbergasted if Hewlett Packard called me up and said oh no! You cannot sell our printers! You cannot use our name to identify them! Uh, sure I can. I paid for the printer. It's mine. I am through with it, so now I'm selling it. Product identification is allowed.

    I don't understand why this bugs MK. This product would otherwise just go completely to waste. No one uses liquidators if the product is "young" enough to send back for a 90% refund, because the liquidators pay less than 90%. This is a niche market for a. people with excess inventory and b. people looking for bargain basement prices who don't mind if the product is a tad bit old. And not everyone wants that. For example, A friend of mine went to a MAC closeout store when she was traveling and what they had was...you guessed it, old stuff for cheap to get rid of. Mostly, it wasn't stuff she wanted...me either. She gave me a couple colors but when I tried them on I could see why they had been discontinued.

    I think MK is just really, really A-R about anything connected to them. Really control freaky, as evidenced by how stringently they limit the advertising and selling options for consultants. I wish they would leave the liquidators alone.

    *launches into crabby old-lady mode* I feel that waste is sinful. The liquidators help prevent waste. It's a good service!

    Yew darn kids get off my lawn, and remember to use a Bic cap or something to scrape out the last of your lipstick from the tube, and reuse those old busted out socks for dusting before you throw them out, and, and... Ok. I'll stop waving my cane. I could make a hole in this monitor, and then my boss would get really mad.

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  4. I guess that it could come across that I feel Mary Kay is the bad guy, but I really do not. I think Mary Kay is going after the wrong people. I think it is wrong of them to punish the "small" crimes of dumping inventory (at a loss mind you) to liquidators when there is the much larger crime of overloading those consultants in the first place.

    I reiterate that NSDs such as Pamela Shaw promote and push orders such as the $4200 Shaw Order of Excellence onto brand new consultants and promote it on their websites as the number one package to purchase. Mary Kay allows *that* but they discourage the liquidation that is caused as a result of that type of behavior. I am against Mary Kay subpoenaing private records of small businesses to perform a little naughty consultant witch hunt while failing to address their own part in the mess.

    I also think that they have no right to complain about liquidation when they have not seen to the problem of discontinued excess and outdated product themselves. Many prestige brand cosmetic companies do this. They take back the product from the counters and sell it through outlets. Several companies such as MAC offer a gone but not forgotten program to connect customers with discontinued items! That is customer service. The manufacturer is absorbing most of the surplus expenses--not the retailer. So, say you are a consultant who purchased a $3600 inventory, only to find out Mary Kay was revamping the entire color line-- next month. Under regular retail guidelines, Mary Kay would take back the product and provide a credit to the retailer (beauty consultant) and that consultant would replace her obsolete inventory. Mary Kay would then send this discontinued inventory to a factory outlet. Not Big Lots or some K-mart type store, but an actual Mary Kay outlet store similar to the outlets that high end designers and department stores use. They would still make a profit because even the 50% discount the consultant gets is higher than Mary Kay's actual production and material cost. At these outlets, Mary Kay could still sell over the 50%. Since outlets are not as common as malls or department stores, they would not undercut the consultant's business.

    I think that this foray into liquidation litigation (say that five times fast) shows positive things about Mary Kay. They are willing to try to protect the brand value, the consultant competition and the Mary Kay image. I just think they are going about it the wrong way. I am completely fine with them cracking down on e-bay as much as legally possible by reporting violations. Why do I think utilizing liquidators is a fair violation while e-bay is not? Well, consultants do not make a profit by selling to liquidators. There is a consequence to this action. They take a loss to move their inventory. A significant one. There is no profit advantage, it is usually a last resort and a lesson learned for the consultant or ex-consultant involved. E-bay use, however, creates an unfair advantage over the honest consultants who follow the agreement by rewarding the violator with profit for doing the wrong thing.

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  5. I am not totally sure how I feel about this. Do I like them? "NO" because if they can undersell me - there may be some people that want to save a buck and instead of purchasing from me after I have taken the time to demo the products, put them on PCP, give them gifts with purchase, deliver, etc.. and then they purchase from someone else, my "investment" is all for not. (fortunately, I haven't seen an impact on my business and pray that I don't).

    One issue I have is that the honest consultants, if we make poor choices find ways to move discontinued inventory where as an unethical one would use a liquidator to "balance" their inventory - and this is clearly a violation of our contract. That means the honest one will be at a disadvantage.

    Another issue, the Company does offer the 90% buyback, if you find MK doesn't work for you, use it. (There are many that don't use the Company {even if they can}, they just use the liquidators and put more second hand product on the market.) - If a consultant has "bought" her car or directorship and then realizes it isn't worth it because now she has more product than Corporate, dumps it on the market because of her poor choices, once again more "cheap" product dumped in the market (of course this has the potential to impact an honest working consultant).

    Another issue, from my reading, many of these liquidators were MK consultants that the Company terminated for breaking their agreements. So they know what they are doing is not within Company policy and if the Company did terminate them, they would have been able to use the 90% buyback for themselves.

    Now, I believe MK is a great product, I would hate for a potential client to start buying stuff of the internet and then find that, yuck, MK is awful because they end up with product that perhaps is too old or was compromised in storage - that would taint their opinion because that is what they will feel about the products. And please don't try and tell me everything is perfect product on the liquidators sites.

    I have seen products with active ingredients that are definely past their shelve life which means they would be no good, especially products with sunscreens in them. I have seen products that are so anticent I would be mortified to allow someone to use them.

    Just because the box and the products look okay, doesn't mean that they are not compromised. If it was stored and get too hot or froze, the products will be compromised. (I understand this could happen even if a consultant was selling it but if I wanted a client to return to me, I would not want to give her a subpar product).

    Another issue - there is no satisfaction guarantee but I have had consultants that come to me and they have a friend that got something and now they want to exchange it - it is not a consultant responsibility to exhance something they did not sell, the client is allowed to call the Company and the Company will assist them, but then the client is upset with the consultant because of the hassle to deal with the Company instead of the consultant and then more than likely the consultant will loose that client anyway. Or if she decides just to make the exchange, it will be a loss for her.

    Last but not least, these liquidators are not in it to help the ex-consultants, they are in it to make money. Period. So they are no better than what they accuse the Company of doing. They are taking advantage of an individual in a position that is trying to make money. I have seen reports of how much money some of these liquidators make, they are flaunted on the internet. They offer a very small amount to the consultant for their products, and they are making a lots of money reselling what they basically got for nothing. If they wanted to help, they would offer more to purchase these products. Bottom line is they have found a way to make money and are not in it to "help" anyone but themselves.
    (Of course any business is going to be looking at the bottom line, money because if they are not making it, they will not be in business).

    Do I wish they would go away? - Yes. Have they affected my busines, not that I know of but the potential is there to hurt my business that I have built and operated honestly and ethically , obeying the rules of the Company and my agreement for 14 years. I can be proud of my acheivements because I have earned them within the rules of the game.

    Actually, if I had to choose, I would like MK to be able to shut down the liquidators and if an exconsultant wants to do the work to sell something on ebay, at least she has to do the work and has a chance at recouping at least wholesale on her product.

    Will Mary Kay be able to do anything about them? I honestly don't know and I don't know enough about the legalities to make an intelligent statement in that regard.

    I wish there were some laws about reselling something like food and cosmetics though for the safety of all.

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  6. Miranda,

    Yes, more or less.

    Still need to get all my settings back the way I like them, but we are certainly functional.

    And, as much as I hate to admit it, the fact that more and more of my "settings" are being saved online makes these kinds of transitions less traumatic. Hmmm... maybe it IS a good thing that everything is more internet-centric.

    Your Mom and mk4me,

    I don't have time to add my thoughts right now, but some of the things that you are talking about gives me some food for thought. Hopefully I will get to share those thoughts later.

    I do think that there is some substance to the argument of:

    It is okay (and legitimate) to liquidate, the method is what comes under scrutiny from "the company".

    Consider: Selling product at 50% (your cost) is a much better alternative to selling to a liquidator for less than 50% of retail. You build goodwill with the clients that get a screamin' deal, you have cash on hand to replace inventory.

    ...more later.

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For Further Reading...

This Week On Pink Truth - Click Here
Pros and Cons of Mary Kay - Read or Contribute or Both!
First Post - Why I Started This Blog
The Article I Wrote For ScamTypes.com (here) (there)
If this is your first visit please leave a comment here. I would love to hear from you!
If you want to email me: balancedmarykay@gmail.com
But you are probably better emailing mk4me: mk4me2@gmail.com