Silpada Designs Reps told business is Shutting Down

At Inspetta, we've followed a growing trend of companies strugling to strike a balance of product driven sales with reps desires for recruitment and the bonuses involved.  Ultimately, doing so while maintaining the integrity of a business is difficult.

While it is too early to know the absolute specifics, it is clear that they've given a lot of effort to stay alive but are now folding.

It is also worth noting that there are 2 sectors to the Direct Selling Industry which are very difficult to enter and maintain, those being Cosmetics and Jewelry.  Generally, even though these 2 sectors are the toughest, Cosmetics are twice as hard as Jewelry.  The main reason is that ladies often found, through thier lives, a product, brand, etc that felt good to their skin, without irritation and made them feel good.  Ladies are very reluctant to trying new costmetics, while they will try a new weight loss pill without thinking.  Jewelry is not as hard as Cosmetics, but still has that personal preferences aspect to overcome.  By focusing on variety, quality, uniqueness and price/value, a company can often build a niche.  That said, doing so while balancing margins for sales rep commissions becomes a harder task.

Again, we may not know the specifics, other than those mentioned in the news report, but it is certainly troubling to see a much-loved direct selling company fold up.  We will miss you!

Here is the news report...

This is a repost from KCTV5 in Kansas City...

"Silpada Designs reps told business is shutting down, liquidating"
Posted: May 24, 2016 3:29 PM CDT
Updated: May 24, 2016 10:05 PM CDT
By Laura McCallister, Digital Producer

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LENEXA, KS (KCTV) -Silpada Designs, based out of Lenexa, KS, told their representatives Tuesday that they are shutting down and liquidating, effective immediately. 

This affects all business in the United States and Canada.

The jewelry and accessories company that's been around for 19 years told representatives in an email that they began the process with firing employees in both countries Tuesday morning. They also aren't accepting any new representatives and have cancelled their July conference.

"The founding families, our internal team and many of you, have worked tirelessly and passionately to turn this company around from the negative trends we have faced for the last 6 years. However, with much due diligence and with heavy hearts we have come to the stark realization that our love, commitment and significant investments are not enough to reverse or even stabilize our Sales Revenue, Party and Recruiting trends - all of which continue to significantly decline."

On the Country Club Plaza, where people flock to brick and mortar stores for jewelry and apparel, many women were familiar with the name.

"I've been invited to several parties," said Mary Martin, who lives in Lenexa. "I know several people that probably have sold it and enjoy it and like the jewelry."

The company built its success on a multi-level direct marketing model involving casual parties. 

There was a time when you'd find nearly 5,000 sales reps checking out the latest Silpada line at Bartle Hall, an annual convention estimated to have brought $1 million in spillover economic benefit to the city.

In 2010, there were 32,000 people selling Silpada at home parties. It was such a success that Avon paid $650 million to buy the company. The founders retained control over some aspects of the business, but by 2013 the jewelry line's sales had declined and Avon wanted out.

The founders bought the business back for a mere fraction of what they'd sold it for and put their daughters in as co-presidents.

After that, there seemed to be multiple attempts to change with the times.

In 2014 Silpada added a lower cost fashion jewelry line to supplement its signature sterling silver product line. In 2015 they added purses and scarves. This year, in February, they tried a new sales model called Silpada Stylemaker. In a news release, the company said it was "designed for the digital-driven woman who is interested in adding to her current income (not replacing it) [in which] she is not expected to recruit a team or host parties."

When KCTV5 approached women on the Plaza for their thoughts, many of the women in their 20s weren't aware of the brand, but they were aware of the concept and weren't fans. 

Brogan Caffarelli's only experience was a party at a neighbor's house.

"It just was not the ideal situation to be selling things," said Caffarelli. "I would rather go to a storefront. Posting on Facebook for your jewelry just seems kind of like weird and I know kids my age definitely aren't doing that."

Team leaders and sales representatives contacted by KCTV5 did not want to share their thoughts. Calls and emails to Silpada's corporate team went unanswered. The Lenexa warehouse that once employed 300 people looked barren Tuesday afternoon, not a car in the lot. The email to sales reps indicated that the company ended the employment of a high percentage if its direct employees. 

All agreements with Silpada representatives and stylemakers will end on July 31.

"While there is never an easy way to communicate news like  this, we will move through this incredibly difficult process in the most transparent manner possible."

The company is answering most of their questions through a FAQ page...
Rep Questions:

Q. Why is Silpada closing?
A. Since the reacquisition from Avon 3 years ago, the founding families, many representatives, and our dedicated internal team, have worked tirelessly and passionately to turn this company around from the negative trends we have faced for the last 6 years. Over the past three years, there were significant investments made to keep Silpada operating as you worked to enhance and evolve this company to remain relevant in this market. However, we have come to the stark realization that our love, commitment and these additional investments are not enough to reverse or even stabilize our Sales Revenue, Party and Recruiting trends all of which continue to significantly decline.

Q. Will the End of Season Sale occur as planned?
A. Yes, the End of Season Sale will occur June 2nd through June 30th. There are 150 items that will be at 40% off as planned. You will receive a listing of those items on May 27th.

Q. Will there still be a new catalog in July 2016?
A. No. Silpada will not be publishing a new catalog in July.

Q. How long will my MySilpada site be active?
A. While most portions of your MySilpada site (including shopping and Party information) will be active through July 31, 2016, any portions that no longer apply to your business (such as Online Sign-up and the Join Now information page) will be removed/turned off by June 3, 2016.

Q. Will the Silpada Foundation still make a donation for sales of the Pink Out Loud Bracelet (B3384),  the Creative Spark Necklace (N3097), and the Polishing Cloth (CLOTH)?
A. Yes. Through July 31, $10 for every Pink Out Loud Bracelet (B3384) will be donated to LBBC in the United States, and to the Canadian Breast Cancer Foundation in Canada; $10 for every sale of the Creative Spark Necklace (N3097) will be donated to the Silpada Foundation; and $1 for sale of every Polishing Cloth (CLOTH) will be donated to JDRF in the US and Canada. Donations made to the Silpada Foundation will be distributed evenly between LBBC, CBCF, and JDRF.

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