Hot off yesterday’s press:
Lion Brand Yarns, well-known purveyor of acrylic craft yarns and trick Vogue Knitting magazine cover advertisements, has teamed up with Purple Tree, which is apparently a direct sales company that has been providing the crafty equivalent to Tupperware parties in the U.S. since 2004, and Canada since 2005 (how did I live without knowledge of this company?), to create a new, national program for knitters who are interested in being instructors.
Quoth Lion Brand:
When Purple Tree approached us about this opportunity, we were absolutely thrilled, “ explained Ilana Rabinowitz, Director of Consumer Marketing, Lion Brand Yarn Company. “We know that literally thousands of our newsletter subscribers are interested in either teaching knitting, or learning to knit, and now we have a way to help them do this.”
The emphasis in the above quotation is mine. Imagine. Up until now, there were all these people stuck with Lion Brand yarn, knitting needles, and no clue what to do with them.
Now, in the interest of research, I registered to find out what kind of super-secret information I’d receive as an instructor.
No money down!
The first thing I learned (learning! and without even registering!) is that wannabe instructors can register with the Lion Knitting Club for free.
For free? Why yes! Lion Brand says “We don’t believe you should spend money to make money, and we want you to start making a profit immediately.” To further clarify this statement, they immediately follow up that sentence with “As a Lion Brand Knitting Instructor, you can order everything you need online. Fast, convenient, secure, and easy. All products are shipped directly to you.” Clearly, this is directed towards those people who still think they “win” stuff on eBay.
And the next thing I learned is that Lion Brand wouldn’t actually force me to prove that I knew how to do that thing with the yarn and the sticks, or assuming I did, that I’d actually make a good instructor to sign up. Lion Brand doesn’t expect you to take classes or pass tests (after all, setting up that infrastructure would be such a drain). Quoth Lion Brand, “We believe that the most important qualification for becoming an Instructor is a love of knitting, and your students will learn more from your passion and enthusiasm for knitting than anything else.”
The third thing I learned, as I completed the registration process, is that the website must have been set up in a hurry. Even though I was only skimming the content, I could spot more than one typo, and the agreement just seemed to be… lacking.
It’s just as good as cash!
Feeling empowered, I moved on to the registration process. I had to read and accept an agreement that specified that knitting instructors and club organizers had to submit at least four class orders within a 12-month period (failure to do so would result in termination of the agreement). In exchange, Purple Tree would provide a credit of 10% towards their own personal purchases, and free shipping on the instructor’s or organizer’s personal orders. Evidently any income would have to be derived from student or membership fees.
Then I had to enter club information. Well, I didn’t think I had to do this to become an instructor, but the form wouldn’t let me go to the next step unless I did this. Since the agreement didn’t say anything about not using an alter ego (did I mention this seemed like it was set up in haste?), Kelly Taylor set up a knitting club at The Peach Pit.
Then, I had to enter the names of four people who I thought would like to join. Since I totally spaced on character last names after Brandon and Brenda, I added Jessica Alba and Mary Jo Eustace. I figured Mary Jo could use the company, and that it was safe to include her, because I couldn’t remember the last name of Tori Spelling’s character. (Oh, wait, it was Martin.)
After a final registration screen, I was finally allowed into the Instructors’ Den. (Den… Lion Brand… Lion… get it?)
And what did I get ?
Fill-in-the-blank ads and press releases to send to my local newspaper.
Worksheets, including “prospecting sheets” to figure out how I could pressure my friends and acquaintances into making purchases. One worksheet lists some categories of acquaintances and groups that might contain likely
marks knitters, like “co-workers” or “childrens’ friends’ parents” or ”doctor’s office staff” or “attorney”, but not “doctor”. (Ooh, can’t bother the doctor with the knitting club.) Another worksheet tells me to list the places I go where I might find likely candidates, like “post office” or ”Curves”. Most importantly, though, there’s a profit-tracking worksheet for me to use when calculating my income from student fees, project sales (ordered on behalf of the students, because the lessons are based on Lion Brand projects), and track my associated expenses.
Finally, there’s an instructor’s manual, which contains much of the content provided above. In addition, it contains tips on setting up the teaching/club space, recruiting members, and how to figure out how much money I’d be raking in. After explaining that the key to a business is profit, and that profit = revenue – expenses (yes, straight out of Dilbert), the manual provides a worked example of how much money an instructor could make by teaching ten women in four classes once per week, at a fee of $10 per person per one-hour class, and selling a total of 40 (yes, forty) kits at $35 each over the four-week period:
Total instruction fee: $400
Total kit sales: $1400
Kit cost: ($1400) (yes, the worked example added in the kits, then took them right back out)
Advertisement (flyers): ($20)
Mileage (driving to classes): ($50)
Of course, I suppose this means that one would have to find ten students willing to purchase a $35 kit once a week for four weeks. But $330 in four weeks? Not a bad profit, if you’re willing to hustle–even once you’ve taken the prep time into account.
But say, how much money would Lion Brand or Purple Tree be making out of this scenario?
Taking a look at the class projects that are available for the instructor to purchase, clearly each project is packaged with everything necessary to complete the item; possibly the only thing that’s missing to make it complete is a ruler or tape measure, for those projects where gauge is important. Each item comes with a Learn to Knit booklet, knitting and yarn needles, the pattern, the yarn, and in some cases even a crochet hook. Based on the kit prices, we can figure out that for those kits containing Lion Cashmere Blend, first $4.95 reflects the kit packaging, needles, and paper content, and $10 is added for every ball of Lion Cashmere Blend in the kit.
… Except, the suggested retail price of Lion Cashmere Blend is only $8.99 per ball, and it seems like a safe bet that the rest of the kit contents don’t actually cost Lion Brand or Purple Tree $4.95. This suggests that if Lion Brand is simply supplying product for Purple Tree to package and ship, and Purple Tree is not being treated any better than any other Lion Brand distributor, it’s paying maybe $4.50 per ball at worst (I’ve seen 100% markups before, but I don’t know what Lion Brand normally charges), which means each a three-ball kit retailing for $34.95 results in at least $13.50, possibly more, in revenue for Purple Tree. So the hypothetical instructor selling forty kits in four weeks at $35 a pop would be earning Purple Tree at least $540.
If Lion Brand’s markup to Purple Tree was 100%, then it would have realized revenue of $270 on the yarn alone, less its expenses. A modest amount, but then all Lion Brand really had to do was sell its yarn. And Purple Tree’s own expenses might include freight (if not covered by Lion Brand), wages for the employees hired to pack the kits and ship them if the work wasn’t contracted out, and advertising and other promotion, in addition to any indirect costs it might apportion to its knitting-related sales… they could spend 35% of their revenue on those costs, and still make as much money as the hypothetical knitting instructor who sold those forty kits.
Of course, this assumes that the hypothetical knitting instructor could convince her ten students to continue buying kits from her, and that the students wouldn’t figure out fairly quickly that the nearest big box craft store could provide the same yarn for less, and that similar or identical patterns are available for free, and that they didn’t really need several copies of the Learn to Knit booklet.
But at least with her 10% discount and free shipping, the instructor herself isn’t any worse off buying Lion Brand kits through Purple Tree.
You know, there’s something wrong with that last sentence, but I just can’t put my finger on it.