by having a make-up counter where you have "an expert" there showing you the different options and determining what types of look would look best on you. There is inherent value to the consultant.
However, if I have developed a great new line of make-up, if I am trying to sell it via a retail store, I do not have control over the skill level and product knowledge of the make-up consultant at the counter, and who knows what brand they would be pushing (retail store might have them push other products, or maybe the teenage girl is just stupid and doesn't know what they are doing).
Not to mention there is very much an aspect of peer reviews that goes into this kind of buying decision. Women rely a lot more on this in making their purchasing decisions. Women don't have Cougarboard to ask about what products are the best, and the retail model has much less of a word of mouth advertising going on.
So, some make-up companies decide to go with a model where women can get together with their friends and have girl time, and do a bunch of make-up together, tell each other how pretty they look, and give each other advice while having a product expert there. So there is this whole experience you are selling. Not just selling the bacon, you are selling the sizzle.
I am not a fan of MLM companies and have never gone to any parties and such, but I can see the potential wisdom of this sales model with make-up.