In a surprising turn of events, LuLaRoe, the well-known direct sales brand famed for its ultra-soft leggings and vibrant clothing options, has revamped its return policy, leaving many consultants feeling anxious. This new policy update has particularly impacted those looking to exit the business, sparking a wave of concern among sellers.
Back in April 2017, LuLaRoe announced a favorable policy allowing consultants who were winding down their businesses—referred to as “going out of business” (GOOB)—to return unsold items for a full refund, with shipping costs covered by the company. This initiative aimed to deter consultants from hosting GOOB sales that could flood the market with discounted items, undermining active consultants’ ability to sell products at their established retail prices.
Fast forward to this past Wednesday, and the landscape has drastically shifted. LuLaRoe declared that consultants would now receive only 90% of the value of returned goods, and they would no longer cover shipping costs. This change could mean significant financial losses for many sellers.
Moreover, a petition has surfaced, urging LuLaRoe to maintain the original 100% refund policy for consultants who had already started the GOOB process before the recent announcement. LuLaRoe, however, insists this is merely a return to their previous policy, asserting that the relaxed rules from April were always intended as a temporary measure.
In addition to the reduced refund rate, the updated policy also stipulates that returns will only be accepted for items purchased directly from LuLaRoe—excluding a substantial portion of merchandise that consultants typically trade among themselves. Further complicating matters, returns are now limited to items bought within the last year, and they must be in pristine condition—unworn, unwashed, folded with tags intact, and in their original packaging. This poses a significant challenge, as many consultants encourage customers to try on items, leading to a situation where returned merchandise may not meet the stringent new criteria.
The final nail in the coffin? LuLaRoe has decided to disallow returns on seasonal or discontinued items. This presents a dilemma for consultants left with unsold holiday-themed stock, such as the infamous Valentine’s Day or Christmas leggings. Given that consultants can’t select specific patterns when ordering, they often find themselves stuck with unmarketable inventory.
Starting a LuLaRoe business requires a hefty investment, with the cheapest buy-in package costing nearly $5,000. Sellers are encouraged to replenish their inventory monthly, leading to situations where those attempting to leave the business are left with a surplus of unsold merchandise. LuLaRoe’s recent policy changes now make this exit strategy even more complicated.
In their defense, LuLaRoe stated to Inc. that they offer a “fair and generous path” for independent retailers wishing to exit their business, reiterating that these terms were part of the agreement signed upon joining the company.
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In summary, LuLaRoe’s new return policy has left many consultants grappling with financial uncertainty, particularly those looking to close their businesses. The shift from a generous 100% refund to a restrictive 90% return policy—combined with stringent new conditions and exclusions—has raised concerns about the viability of exiting the business gracefully.