Color Street is an American nail polish strip company that has become incredibly popular in recent years. Their unique nail polish strips allow for easy, mess-free application of nail art and designs. But beyond their novel product, what really makes Color Street stand out is their business model. Color Street relies on a direct sales, multi-level marketing structure that has fueled their rapid growth. In this article, we will take a deep dive into the Color Street business to understand what type of company they really are.
Introducing Color Street
Color Street was founded in 2015 by Fa Park, a seasoned entrepreneur and product developer. The company is headquartered in New York City but ships their product worldwide.
Color Street nail strips are made of 100% real nail polish infused into a thin, flexible film. The strips come in a huge variety of designs, from solid colors to glitter, prints, French tips, and more. They are applied like a sticker onto the nail and last for up to 10 days without chipping or smudging.
The polish strips have proven extremely popular with women looking for an easy, mess-free alternative to regular nail polish. They allow anyone to quickly achieve professional-looking nail art at home.
Color Street’s Business Model
Color Street relies on multi-level marketing (MLM) to sell and distribute their product. They have built a network of thousands of independent distributors who earn income by selling Color Street nail strips and recruiting other distributors.
Here are some key things to understand about Color Street’s MLM structure:
- Distributors buy inventory directly from Color Street at a wholesale discount and then sell to customers at higher retail prices to earn profit.
- Distributors can recruit, mentor and earn bonuses from a “downline” of other distributors they bring into the business.
- There are multiple levels in the compensation plan that distributors can achieve by hitting certain sales thresholds and growing their team.
- Distributors earn money from their own sales and get commission from the sales of their downline. More recruitment means more earning potential.
This MLM structure allows Color Street to scale its sales force quickly and cost-effectively. The financial incentive of earning money from recruits is what fuels exponential growth.
Growth and Presence
Color Street has experienced incredible growth since its launch just a few years ago. Some key facts about the scale of their business:
- More than 150,000 independent distributors worldwide
- Available in the US, Canada, Australia, Germany, and the UK
- US annual revenues hit $500 million in 2021, up from $200 million in 2020
- Doubled its number of distributors from 2020 to 2021
- Ranked the #3 MLM company by revenue in 2021
These stats make Color Street one of the fastest growing and most dominant MLMs today. Their global footprint continues to expand each year.
Controversies and Criticisms
While Color Street’s products are popular, their MLM model has sparked some controversies. Critics have accused Color Street of the following:
- Overstating earning potential for distributors
- Encouraging aggressive recruiting and sales tactics
- Having very few distributors actually make money
- Relying on distributor fees instead of retail sales
- Pushing distributors to flood social media with promotions
These issues are quite common in the MLM industry. However, Color Street maintains that their opportunity is financially beneficial for all distributors.
Product Line
Color Street sells a wide variety of nail polish strips, tools, and accessories:
| Product Category | Examples |
|---|---|
| Nail Polish Strips | Solids, French tips, glitters, prints, transfers, metallics |
| Nail Tools | File, cuticle stick, nail clippers, cutters |
| Accessories | Remover wraps, top coat, nail serum, applicators |
New collections and limited edition strips are released frequently to give customers variety. Their core product remains the many styles of false nail strips.
Sales and Marketing Strategies
Color Street employs the following sales and marketing strategies:
- Home nail parties: Distributors host private events to demonstrate and sell products.
- Online parties: Virtual parties allow broader reach through social media.
- Direct sales: Distributors sell directly to their contacts through personal conversations.
- eCommerce: An online shop allows 24/7 ordering.
- Social media: Distributors market heavily on social platforms like Facebook, Instagram.
- Referral rewards: Customers can get products for referring new buyers.
- Promotions and bonuses: Special deals encourage ordering.
The home party model has proven very effective but online selling has opened up more opportunities. Their distributors rely heavily on social media to find new customers.
Is Color Street a Pyramid Scheme?
A common accusation against MLMs like Color Street is that they are pyramid schemes or have a pyramid scheme-like structure.
There are a few key differences between legitimate MLMs and illegal pyramid schemes:
| Multi-Level Marketing | Pyramid Scheme |
|---|---|
| Sales driven by real customers outside the network buying products | Mainly relies on fees from recruited distributors |
| Products have real value | Products exist only to hide scheme |
| Possible to profit from retail sales alone | Profit requires continued recruitment |
| Legal in the USA | Completely illegal |
Based on these differences, Color Street is classified as a legitimate MLM, not a fraudulent pyramid scheme. However, critics argue their focus on expanding their sales force vs selling through traditional retailers makes them skirt the line.
Conclusion
In summary, Color Street is classified as a multi-level marketing company. Their nail strips are sold through a network of distributors who earn income through direct sales commissions and downline team building.
Rapid growth fueled by their MLM model has made Color Street one of the most popular MLMs today. However, they face criticisms common to the MLM industry around deceptive income claims and over-reliance on recruitment.
Regardless, Color Street’s quality products and large distribution network have carved out a successful niche in the beauty market. Their business model has allowed them to scale globally and generate impressive revenues in just a few short years. They don’t show signs of slowing growth any time soon.