Amway or the Highway?

30Apr07

 

Anybody could use a little extra money. That’s what this friend said when he came up to me with a proposal regarding Amway. I’d heard a lot about it (mostly just allegations of it being a cult, blah blah) and I had assumed it to be just a glorified pyramid scheme. So I sat and listened to whatever he had to say about it for over an hour. Apparently, they don’t call it a pyramid scheme anymore; it’s called Multi Level Marketing (sic) ! Anyway, I was skeptical from the start and ended up asking a lot of questions and at the end of it all, I was still left unconvinced. Is it that easy to make so much money by doing nothing? Do people really make money off it? How come so many (really) educated people buy into this?

I began digging (it’s not THAT hard with Google).

Amway, set up in 1959 made over $6.5 Billion in 2005 from selling it’s various products (detergents, utensils etc…) and over the years have made the founders; Devos and Van Andel clans billionaires. They use something called a Distributed Marketing System which is nothing more than a pyramid scheme really where people at the top actually earn money and the ones at the bottom mostly dream of getting to the top.

Historically, many Amway distributors in the United States have lost money or barely made minimum wage for their time.

        Source: International Business Times

You’re really NOT expected to do anything; you just buy the starter kit which does cost a good amount of money and incidentally, Amway makes most of it’s profits from the sale of these starter kits rather than their so called “100% Reliable Products”. Then you hawk around these products with the hope that you add enough members/sell enough products to join the elite few (Diamonds, Emeralds etc…) who make money.

But it looks like the “little fish” “downline” in Amway have little hope of joining the elite and “miniscule…percentage” that make it really big.

One former Amway distributor recently said, “I lost all I had, great job, my financial future, my wife, children, and soul.”

         Source: International Business Times

What is striking of course is that through their various ‘meetings’, Amway has convinced it’s investors that they are actually doing a good thing; financially and morally. These so called meeting have also been accused of functioning like a cult of sorts.

When I told the friend that I needed to do a little reading before I committed to anything, he asked me to NOT go by whatever I find on the net but to simply look up the Forbes List. I do agree that somebody makes money off of all this, but it’s certainly not the ones so down in the chain.

Moreover, Amway’s business model has been declared ‘illegal’ in India and I have a feeling that the 80,000 investors with dollar dreams are in for a bumpy ride!

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18 Responses to “Amway or the Highway?”

  1. Oh dear … the Internet Echo Chamber strikes. How many things wrong in this post?

    1. Amway has NOT been declared illegal in India or anywhere else. In India a disgruntled husband whose wife was making money from Amway and not giving it to him complained to the police it was a pyramid scheme and they shut down the local Amway offices. For one day. The courts immediately reopened them stating Amway was *not* a “pyramid scheme”.

    2. In a pyramid scheme you make money by recruiting people. In Amway, if you recruit a million people, and nobody actually buys anything, how much do you make? Zada. Zip. Zero. Zilch. But if you recruit nobody and sell a lot of products, how much do you make? Well .. as much as 50% or so of the RRP of whatever volume you create. Network Marketing, or MLM, is just a marketing strategy for developing that volume, and with good products and good service, people keep buying again and again and again and again

    3. The people at “the top” do not make the money in a legitimate MLM like Amway. The people who create the sales volume make the money. I make more than the person who introduced me, who makes more than the person who introduced him. Why? Because the person who did the most work to create the volume in a group gets paid the biggest percentage. Fair system.

    3. Amway and Amway IBOs do not make money on the membership fees. None at all. Amway, and Amway IBOS, make money through the sale of products, including Nutrilite/Nutriway, the world’s best selling Nutritional products used and endorsed by the world record holders in the 100m sprint and 100m hurdles. Nutrilite also regularly tops ConsumerLabs “consumer satisfaction survey” and has one numerous awards around the world, including “most trusted brand” status with Reader’s Digest. Amway IBOs also market Artistry, independently rated by Euromonitor as one of the worlds top 5 prestige cosmetics brands, eSpring, technologically the best home water treatment system available, and the best selling, LOC range, some of the worlds first environmentally friendly cleaning products, launched nearly 50 years ago, and more and more and more.

    4. You *ARE* expected to “do” something. If you think you make money in Amway by “doing nothing” then you have been badly misinformed. It takes a deal of work, and usually many months or years, to build up a business that generates an ongoing income where you no longer have to work. Exactly like any other business. Bill Gates doesn’t have to work if he doesn’t want to. Why? He started Microsoft but now it runs fine with out him. Same with the WalMart’s and IKEAs etc etc of the world. Build an asset that generates income for you without having to work. But first you have to work without making much money, which is why relatively few people make money through Amway – they don’t do the work, or if they do, not for long enough.

    which brings me to –

    5. Very few people do much work, but those that do it and build it to a reasonable size will tell you it is worth it. A “diamond” business pays around US$150,000/yr. The average diamond built to that size in about 9 years, but some have done it in less than 1 year. Take 20 years to do it, and then retire. You do the math on how much you’d need safely invested to bring in $150K passive income every year, indexed to inflation. It’s worth it. For those with lesser ambitions, a platinum business pays around US$47,000/yr, part-time. Not bad. There are *thousands* of people around the world who have qualified Diamond, and tens of thousands who have qualified platinum.

    So, in summary, Amway is in 80+ countries and territories around the world, it’s been operating nearly 50 years and has not been “made illegal” anywhere. Amway and it’s IBOs have received awards from the UN, US Chamber of Commerce, UNICEF, various governments, untold other organizations etc etc. One of Amway’s founders was a pallbearer at the recent funeral of US President Gerald Ford. Amway’s own brands are respected as some of the best in the world. But it’s not “money for nothing”. You have to work hard. But it’s the best opportunity for most people I’ve ever encountered, and I own a number of businesses.

    Check out Get the Facts – The Truth About Amway and Quixtar

  2. As eloquent as you are, I may not be well ‘informed’ enough to counter your various points but there are still various people out there who swear they have been scammed by Amway and it’s questionable ‘business model’.

    http://www.caic.org.au/commercial/amway/scamway.htm

    http://www.geocities.com/CapitolHill/Senate/9526/amway001.html

  3. I am not sure if it’s banned it India or not. However, I’d like it to be declared illegal.

    One thing I HATE the most about such schemes is the way it moulds the mentality of Junta. No offences to the members, but most of the people wish to “MAKE-MONEY-FROM-HOME-WITHOUT-DOING-ANYTHING” through such schemes. These schemes, in a way, propagate the retard mentality. The “BECOME-A-MILLIONAIRE-LIKE-HIM/HER” thing is another step to make sure people are trapped easily.

    I recently happened to visit one of such conferences by OCEANS (similar to AMWAY) at Vijaywada. It was targeted mainly at the people of AP (mostly from rural areas) and thus the Hosts (some of the people up-the-chain) were speaking in Telugu. The funny thing was that there were a few people from CG who couldn’t get even a single word… and they were clapping/laughing with the rest.

    Who ever said, “Money Speaks” was pure genius. 🙂

  4. For starters i just want to say that schemes like Amway, whether legitimate or not, seem to be generating a lot of money and interest. Now ibofightback who just happens to own a site “thetruthaboutamway.com”. Now interetsingly i have my doubts as to whether the site is backed up by amway itself (contrary to the disclaimer).

    Having said that i dont believe in the MLM business model. The funny thing about schemes like amway is the fact that most of its members are average and below average people who pool in everything they have under the false pretext that they are going to be getting money soon. This is a)because of THEIR fault of jumping into a business model without understanding every detail of it b)because they don not understand the gravity of the efforts needed to make a decent living out of this.

    In either case, schemes like amway need to be discouraged, or at least regulations of some kind need to be brought in to monitor such schemes.

  5. My site is absolutely NOT backed by Amway. In fact, it’s probably breaking Amway rules, but they’re aware of it and letting it be.

    prestidigitator – there’s been millions of people around the world involved with Amway over the years. Of course there are people who were unhappy with the experience. But in virtually all of those experiences they don’t say much about Amway – they talk about *the people they worked with* – ie, other Amway distributors/IBOs. You don’t here from the millions of people who had positive experiences, because people are far more likely to complain than praise, it’s the nature of the world. The fact Amway hasn’t let people have their own blogs doesn’t help!

    Bipin – I agree with you about the idea that “make money not doing anything” is essentially a bad thing, and as I pointed out, that’s not the reality with Amway. In fact, you need to work damn hard for pretty much *no* money to get the thing going. But that’s the same in any business. I also don’t like a focus on “being a millionaire” or such, the organization I work with operates in a different way. We ask, and help people to work out, what it is they really want to achieve in life. What is *their* dream. In reality, peoples dreams require time or money, and usually both. Amway offers that, if you are willing to put in the time and work, and yes, a relatively small amount of money, in order to succeed.

    Wildgrey – 50 years of history shows that if you want to build a profitable, stable Amway business then “below average” people are the last ones you want to target. I have multiple degrees and operate multiple businesses. My sponsor is an engineer and national sporting champion. His sponsor was dux of his school, later a veterinarian with how practices running in multiple towns. Further “upline” you find more engineers, successful business owners etc etc. When I show the business to “below average” people, those with no jobs, those with little education, those with little success in life, they nearly all go “it’s a scam, a pyramid, it’ll never work”. When I show it to successful people, particularly successful business people, they go “yup, that’s a good idea, looks sensible”. Yes, there are stories of success from people who had not achieved much before in life. But those were people with big dreams, who were willing to work for it, and who when they saw Amway finally saw a way that could help them achieve those dreams. That’s the difference between Amway and most other businesses – it’s a low startup cost, low risk. You can get your money back on virtually everything within 3 months of buying it. Heck, you can buy the shampoo, use it all, and if you think it was crap or overpriced, send it back, Amway will give you all your money back.

  6. 6 Joe Kulangara

    I’ve been approached by Amway dudes. They exude the same religious zeal as your average run-of-the-mill tele-evangelist. I’ve been given CDs where self-import Diamond dudes and Sapphire dudes and Ruby dudes raise their hands and dance around real happy when they backslap each other. But I have two points here that really havent been answered effectively by any of these parasites (yes, thats the word I use, and if you dont like it…sue me).

    1. If a company generates its income by selling its products only to it’s employees, how will they generate significant profit. Thus, “Amway, and Amway IBOS, make money through the sale of products” seems like a moot point to me since no one outside the Amway “family” seem to be interested in buying these overpriced products.

    2. If this economic model was really so successful, why not implement it everywhere? Think about it, I make a software, I create a company of people who will use the software, who in turn hire more people who will use the software. y following the Amway model effectively, I will have a killer app in my hand that does not require support or additional marketting investments.

    Amway seems to be the only pyramid/networking company out there that actually acts as a producer sustained by consumers, but the bottom-line is that the real money comes from conning people. Why don’t they get a real job. And to all the Amways dudes out there- don’t act like you actually believe the bullshit that you peddle, because:
    – you really don’t believe it yourself.
    – (and inifinitely worse…)It insults my intelligence.

  7. @Joe Yeah…you know what, I doubt these guys really belive in the ‘reliability’ of the stuff they hawk. I think they pretty much mouth everything they’re told to at their ‘meetings’ (I’ve been invited to one).

    At the end of the day, it’s just guys trying to make an easy buck!

  8. @ All: Well I have personal experience of almost being caught in the Amway web, and by almost, I mean that one of my very good friends got caught, my own mother tried it and my cousins are half-successful in this business.

    I wouldn’t go to say it’s a complete sham. Much like any business, you use your brain, you can make some $$$, moolah, big ‘uns, dabbulu..

    However, save for my cousins who were successful in the same, my friend and my mom were “taken for a ride”. That’s 2 against 1 mind you. Now, as i say again – it’s how u take the business =)!

    So, well there’s nothing wrong with making money from home is there? The advertising is wrong, but the mentality sure is correct. =)! I don’t find anything wrong with making a few bucks whilst sitting @ home…

    Any takers in the grey land. =?

  9. 9 Bipin

    @Guru: Well, the issue that that Pres* brought up not about making money from home (I was actually me :D). and I don’t want everyone to follow it.
    The bigger issue though, which Pres* brought is the “way in which” the amway (and similar other) businesses run.
    Talking about the 2:1 ration; may be an analysis would help us understand why your mother and friend failed, while your cousin (half) succeeded. Does their success has anything to do with all the *allegations*?

    I did not right this just as another comment. I sincerely believe that you can get a clearer picture of why some succeeded while the others failed. (Everyone I know failed 🙂 )
    Is it really that simple to make money sitting at home, or you have to pursue everyone shamelessly.

    @PS: You should have attended the meeting. I attended OCEANS meeting. It was a pathetic experience. You ought to have some patheticism in your life 😉

  10. 10 Simon

    You will never make money by doing nothing, people that tell you that are scamming you. I know all about scams, I recently lost 2000 dollars to a scam, and believe me that hurt. But I’m part of amway, and I never tell people that they will be rich by doing nothing, and I haven’t had anyone in my upline tell me that either, the ratio to life is you get out what you put in. People that get in, get out, and complain are just complainers, they are the ones doing the lawsuits because they are hopelessly chasing those easy bucks, a few might get lucky, but 99% will go through life miserable and complaining about the success of others.

    You want to blame someone for scamming the world, blame the education system. Most people in the world believe what they are taught in school, so I understand how its hard for you to break out of that mold, but if you want to be successful in life, look at what everyone else is doing and do the exact opposite. I see everyone complaining about amway, so I’m going to do the opposite, cause to me it looks like a solid system with great products, but I understand that (unlike most people) its not a make-a-quick-buck scheme, and I need to work at it.

    to Joe: to try and answer your questions.

    1. I don’t know if you’ve ever owned a company before. I have, if its a company that sells products that you don’t manufacture (like mine) you have to buy it from a supplier. You are incorrect in using the term “to its employees” we are not amways employees, we are Business owners that have joined a franchise and need to buy products to sell, you don’t have to recruit other IBOs if you don’t want to, in fact I know a few IBOs that don’t, they sell the products to consumers, just like any other company. AMWAY is the supplier, they make money by supplying to the IBOs, and the IBOs make money by recruiting other IBOs (who could benefit by just being consumers and using the products), and by retailing to the general public. Tell me of another successful business model that isn’t, at all, similar to this. I challenge you (if you haven’t) to start your own business, whatever you want, if your system and products are good, I guarantee you will succeed, but you have to be willing to take the risks. In the case you don’t succeed you have 2 options 1. learn from the experience and try again, 2. complain, whine, call life a scam, or sue the education system for not providing you with the necessary skills and motivation.

    2. This question is really quite stupid, you could answer it yourself if you thought it through just a little. The answer is simply this: there are lots of company’s that do follow this model, and its obviously successful since its made lots of people very wealthy. Network marketing is really not that big a deal, every successful company in the world has to network, if they don’t they will lose business, plain and simple. Network marketing in this particular model is simply a very good way of replacing advertising, thus reducing costs, thus having more money to invest in the business and make it more successful. I live in South Africa, and here almost every large corporations (and some of the largest) have affiliate programs you can join. Network marketing is the future, and if you want to be successful, you have to come before the trend, not after, you have to be willing to be called names and ridiculed by all the people that are too chicken to try it, to most that is a heavy price to pay for mere success.

    peace and love
    Simon

  11. 11 Joe Kulangara

    @Simon: you have provided excellent answers to my questions. but yet i am compelled to stand by my original statements. the reason is simple…you haven’t convinced me yet. here are the two reasons again and why i can’t buy your argument:

    1. you say that the Amway franchises sell products to consumers that aren’t part of Amway? and you imply that your products sell like hotcakes because of their quality. here is a link that dispels that claim about Amway “products”:
    http://www.blonnet.com/2004/01/06/stories/2004010600500600.htm

    also,A mway products are overpriced and I have never seen a Non-Amway-Member consumer stating that it’s worth the money. Thus I re-assert my earlier point- that Amway thrives on selling overpriced products to it’s “employees”. I still say “employees”, because that is what they are. Franchisees sell products to consumers. So if a “franchisee” sells it to himself or his “employees”, it is still selling product to the employee and not the general public.

    2. there are companies that follow this model. they are what they are- pyramid schemes and network money chains. you haven’t proved to me that Amway is any different from them. and by claiming that these companies follow your similar model…well, you have essentially stated that Amway is nothing but a glorified money chain. to prove otherwise- name one company that successfully followed the Amway model without falling in the money-chain-pyramid-whatever category.

    additional notes: i have no need to accept your challenge because there are certain ideals i’d like to live by and it doesn’t involve conning people. and as for your implication that everyone except those succeeding in Amway “whine”- i’d like to say that it is a moot point. why? because i dont need Amway or it’s back-patting community gatherings to make me feel i am worth something.

    lots of peace and lots of love
    Joe

  12. This is an interesting discussion of Amway. I didn’t know Amway was still operating.

  13. For the Record…I am an Independent Amway or Quixtar Distributor or has the company calls us IBO’s short for independent Business Owner’s first of all it is required that you retail products in the Amway Business anyone telling someone they do not have to sell products just use them is in violation of the rules of doing business in any MLM type business. You must sell 70% of the products that are moved through your business not just sold to your downlines. First of all we have been using the Amway products since 1982 and feel they are better then any other products on the market and they are not over priced. for example a bottle of LOC is equal to 4 bottles of leading brand in the store yes you pay about $8.00 for the quart but when compared it cost over half as much. Almost all our products are like that too. We retail to our customers by sending them to our website: http://tbratcher.qhealthbeauty.com/ and our customer order and we get the profit. Retailing in it self is very profitible without even having anyone signed up under you. What do all business do they sell or provide a service in which the business owner makes a profit. So with Amway you must sell Duh, or you make NO MONEY and that is why most have failed they saw the DREAM but wanted to get it with out doing the work. Ok as Forest Gump would say “Thats all I got to say about that.”

  14. 14 Emerson

    Amway is a truly honest way for building a business. It is a fact that only people who have character can last and succeed in this business. People who join to make a quick buck and by deception, fail and they go on and whine that this business does not work. Also, while building this business, you also have to build yourself personally. This is not understood by everyone. As they say ‘YOU HAVE TO BE IN TO WIN’.

  15. 15 Mikki

    Some supporters say you don’t make money for recruiting. While that is true, you still need to recruit in order to increase volume to make money. Why do you think they have recruitment meetings all the time and amway distributors lie and deceive people into attending meetings all the time.

    Its’ just a loophole in the pyramid law. Yes you don’t get “paid” to recruit, but distributors recruit in the hopes that their recruits will selll stuff and sponsor more suckers.

    If you don’t believe that, you are blind to the truth.

  16. 16 PREDATOR

    I Come in Peace….Bring me to your leader.

  17. True, but funny, as are many of your posts. I read through the past entries over the last few days, and I must say I
    think I’m smitten.

  18. This website was… how do you say it? Relevant!! Finally I’ve found something that helped
    me. Thanks a lot!


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