DISCUSSION OF SECTION 5.11: RETAILING OR RESELLING
Section 5.11 is the most frequently used Section in Paparazzi Policies and Procedures by Compliance. It is critical that any Consultant understand the ins and outs of Section 5.11. It states:
5.11 Retailing or Reselling
After the initial product or inventory is purchased, no product can be resold or retailed for less than the suggested retail price (no product under $5 USD). This includes but is not limited to, offering or advertising free items through buy X, get X promotions or giving free gifts with a purchase. This same policy applies whether the free promotional item being offered is a Paparazzi product or a product not carried in Paparazzi’s Inventory.
Offering or advertising these types of promotions lowers the retail price of each piece sold below the required $5 USD minimum. Doing so compromises the entire Paparazzi program for all Consultants. Any promotion of a Consultant’s independent business or the Paparazzi opportunity through any channel of communication (public or private) is considered advertising.
Additionally, giving away free items that are not sold by Paparazzi can lead customers to the assumption that those items are part of Paparazzi’s product offering. As outlined in Section 5.13, offering non-Paparazzi products alongside Paparazzi products compromises its good name and can lead to the Paparazzi name and brand being associated with inferior products.
Any exceptions to this policy must be authorized by an official Paparazzi officer in writing prior to the sale or event.
Selling below the mandated prices. The first paragraph of Section 5.11 prohibits selling below the suggested retail price. Compliance refers to the suggested retail price as the “mandated price” of $5 for the regular line of accessories and $25 for the Zi Collection. There are many ways that a Consultant can violate this Policy and sell below $5—knowingly or unknowingly.
- “Buy X, get X promotions.” This means a promotion allowing a customer to buy any number (insert any number of accessories here) and get any number (insert any number of accessories here) free. The effect of a buy X, get X promotion is that the free item devalues the already low price of the other accessories purchased by the customer at that time. So, for example, if a customer buys five (5) accessories and gets one (1) accessory free, all six (6) accessories have sold for approximately $4.17 each. All six items have been discounted and that is a violation of Policies. There are two exceptions to the buy X, get X rule.
A. Exception #1: The Frequent Buyer Card is a buy X, get X exception designed by Corporate Paparazzi to allow Consultants to reward loyal customers and is a buy 12, get 1 free. This is not found in the Policies and Procedures. This is an exception to the enforcement of Section 5.11 provided by Paparazzi. This is not intended as a one-time sales pitch although a customer can buy twelve at one time and be rewarded.
B. Exception #2: A Consultant can do a “buy X, get shipping free” OR “buy X, get tax free.” In this context, the accessories still sell for the mandated prices ($5, $25). The free shipping or free tax must be used on the current order—not on future orders. Any time a Consultant sells “tax-free,” he/she needs to be aware of all sales tax requirements and we recommend he/she visit with their tax professional.
- Another way to violate Policy by selling below the mandated prices is to offer a coupon, bling bucks, or Paparazzi gift certificate as a prize for a giveaway. For example, if a customer is given a $5 coupon to use on his/her next order and the customer then purchases five (5) accessories, each of those five (5) accessories actually sells for $4.00 each (the coupon provided $1.00 off each accessory) hence selling below the already low mandated price.
- Another way to violate Policy by selling below the mandated prices is to sell mystery bags with extra Accessories. For example, if you have ten (10) bags and two of the (2) bags have an extra item in each, the items in those two bags will sell below the mandated prices—one bag with three (3) pieces, selling for $10, means the three (3) pieces in each bag will have sold for $3.34 each.
- Another way to violate Policy by selling below the mandated prices is to charge an excessive “shipping” fee for free accessories, such as $100 shipping for 100 accessories, thereby only thinly disguising the attempt to sell below the mandated prices.
- Another way to violate Policy by selling below the mandated prices is to auction off items. Of course, in an auction, the items are unlikely to sell for the mandated prices. If you start the auction of an accessory at the mandated price, please keep in mind: General Sales Tax Information.
A. Exception #1: If you donate accessories to a charity and the charity raffles or auctions off the items, that is allowed. The Consultant must not be involved in the auction after the initial donation.
Giving gifts with a purchase. Another requirement of Section 5.11 is not “giving gifts with a purchase.” If you require a purchase for someone to enter or win a giveaway, or you reward the purchase, this is a violation of Policies. Some examples of violations of this type would be:
- A Consultant offers “Shop my replicated website (*purchase*) and I will give you an extra accessory/free shipping on your next purchase.” This Consultant is rewarding a purchase.
- A Consultant offers “Pay your invoice before midnight tonight (*purchase*) and you will receive a free accessory in your package.” Or a Consultant includes a free piece in the package with the order “just because.”
- A Consultant offers on a live video “Every time you purchase tonight (*purchase*), your name will be entered into a drawing for ten free accessories.” This is a violation even if there are other ways in addition to purchasing to enter or win the giveaway.
- A Consultant requires a customer to buy (*purchase*) before a customer can play a game on a live video. This may be with a number or color on the back of the accessory tag and when a customer picks that accessory for purchase, he/she wins something or can play a game.
- A Consultant conducts a raffle—selling chances (*purchase*) to win a prize. This also includes selling squares or numbers for a chance to win.
- A Consultant sells bingo cards (*purchase*) to people so the people have a chance to win.
- A Consultant charges admission (*purchase*) into an event where attendees may win a giveaway for attending.
Selling non-Paparazzi alongside Paparazzi. Another common violation of Section 5.11 is selling/promoting or offering non-Paparazzi items alongside Paparazzi accessories. This requirement of not promoting, selling, or giving away non-Paparazzi also appears in Sections 5.10, 5.11, 5.13, and 5.15. Underlying this concept is the idea that a Consultant should NOT use affiliation with Paparazzi as a platform to sell, offer, or promote other products that are not Paparazzi Accessories. Additionally, it gives customers the mistaken idea that non-Paparazzi items are affiliated with Paparazzi or are Paparazzi products.
There are numerous ways that offering/promoting/selling non-Paparazzi can violate Policy. Here are some examples:
- A Consultant should not offer Back Office items for sale or giveaway. They do not have PV and are not intended for resale. While one may think they would be “Paparazzi items,” they are considered non-Paparazzi because they are not Paparazzi accessories and are intended for Consultant use only.
- A Consultant should not create products with the words “Paparazzi” or “Paparazzi Accessories,” the corporate symbol (the crown), and/or with the Independent Consultant Logo and sell or give them away.
- A Consultant charges his/her downline for training, going Live, business materials, graphics, etc. That Consultant would be creating a separate business capitalizing on ties with Paparazzi and then selling those products/services alongside Paparazzi Accessories.
- A Consultant promotes other items alongside Paparazzi for which the Consultant receives benefits such as other multilevel products, handmade items, businesses, services, yard sale items, entry fees for vendor events, etc. on the same site where the Consultant has made even one post about Paparazzi.