Kendra Scott Announces New Direct Sales Program
Multi-level marketing is becoming an even more divisive topic, but that isn’t stopping some brands from giving the method a try. Kendra Scott, a Texas jewelry company, appears to be the latest company to delve into the space.
On March 3, 2022, Kendra Scott made a Facebook announcement that the company is launching a direct sales program, Direct Retail by Kendra Scott. The brand claims that for $199-$1499 you can start your own business through Kendra Scott.
In the comments section, many concerned fans and customers are ringing the alarm bells because, yes, this sounds like a Multi-level marketing company.
Multi-level marketing (MLM) is a business model in which individuals are signed on as independent contractors, often after the purchase of a starter kit, to promote and sell the company’s products. Despite their independent contractor status and the fact that they are signing on to an already existing company, MLM consultants are often told that they are starting their own business and becoming entrepreneurs.
MLM consultants typically earn money in two ways, selling the product or service provided by the MLM and recruiting additional consultants underneath them. Consultants can make a commission or additional bonuses based on the sales, purchases, and recruitment of those who they have recruited.
This recruitment is the biggest danger to those involved in MLM. With each new recruit, the company becomes more saturated and the opportunity diminishes all the while those at the top continue to profit off the consultants underneath them.
You can read more about the MLM business model and its risk in my article below.
Due to the nature of this business model, people are rightfully concerned. In the comments on their Facebook post, Kendra Scott has responded to the critics, but not quite to people’s liking.
We believe that true entrepreneurship is born from women supporting women; however, we are not launching this program as an MLM.
Our Direct Retail platform is built as a direct selling model run by business-minded entrepreneurs with no emphasis on recruitment or building teams. We have a responsibility to use our talents to create good in the world and we know there are so many more opportunities to impact local communities where Kendra Scott does not have reach, but our stores, website, and wholesale partners will continue to be integral to our Kendra Scott brand.
There are a few things to note in this response.
First, entrepreneurship is not joining another company, it is starting your own. Kendra Scott started her own jewelry business, consultants who sign up to sell Kendra Scott jewelry are not starting their own business.
Second, in the response, the brand states that there will be “no emphasis on recruitment”. This is very different from the statement “no recruitment” that would debunk claims that they weren’t starting an MLM. While Kendra Scott has not yet released a public compensation plan, their wording of “no emphasis on recruitment” leads me to believe there will be recruitment, they just don’t want to make it sound as predatory. This is a relatively common tactic in MLM. Companies may claim that you don’t have to recruit to make money or that you won’t be pressured to recruit. However, the reality is that whenever recruiting is monetarily incentivized it will happen and those who take advantage of it will be the ones who profit.
In addition, Kendra Scott is using the phrase “women supporting women” quite frequently on their pages discussing this opportunity. It seems likely that one of the ways women will be encouraged to support other women will be to recruit them into the company.
Along these lines, there is a rise in MLM companies claiming that they aren’t MLM companies by using the language “direct sales”, “influencer marketing”, and “social selling”. Kendra Scott’s naming of “direct retail” seems very intentional and consumers should be mindful of that as more information is released.
Kendra Scott’s move to direct selling, likely MLM, is a concerning one. Kendra Scott already has a following of moms and young women who may be more vulnerable to falling for this type of business scam.
They have also made clear that they won’t be stopping their online selling, retail stores, or wholesale partnerships. This means that consultants who sign up to sell Kendra Scott are competing not only against other consultants for sales but the marketing and business strength of the company itself.
It seems quite clear to me that this move is meant to expand the reach and brand loyalty of Kendra Scott itself at little to no cost to the company by convincing people to buy into an entrepreneurial opportunity.
They are positioning themselves to use their previously strong reputation to potentially take advantage of their following.
If you’d like to learn more about the dangers of MLM, a great way to start is the official FTC page.
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