Amway

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Amway

Type Private

Industry Direct selling

Founded 1959

Rich DeVos
Founder(s)
Jay Van Andel

Headquarters Ada, Michigan, United States

Area served Worldwide

Steve Van Andel (Chairman)

Doug DeVos (President)
Key people
Al Koop (Chief Executive)
Russell Evans (CFO)

Revenue USD 8.4 billion (2009)[1]

 Employees 13,000[2]

Parent Alticor

Website Amway.com

Headquarters in Ada, Michigan

Amway is a direct selling company, and manufacturer that uses multi-level marketing to sell a
variety of products, primarily in the health, beauty, and home care markets.[3][4][5] Amway was
founded in 1959 by Jay Van Andel and Richard DeVos. Based in Ada, Michigan, the company
and family of companies under Alticor reported sales growth of 2.3%, reaching US$8.4 billion
for the year ending December 31, 2009.[1] Its product lines include home care products, personal
care products, jewelry, electronics, Nutrilite dietary supplements, water purifiers, air purifiers,
insurance and cosmetics. In 2004, Health & Beauty products accounted for nearly 60% of
worldwide sales.[6] Amway conducts business through a number of affiliated companies in more
than ninety countries and territories around the world.[7] It is ranked by Forbes as one of the
largest private companies in the United States[8] and by Deloitte as one of the largest retailers in
the world.[9]

Amway® (Quixtar®) (Team of Destiny®)

 (TEAM®) (Network 21)

Amway is the largest multi-level marketing (MLM) organization in the world. It is a multi-

billion dollar a year company based on the sale of products as varied as soap, water
purifiers, vitamins, and cosmetics. Amway proponents are fond of asserting that their

products are of the highest quality, their company is very large (several million

distributors and several billion dollars in annual sales), and does business with such

giants as Coca-Cola and MCI (bought by Verizon).

In Amway, one is recruited as an "independent" distributor of Amway products by

buying a couple of hundred dollars' worth of the products from the one who recruits you,

known as your "upline." Every distributor in turn tries to recruit more distributors. Income

is generated by sales of products by the distributor plus "bonuses" from sales of his or

her recruits and their recruit-descendents.

Here is a description from an Amway distributor as to how it works.

It goes like this:

If I buy $200 of stuff from Amway this month, I'll get a 3% bonus check (3% of $200 =

$6). If I share the opportunity with nine others, and we each buy $200 of stuff from

Amway this month, they each were responsible for $200 and will get $6, but I'm

responsible for $2000, moving me to the 12% level. I get $240. However, I'm
responsible for paying the bonuses of the people right below me - $54 - so I keep $186.

I make more because I did more, I found nine people who wanted to buy at a discount

and get a bonus for doing it. After I reach the 25% bonus level there are other bonuses

that kick in, but they're all based on the volume of product flow, not on signing people up

or having lots of people (Bob Queenan, personal correspondence). [April 7, 2004. Gary

Elliot Murway writes: Please correct: distributors/IBOs no longer need to pay downline

bonuses. Quixtar can pay each IBO directly.]

Amway defenders take offense at describing this method of sales and recruitment as

akin to a pyramid or chain letter scheme. It is true that MLM as practiced by Amway is

not an illegal pyramid scheme. Amway has been taken to court for being an illegal

pyramid and the courts have ruled that since Amway does not charge people either for

joining Amway or for the privilege of recruiting others as distributors, it is not an illegal

pyramid. Illegal pyramids and chain letters have no product. Amway has lots of

household products: from laundry detergent to vitamins, from cosmetics to water filters.

Amway is a legal pyramid scheme.

the legal pyramid

There are several distinct aspects of MLM schemes that justify calling them legal

pyramid schemes. One is the aspect of the chain or line of distributors whose income

depends primarily not on their own sales of Amway products but on sales made by

others whom they've recruited. The actual practice gets fairly complicated. Here is how

Bob Queenan, cited above, describes it:

Now we get into the actual mechanisms. While my product volume is low, it makes

sense to combine my order with other orders to reduce the paperwork that Amway has

to deal with. So the way I order from Amway is to call my "upline" and place my order.

My upline combines my order with others and calls Amway directly. Amway would

normally ship direct to the upline, and we'd all go over and pick up our products. In my

actual case, I live too far away from my upline to make that practical, so I order through

my upline, but get direct shipments from Amway.

Do I sell to other distributors? No, we all buy direct from Amway.

Do other distributors order their products through me? Yes, I combine the orders and

send them to Amway.

Do I get money from my distributors? Yes, for the products they buy. I write a combined

check to Amway.

Do I profit if my distributors buy more? Yes, I do -- so do they, but yes, I do.

Is my bonus from their money? It's from the bonus pot, which is filled with money saved

by not paying middlemen.

Am I missing something here? Haven't the distributors become their own middlemen?

Aren't the distributors selling to each other? Isn't income mainly generated by recruiting

new members to the organization? Isn't Amway Corporation the big winner in this

scheme?

An Amway customer is not just buying a detergent, but is recruited into being a minister

of a faith with a complicated bookkeeping scheme. Why not just go to your local store

and buy soap, you ask? Because the agent is someone you know, or who knows

someone you know, who's invited you over for coffee to tell you about a great

opportunity. Odds are good that you'll either buy something out of politeness or a

genuine need for soap or vitamins, etc. Perhaps you will become an agent yourself.
Either way, the agent (distributor) who sold you the soap or vitamins makes money. If

you become an agent (distributor) then part of every sale you make goes to your

recruiter. The new recruit is drawn into the system not primarily by the attractiveness of

selling Amway products door to door, but by the opportunity to sell Amway itself to

others who, hopefully, will do the same. The products seem secondary to the process of

recruitment. Yet, the distributors will learn to talk about little else than the product and its

"quality." What justifies MLM schemes is the high quality of their products. What entices

the recruit, however, is likely to be the attractiveness of making money from others'

sales, not the products themselves.

Do the numbers add up?

[Note: the data used in the following paragraph is outdated. I am not going to try to keep

up with the specific dollar amounts in sales and the number of distributors. The current

Amway Global website does not give the numbers needed to determine how much the

average distributor makes. Wikipedia claims that sales for 2008 were $8.2 billion, up

from $7.1 billion the year before, when the sales force was over 3 million.]
 According to Amway, their annual sales amounts to about $7 billion and there are 3

million distributors. Thus, the average distributor's sales amounts to about $2,333/yr. If

30% of that is profit, the average distributor makes $700/yr. Klebniov claims that the

average income is $780, but the average distributor buys $1,068 worth of Amway goods

himself and also has expenses such as telephone bills, gas, motivational meetings,

publicity material and other expenses to expand the business. "The average active

distributor sells only 19% of his products to non-Amway affiliated consumers," according

to Klebniov. "The rest is either personally consumed or sold to other distributors."  In the

United States,  the Federal Trade Commission requires Amway to label its products with

the message that 54% of Amway recruits make nothing and the rest earn on average

$65 a month. No such labels are required in other countries, but the facts are clear.

Most people who get involved in Amway will not make money.

Far from boosting their incomes, the vast majority of those who become Amway

distributors, particularly those in 'the system', are likely to end up losing money.

The majority of the wealth of the tiny number of top-ranked distributors in this

country comes not just from the sale of Amway products but from selling
motivational materials and organizing seminars and rallies for the people below

them (Thompson).

Amway has made a very few people very rich while paying its foot soldiers more in

inspiration than in cash (Thompson). There is nothing particularly unique about this in

the history of business. What is unique is the faith, devotion and hope that the foot

soldiers have. (Note: the numbers in the paragraph are from 2005-2006.)

Is Amway a cult?

Critics of Amway have compared it to a cult whose main product is Amway itself.

Amway folk do resemble religious devotees in some respects. They have great faith in

their company, its products, and the hope for wealth and early retirement. They attend

seminars and meetings that are reminiscent of revivalist meetings, where the power of

positive thinking replaces (or is accompanied by) faith in Jesus. Instead of a parade of

souls healed by faith, Amway faithful are treated to testimonials of early retirement with

plenty of money. While there have been some accusations of persecution of those who

have left the flock, by and large Amway devotion seems harmless enough. Amway
doesn't seem to differ much from other zealous big corporations which preach positive

thinking about the business of business in endless motivation seminars and retreats,

books, tapes, brochures, among other things (Klebniov).

Graham Baldwin of the United Kingdom compares an Amway motivational meeting to a

revival or cult meeting. The former university chaplain tries to help people break away

from religious cults with his program called "Catalyst." Soon after one of his broadcasts,

he got a call from a man

who explained how the group he had joined a year earlier was slowly taking over his

life. There were the huge monthly meetings at venues like Wembley Conference Centre

where he and thousands of other followers were worked into a passionate frenzy then

told to go out and find as many new recruits as possible; there was a powerful doctrine

that frowned on television, newspapers and other 'negative' influences; there was the

strict dress code and advice on how to bring up children and relate to loved ones; there

was the fear that to quit would mean giving up hope of a happy future.
However, having seen the television show featuring Baldwin, the man now alleged that

he was being subjected to mind control techniques and being manipulated by those

above him. He wanted advice on making a possible break. Baldwin asked which cult the

man was in.

"It's not a cult. It's not a religion. It's something called Amway" (Thompson).

To some of Amway's critics, Amway may look like a religious cult, but to others it just

looks like a shell game. The ministers of the faith work their magic by constantly calling

your attention to the quality of their products, their concern with ethics, the wealth of

their company, their association with Coca-Cola or MCI, the claim that they don't have

to pay the middleman or advertising costs, and the numerous testimonials of the faithful

who have passed through the valley of death and have arrived on the mountaintop with

buckets of gold. Meanwhile, you do not notice that the products are secondary to the

process of recruiting new distributors of those products. You do not notice that the

wealth and associations of the company are irrelevant to its promises of wealth to the

millions of distributors recruited. You do not notice that many costs, such as mailing,

handling, doing forms, advertising, and driving personal vehicles to deliver or pick up
products, are picked up by the distributors themselves. You do not notice that even

though some people make a decent or more than decent living exclusively through

Amway, the chances of all or most distributors making such wealth are absurdly small.

You do not notice that while the leaders talk about ethics they are stimulating

resentment and greed. And of course you never hear the testimonials of those who feel

cheated by Amway; dissidents are not allowed to give their testimony at revival

meetings.

The shell game gets even more complicated because when it is pointed out that most

people who are Amway distributors either lose money (they buy more products from

Amway than they sell) or make a very modest income, the ministers of the faith don't

respond honestly and directly by saying that that is what should be expected from such

a system. Instead they claim that no one said you would get rich quick at Amway; no

one promised great wealth with little work. Those who fail do so because they are

failures. They don't work hard enough. They don't devote enough time to their

distributorship and recruitment. The failures need motivation!

the dissidents
Paul Klebniov writes that

Former distributors and Amway officials say that like many movements based on a cult

of personality, Amway's attitude toward any insider critical of the organization has

bordered on paranoia. Edward Engel was Amway's chief financial officer until 1979; he

resigned over a disagreement with DeVos and Van Andel [the founding fathers of

Amway] on how to run the Canadian operations. This apparently branded him a traitor;

he says he and his family received threats for years after his resignation. "It was a Big

Brother organization," says Engel today. "Everyone assumed that the phones were

tapped, and that Amway had something on everybody."

In 1983 Engel's former secretary, Dorothy Edgar, was helping the Canadians in their

investigation of the company. She was roughed up in Chicago, after she was told to

"stay away from Amway." Engel, who picked her up after the incident, says he believes

her story. Amway would not comment on the incident.

There was extremely bad publicity in 1982 when a former distributor, Philip Kerns, quit

to write a damaging expose called "Fake it Till You Make It." Kerns charges that Amway
used private detectives to follow him and rough him up. Kerns' expose prompted the

"Phil Donahue Show" and "60 Minutes" to run uncomplimentary pieces on Amway.

Amway's recruitment dropped off; with it, sales plunged an estimated 30% in the early

1980s.

In 1984, another former Amway insider, Donald Gregory, says he started to write a book

on Amway, but the company obtained a gag order against Gregory in a Grand Rapids

court" (Klebniov).

Even so, the vast majority of Amway distributors are probably decent people who

believe in the quality and value of Amway products and who are in it to make money in

a legal and ethical way. They are not responsible for what the founders or "uplines" do.

They are not making wild promises about making millions of dollars with just a few

hours of work a week to their friends. The average Amway distributor is undoubtedly not

like James Vagyi.

Amway comes to Hungary

Now that capitalism has come to many former communist nations in Europe, Amway

has spread its ever-replicating roots into countries such as Hungary and Poland. James

Vagyi, the lead recruiter in Hungary, tells potential recruits that the minimum income is

about $9,000 a month [700,000 forints]. Mr. Vagyi says to a group of potential recruits,

"If 10 million people were persuaded for 40 years to build socialism in Hungary, you can

each find six people to do this." If those six find six who find six who find six, you will be

rich in no time. Mr. Vagyi shows his audience a videotape that ends with a message

from Amway's co-founder, Richard DeVos: "Ethics and caring for people are the

fundamentals of Amway's business." Maybe. But apparently some distributors have

cynical views of ethics and the only people they seem to really care for are themselves.

Still, isn't this true in every business? Aren't there always a few bad apples who give the

whole group a bad reputation?

Is the appeal to greed or to need?

It isn't very likely that the majority of Amway's distributors follow Vagyi's example. Nor

do they follow the example of Michael Aspel who used a curious recruitment video in

London. The video "features couples who live in enormous detached houses and have
luxury cars, talking about how much freedom and independence the Amway opportunity

has given them. The narrative tells how the company is built on "ethics and integrity"

and how it has helped "thousands improve the quality of their lives" (Thompson).

Furthermore, there is no doubt most Amway meetings are not like the one described by

Paul Klebniov:

One weekend this summer over 12,000 enthusiastic people gathered for a rally in

Richmond, Va. A handful were wealthy distributors of Amway Corp's products; the rest

wanted to be. The meeting began with a prayer and a Pledge of Allegiance. On stage,

Bill Britt, the master Amway distributor who organized the rally, introduced the other top

distributors, who had arrived in their Cadillacs and Mercedes, flaunting expensive furs

and jewelry. With the introduction of each of these role models, the crowd cheered.

Stories such as Klebniov's inevitably lead to the question, Does Amway encourage

fraud? The answer is No. However, one of the main criticisms made of Amway and

other MLM organizations, is that they inevitably encourage unscrupulous people to

defraud the gullible into thinking that with a little hard work they can become rich beyond
their wildest dreams. These unscrupulous people become rich themselves, not by

selling Amway products but by selling the concept of Amway and "inspirational

materials" such as books, tapes, seminars, etc., aimed at motivating a person to think

positively. Critics argue that while it is possible to make a decent living selling Amway

products, a realistic person should not expect more than a supplement to one's income

from selling the products. The real money is in recruiting people into Amway. The really

big money is in selling motivational materials, i.e., hope.

Amway World Headquarters

Ada, Michigan

Amway's two
founding fathers,
Jay Van Andel and
Richard M. DeVos
 Category Archives:
Amway India
16.6% growth for
Amway India
January 15th, 2007 | Posted in Amway India,
Amway News

Despite the distractions of being

temporarily shutdown in the state of
Andhra Pradesh because of a marital
dispute, Amway India has reported
spectactular sales growth for 2006. Amway
India sales for 2006 are reported at Rs 738
crore (US$168 million) compared to
revenues of Rs 633 crore in 2005 – growth
of 16.6%. This is [...]
Our Values
 

Vision
Inspiring people to live better lives.
 
Mission
To provide the best business opportunity. To
deliver exceptional quality products to urban and
semi urban homes in the areas of nutrition and
wellness, cosmetics, personal care, home care,
home tech and insurance.
 
Our Values
Amway has established some simple shared
values that unite the entire company, and all of
the Business Owners that are associated with
Amway. We believe that these values guide our
actions and help us to achieve everything we are
capable of without compromise or harm.
 
Integrity
We will uphold the highest personal and
professional integrity which demonstrates
honestly, loyalty, respect and high ethical
standards in all our responsibilities, obligations
and other activities. We are committed to behave
at all times in accordance with the ethical
practices of the organization.
 
Trust
Building reliability and dependability for self by
displaying commitment, honesty, confidentiality
and consistency in all actions.
 
Transparency
We will promote a culture of openness and mutual
trust by interacting objectively and without
underlying personal interests.
 
Service Orientation
We are committed to serve our customers to fulfill
their needs by focusing efforts on discovering and
thereby meeting stated and unstated
requirements.
 
Partnership
We will collaborate across boundaries and find
common ground by sharing ideas and resources,
with a wide range of stakeholders. We will
develop networks and build long term alliances
with internal and external customers.
 
Recognition
We are committed to honor, encourage and
support individuals and teams who contribute,
through their behavior and actions, to the success
of the organization.

Sales and Marketing Plan

The Amway Sales and Marketing Plan is a low
risk, low start-up cost business opportunity that is
open to everyone. It allows you to build your
business through retailing products and
sponsoring other people who, in turn, can retail
products and offer the business opportunity to
others. By passing your sales and marketing
knowledge to your developing team, you not only
build your own business network but also enable
others to build one of their own.
 
The Amway Sales and Marketing Plan has been
operating for over 40 years and is available in
over 80 countries and territories around the globe.
 
The core of the Amway Sales and Marketing
Plan's income opportunity is the sale of quality
AMWAY products to retail customers. As your
Amway business grows, the rewards you earn
grow in proportion. The Amway Sales and
Marketing Plan does not compensate anybody for
simply recruiting others as Amway Business
Owners.
 
Click here to download the ASMP Brochure
Marketing strategy

A strategy is a plan of action designed to achieve the goals of the organisation. In creating a
marketing strategy for the Super Concentrated Cleaning System, Amway needed to set out the
key objectives it wanted to achieve. The following objectives for the brand were set:

 to increase distributor profitability and productivity by providing a new and exciting business
opportunity

 to optimise consumer convenience and value through enhanced product differentiation with
this exclusive and revolutionary cleaning system

 to provide innovative and unique products to enhance the image of Amway Home Care.
 Established in 1959 by Jay Van Andel
and Richard DeVos Amway now
operates in more than 80 different
countries. This Direct Selling Company
enables more than 3 million people to
own independent businesses, but lets
take a quick look at what business
growth strategies Amway teach.

'Old School' Marketing Strategies:

These are not much different from

nearly any other MLM's - try products,
make a list of all people you know, seek
'help' from your Upline, attend 'never-
ending' meetings; hand out free
samples, flyers, business cards, talk to
strangers on the streets; let people
know about this business opportunity
and the prospects will just jump aboard
and join your business....

However, when following ALL techniques

mentioned above most people will
struggle, suffer, and fail in network
marketing industry. As a matter of fact,
trying to grow MLM business today by
targeting your 'warm market' RUIN
more relationships than you ever
believed is possible.

Trying to grow such important business

with the help of flyers, magazines,
business cards or by simply attending
meetings will also take a tremendous
amount of your time, money and effort,
usually with very little, or no results.

However, the fact is that with right

training and education anyone can build
their own Amway business and operate
it from home. To really get ahead with
this opportunity you would have to
search for a different Amway marketing
strategy and work on developing
marketing systems that targets the
masses and helps present your product
and services to a wider audience.

Few guides to consider:

1. You should ALWAYS lead with product

or service, and NOT with business
opportunity.
2. You must learn how to find your
TARGET MARKET (people that already
have needs, wants, or desires, for
products or services), and focus on your
marketing campaign.
3. To get the absolute best results out
of your marketing campaign you must
learn to leverage 3 main tools, that are
available for most of us today -
telephone, internet and the power of
written word (copywriting). These are
absolutely mandatory if you want to
grow your Amway business from
home.
4. You must have a system to follow, a
support and a good advice whenever
you
need for it.
5. You must always try become more
effective through your own personal 
development.

To Summarise:

Nowadays 'Old school' methods works

hardly for anyone, and promoting to
friends and family, or handing out free
samples are tactics not much effective
for the average modern day distributor.
To maximise it's potentials and create a
solid, build-to-last Amway organization
you would have to search for different
marketing strategies from those taught
by Amway, learn how to grow and
expand in knowledge, and then develop
your own marketing skill-set.

Read more:
http://www.articlesbase.com/home-
business-articles/amway-marketing-
strategy-039old-school039-doesn039t-
work-or-does-it-
1517042.html#ixzz0txFHm0SK
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