Amway TV ad

[Tex2]

Oh yeah, I forgot to remind you. Crayons are for coloring, they are not supposed to be eaten! LOL

 

[Porkchopjim]

Uhuh. Which part of "Nutrilite is the #1 best selling supplement brand in the world" don't you understand?

When your vitamins, of questionable content (make sure to get your phytonutrients mixed in with alfalfa!), cost factors of 10 above the competition and you define #1 best selling (for AMWAY - not for the poor distributors tossing that junk down their throats to make PV 'sales' goals to please upline and get their $9 rebate check) by the $$$ spent on those products...then the 'understanding' becomes a little different, doesn't it?

When my 30 day supply of Amway vitamins runs me $80 and my Costco 60 day supply costs me $10 (which, shockingly have quality control awards that Amway can't seem to meet, of just plain choose not to...): who's number 1? Must be Amway!

There is a lot of money and profit to be made in MLM. Amway is proof of that. It's customers (also called IBOs) aren't so lucky.


All this blather about 'sales outside the pyramid not defining a pyramid scheme' is another blatant misrepresentation of what was said:

Buyer's clubs have NO outside sales. They are not illegal.

Amway is NOT a buyer's club. Outside sales ARE important.

IBOFB/ICERAT will claim to his death that IBOs who chug vitamins and XS in order to make 'performance goals' for their business ARE legitimate customers.

Funny how those 'legitimate customers' no longer feel the need to consume 100PV+ of their own products once the leave that glorious business.

I'd bet a donut Tex will claim less than $120 profit from his Amway business this year. $112 of that will be from his rebate for ordering $300 a month from Amway and eating it himself. (He thinks that's profit).

But, don't worry about Tex and his taxes - he made a 620 mile trip (one way) to visit family and happened to attend an Amway convention, so he's writing the whole thing off as a business trip. He's ethical like that.

 

[CynicalSkeptic]

the FTC has gone on record as saying this issue, by itself, is NOT an illegal pyramid.

True. It's a legal pyramid scheme, not an illegal one.

 

[NewtonTrino]

But, don't worry about Tex and his taxes - he made a 620 mile trip (one way) to visit family and happened to attend an Amway convention, so he's writing the whole thing off as a business trip. He's ethical like that.

This is typical in scamway.

 

[icerat]

Even if this was true ....

But volume only comes from those IN the system!

which it categorically isn't ... this doesn't follow -

That's why it's a pyramid scheme!

The FTC has explicitly said the level of "internal consumption" does not determine whether something is a pyramid scheme (read MYTH: It’s a pyramid if most products are bought by IBOs]. EU law, as established by the Unfair Commercial Practices Directive, explictly considers "consumption" the same as "sale" for the purpose of determining an illegal pyramid (see Page 15, para 14 - DIRECTIVE 2005/29/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL), and the Canadian Competition Burea law even explicitly states you're only "in the scheme" if you're actually doing things to try to earn money (see Multi-level Marketing Plans and Schemes of Pyramid Selling.)

Something is a pyramid scheme because you make money by recruiting people. It's really quite simple - the sine qua non of a Pyramid Scheme (without which it is not) is the second element of the so-called "Koscot test" -

the right to receive in return for recruiting other participants into the program rewards which are unrelated to sale of the product to ultimate users"

(see for example USA vs Gold Unlimited)

You're not a pyramid scheme unless you're getting paid "unrelated to sale of the product to ultimate users". In Amway and other legitimate MLMs, payment is entirely based on sale of the product to ultimate users. Note "ultimate users", not "people who aren't distributors".

So the law is clear - YOU ARE WRONG.

Furthermore, as Peterson and Albaum point out in On the Ethicality of Internal Consumption in Multilevel Marketing,JOURNAL OF PERSONAL SELLING AND SALES MANAGEMENT, 2007, VOL 27; NUMB 4, pages 317-324 -

internal consumption is a common, widespread phenomenon found in all types of firms and that criticism of this aspect of multilevel marketing as being unethical and fraudulent is misplaced​

ETA: On the Coke thing... Icerat, you missed the important bit. According to Whump, Coke salesmen do not recruit other sales men in their area, since that would be increasing competition with themselves.

This is completely and utterly false. Coke "salesmen" as outlined by Whump do not sell to end-users, they sell to wholesalers and retailers, the wholesalers also sell to retailers (competition to the coke "salesmen"!) and the retailers sell to end users. Wholesalers will often also have a small retail sale component, which is again direct competition with the "retail sales" of retailers, as well as direct competition to the coke sold by coca-cola in the company cafeteria.

Wholesalers recruit "competitors" in the retail marketspace by selling to retailers all the time. Heck, by the definition of "competitor" you are using, if hot dog stand buys coke from Walmart, and sells it in his hot dog stand at a markup - Walmart is selling to a competitor!!! Strictly speaking you are actually correct. Both Walmart and the Hot Dog stand are competing for a "retail sale". And just like Amway, Walmart and other wholesalers may even give the hot dog stand guy a discount if he buys in large enough volumes.

Amway depends on it, since you can't make enough money selling product to end customers because they are overpriced.

I'm not sure what you're trying to say here. Amway sells virtually all of it's products at around 55% off marked "recommended retail price". What price somebody resells it for has no effect on Amway profitability at all, let alone makes Amway "dependent" on it. As for Amway reps, all profitability comes from products reaching end consumers.

The main purchasers of Amway products are the distributors, which is why you must recruit them to earn money.

Umm, 100% of Amway products are purchased by distributors. Well, almost, Amway staff can purchase from a factory outlet.

I'd venture to suggest that close to 100% of Coke's products are purchased by Coke wholesalers, distributors, and retailers as well.

So guess what! Coke makes money by "recruiting" wholesalers, distributors, and retailers.

This is a problem why exactly?

So nominally, you're recruiting competition (other people who will sell Amway), but in reality, you're recruiting the customers themselves.

So, yup, nominally Coke is recruiting competition, since both Coke and the people they sell to can sell the product to a final consumer.

This is a problem why exactly?

Coke sells on the open market to anyone.

Really? So I can ring up the Coca-Cola factory and buy a can?

No.

The Coca-Cola company does not get a cut of sales to me. The Coca-Cola company makes money selling to the bottlers. The bottlers make money selling to me.

Not usually. The bottlers would normally sell to wholesalers/distributors/retailers, and they would sell either to you or someone else in the distribution chain.

Who here has bought Coke for consumption direct from a bottler? No, I didn't think so.

Setup is much the same for Amway.

The bottlers do not sell to other bottlers who sell to other bottlers who try to sell to me (and other bottlers (who also try to sell to other bottlers who try to sell to me)) so that each person upline gets credit for the sale.

Huh? I've no idea what this rant means. It appears you think this is somehow what happens with Amway?? It doesn't.

Big difference.

No, all you've done is show how similar they are.

 

[icerat]

When my 30 day supply of Amway vitamins runs me $80 and my Costco 60 day supply costs me $10 (which, shockingly have quality control awards that Amway can't seem to meet, of just plain choose not to...): who's number 1? Must be Amway!

Always amazes me how so many people who claim Amway is somehow a scam are just repeatedly dishonest. What's even more bizarre is how they do it when it's so easy to prove. The closest thing Nutrilite has to a "costco" vitamin is Nutrilite Daily. A 90 day supply at full retail price? $11.30.

All this blather about 'sales outside the pyramid not defining a pyramid scheme' is another blatant misrepresentation of what was said:

Uh. Yeah. Blatant misrepresentation.

I said -

The FTC has explicitly said the level of "internal consumption" does not determine whether something is a pyramid scheme

The FTC's actual words were -

In fact, the amount of internal consumption in any multi-level compensation business does not determine whether or not the FTC will consider the plan a pyramid scheme.

Oh yeah, I blatantly misrepresented them.

Funny how those 'legitimate customers' no longer feel the need to consume 100PV+ of their own products once the leave that glorious business.

Again, a lie. Half of people who join Amway never buy the products in the first place, they are never customers, and they do not renew. Of the other half, no more than 13% pursue the business. Much of the rest (74%) continue to purchase products. (source: Orrin Woodward et al v. Quixtar, Inc.). Furthermore, of people who don't even renew their memberships, 25% remain as customers (source: Wilbur Cross (1999),The Definitive History of the Amway Corporation: The True Story of the Company That Transformed the Lives of Millions )

 

[Tex2]

pcj, you would bet wrong, as usual. Just because you don't understand the tax laws isn't my problem.

 

[Tex2]

Cynical, virtually every organization is a legal pyramid scheme, what's your point?

 

[Tex2]

ibofb/icerat said, "As for Amway reps, all profitability comes from products reaching end consumers." ---- Let's be clear: About 99% of IBOs don't make ANY profit, thanks to the tool scam. Any Amway profit they make goes into the tool scam, which allows the LCKs to "double dip" both Amway and tool scam profit.

Also, the FTC was careful to state there are other factors that come into play, especially intent, which is difficult to measure. All IBOs have an interest in consuming the products for a number of reasons, not the least of which is the ability to get money back, which is not available to customers.

The reason why Amway has a retail sales rule is to ensure the product quality/price equation (value) is acceptable to non-IBOs. Otherwise, your argument could result in $10,000 pencils being the basis of an MLM, which the FTC certainly wouldn't support as legal.

 

[whump!]

Coke does not sell it's products to it's own supply chains in the same manner as a downline leg does. 99% of the Coke produced goes from the warehouse to the retailer to the consumer and there is not a massive chain of open hands between the final retailer and the bottler taking a cut of the sales and each one taking a few items for their own consumption.

I figure by now that anyone able to read this thread has determined that the Amway "opportunity" is not as simple or altruistic as the commercial makes it sound. If the company eliminated by rulemaking the parallel pyramids of "motivational" businesses setup by several distributors, enforced the retail sales rule, and actually controlled the awarding of distributorships by qualifications such as geographic territories, guaranteed volume, etc. just like other "wholesale" businesses and distributorships are done, and changing the attitude of the majority of those currently taking part in it, some of whom often do things morally questionable or even illegal, then the Amway business might actually be seen in the eyes of the majority of people as a real business worthy of investing time in, just like Domino's Pizza or a UPS store.

On to bigger and better things than dealing with the true believer. As I said, the damage to Amway's rep has been done in this thread and there's nothing that Icerat and even Tex can do to repair it (although, Tex is at-least trying to be honest about what he is doing and deserves kudos for admitting to abuses of the system that is Amway). The funny thing about all of this is, it's the damage that the distributors themselves did through their own actions that ultimately has done the damage. All many of us have done is bring the wrongs into the light for public scrutiny. For those of you who have never been to the site where a very good business analysis was done, visit amquix.info and have a good read before taking the plunge into the Amway business.

Whump!

 

[Tex2]

whump, just because Amway isn't identical to every aspect of Coke doesn't make it wrong. The rest of you have done very little to "bring the wrongs into the light for public scrutiny.", as most of what is posted is half-truths, blather, etc., not to mention an extremely small segment of the public is even aware of this forum, let alone this thread, to provide scrutiny. I have said many times amquix is a good source for DOCUMENTS, not ANALYSIS. The site owner has serious accuracy and analytical skill issues.

DOUBLE Whump!!!

 

[NewtonTrino]

Legal != Good business.

Semantic arguments about whether it's a pyramid scheme are pointless. Whatever you call it the business is not a good effective way to turn time into money. When you add the tools scam brainwashing garbage on top of that it becomes downright dangerous.

 

[Tex2]

You don't have a clue what the nature of the Amwya business is minus the tool scam.

 

[NewtonTrino]

Enlighten us then.

 

[whump!]

Amway was designed as follows:

1. Corporation produces products.

2. Corporation uses the network of recruited distributors who pay a yearly fixed fee to sell those products to end-users (consumers). Products were sold wholesale and shipped in bulk to large-volume distributors who in-turn sold them wholesale to more distributors below them (ever done a "product pickup"?) Those distributors then sold them to themselves and to more distributors below and sold product retail as their "own store" and the process continues on down to the bottom tier of distributors.

3. Distributors make a commission from the sale of said products, with those who wholesale and retail higher volumes making more commission, but always having to share some of the commission with those above them. Even when you reach a certain level and your checks come directly from the corporation (which you use to pay yourself and pay commissions on the sales volume those below you generate), your volume is also shared with those above you, you just never see it. I'm not making a judgment, just stating a fact.

The Amway model always intended to have distributors do a decent volume through their own retail sales, which negated a need to have a large downline of mostly wholesale consumers who consume mostly for themselves (which is how it really is now) in order to be profitable. The products had good reputations and many distributors did very good retail volumes and did not have to recruit their friends/neighbors/co-workers/etc. using the hook of "owning your own business". All you ended up doing was diluting your own potential retail sales with the full markup in exchange for recruiting your customers as your wholesale competition. That's the #1 failure of the "system" due to it being corrupted by the greed of those most successful in the business. Icerat - learn the story of Frank & Lorraine Mikolas from Canada and how they went "direct" without any downline. The sold everything they bought and made great money. They spoke at the first "rally" I attended in Austin 17 years ago. As you know, Deb at webraw.com/quixtar/ has first-hand knowledge of how her parents built the business that way.

That's it. Really. No spin, no BS. Done as Amway (not the distributors) modeled it, the business of an Amway distributor is a legal multi-level distribution network. Now, with products rather uncompetitive due to pricing and the antics of the motivational organizations that make up the majority of the business, Amway is attempting, through the TV ads and people like Icerat, to rehabilitate their public image which has taken a beating because of people who have experienced first-hand the real Amway business as it exists today and don't want to have anything to do with it.

You can pick what I said apart all you want, since you seem to enjoy it so much, but it's all fact. What I said in my 3 points is basically what you get in the SA-4400 prospectus and at any introductory meeting.

Whump!

 

[icerat]

Coke does not sell it's products to it's own supply chains in the same manner as a downline leg does. 99% of the Coke produced goes from the warehouse to the retailer to the consumer and there is not a massive chain of open hands between the final retailer and the bottler taking a cut of the sales and each one taking a few items for their own consumption.

So ... Coca-Cola->Warehouse->Retailer->Consumer.

3 steps to the consumer. 99% of all coke takes that path? I doubt it, but I can accept it's probably a majority.

And what's the situation with Amway? You seem to think there's "a massive chain"? Massive? Funnily enough, we've known exactly how "massive" it is for more than 30 years, thanks to FTC vs Amway -

Currently about half of all Amway distributors were sponsored by a Direct Distributor or by a distributor sponsored by a Direct Distributor. More than 70% were within three positions of a Direct Distributor and 99% were within seven positions​

With "distributors" often being the end consumer, half the time it was -

Amway->Wholesaler(Direct)->Customer

Two steps to the consumer. And 70% of them time it was three steps or less.

Some "massive chain", huh?

I figure by now that anyone able to read this thread has determined ....

.... that you don't know what you're talking about. You, NewtonTrino, and PCJ keeping making claims that are outright wrong, and I've supplied sources that prove it if anyone cares to check for themselves.

You and your friends have shown that ... you don't know what a pyramid is, you don't know what a retail customer is, and you don't even know how Amway actually operates.

Back in 2004, Brodie et.al did a study titled Public Perceptions of Direct Selling: An International Perspective

They surveyed over 4000 people about their experiences with Direct Selling companies such as Amway, Avon, and Herbalife. What they found was that there were two significant groups - one group had a negative impression of Direct Selling and Direct Sellers, the other group had a positive impression.

What was the difference between the groups?

To quote, people who had "actual, first-hand personal experience, have a considerably higher, more positive perception"

People with actual first-hand experience had a positive view of direct selling, they had a positive view of direct sellers, they considered the product to be "value for money", the process convenient, and no problem with "pressure to buy".

The people with no actual first-hand experience had a negative view of all of these things, except an acknowledgement it may be convenient.

Seems to me there's much the same dichotomy here.

 

[icerat]

Amway was designed as follows:

1. Corporation produces products.

2. Corporation uses the network of recruited distributors who pay a yearly fixed fee to sell those products to end-users (consumers). Products were sold wholesale and shipped in bulk to large-volume distributors who in-turn sold them wholesale to more distributors below them (ever done a "product pickup"?) Those distributors then sold them to themselves and to more distributors below and sold product retail as their "own store" and the process continues on down to the bottom tier of distributors.

right so far.

3. Distributors make a commission from the sale of said products, with those who wholesale and retail higher volumes making more commission, but always having to share some of the commission with those above them. Even when you reach a certain level and your checks come directly from the corporation (which you use to pay yourself and pay commissions on the sales volume those below you generate), your volume is also shared with those above you, you just never see it. I'm not making a judgment, just stating a fact.

Also right so far (though outdated mechanisms). It's probably important to point out that apart from calculating volume monthy, rather than at point of purchase, this doesn't differ significantly from traditional distribution.

The Amway model always intended to have distributors do a decent volume through their own retail sales, which negated a need to have a large downline of mostly wholesale consumers who consume mostly for themselves (which is how it really is now) in order to be profitable.

This depends on what you call "decent volume", but the model always had people moving from being retailers to wholesalers as their volume increased through recruiting other distributors. Even back in the early 70s in FTC vs Amway it was reported that a large proportion of volume was from internal consumption.

The products had good reputations and many distributors did very good retail volumes and did not have to recruit their friends/neighbors/co-workers/etc. using the hook of "owning your own business".

Again, read FTC vs Amway. Read any history of Amway. Heck, read the articles of incorporation. Amway was always primarily about offering a business opportunity.

All you ended up doing was diluting your own potential retail sales with the full markup in exchange for recruiting your customers as your wholesale competition.

I absolutely agree. Where you're wrong is in thinking that everyone was operating on the "no customers" model. Right from when I first started we were encouraged to have customers. The "system" I work with has customers as part of it's "vital signs" - ie what a healthy business should look like. We had competitions where signed customer receipts were the entry tickets. We had product and sales training. The "system" I work with spent a deal of money developing a whole weightloss program based around Amway products, and directed towards customers. My group continues to hold skin care clinics and health seminars ... all for customers.

Heck, here in the market I currently operate, Amway has a "member" category, were someone can join Amway for free and get IBO pricing. We do not use it, we do not promote it. Our position is that it's absolutely stupid. These people are customers. You have to treat them like customers. You have to do the work as if they're a customer - but the Amway model for them has no retail profit! We don't want them as members, we want them as customers so we get retail profit.

So we're in complete agreement here. A model with no "full price" customers is dumb - you're cutting into your own profits. Where you're wrong is in assuming all Amway groups are the same.

That's the #1 failure of the "system" due to it being corrupted by the greed of those most successful in the business.

Rule #1 of evaluating a person's comments on Amway ... if they say "the system", then you know they have very limited experience with Amway. There is no "the system". There's dozens, indeed I suspect hundreds of different systems. One of the differences is in how they deal with customers.

Funnily enough, you'll find that the groups that promoted "no customers" have shrunk dramatically over the past couple of decades. What's more, folk who are online critics of Amway almost universally have experience only with those groups (actually they're all one group and it's offshoots).

Icerat - learn the story of Frank & Lorraine Mikolas from Canada and how they went "direct" without any downline. The sold everything they bought and made great money.

Good for them. They're not the only ones that have done that. It has it's strengths (profitability) and weaknesses (lack of stability).

They spoke at the first "rally" I attended in Austin 17 years ago. As you know, Deb at webraw.com/quixtar/ has first-hand knowledge of how her parents built the business that way.

Except they didn't. They had lots of downline, and indeed their biggest leg and biggest contributor to their profits came from the very "the system" you just decried. What's more, without a "system", Deb's family struggled to keep the other legs together and ended up selling their business.

That's it. Really. No spin, no BS. Done as Amway (not the distributors) modeled it, the business of an Amway distributor is a legal multi-level distribution network. Now, with products rather uncompetitive due to pricing and the antics of the motivational organizations that make up the majority of the business,

Again with the myths - the products aren't "uncompetitive". It's simply not true. That myth comes about because of the way some people were marketing the products. They were (still are for that matter) trying to sell BMWs to people who buy Mazda's, and telling them they could get their car 30% cheaper through Amway. A BMW at 30% off is still more expensive than a Mazda. Sell an Amway BMW to a BMW buyer though, and the prices are more than competitive.

Amway is attempting, through the TV ads and people like Icerat, to rehabilitate their public image which has taken a beating because of people who have experienced first-hand the real Amway business as it exists today and don't want to have anything to do with it.

Again, partially true. The thing is the "people who have experienced first-hand the real Amway business" ... haven't. You have people who experience one part of the Amway business, a part that was never a majority of Amway, and then you have even more people who have repeated the stuff those people have said, such as you are doing I expect.

You can pick what I said apart all you want, since you seem to enjoy it so much, but it's all fact. What I said in my 3 points is basically what you get in the SA-4400 prospectus and at any introductory meeting.

We'll I pretty much agree with everything you said here, except you're a little idealistic on the early Amway, and your view of the Amway of the past few decades is really only a view of one part - a minority - of Amway and you're making the mistake of thinking an elephant's tail tells you everything about the elephant.

 

[Tex2]

Enlighten us then.

I doubt you could comprehend it, your mind is too stuck in the current scenario.

 

[whump!]

Then I think it's settled. This thread can die and the ad-hominems about people who were involved not knowing what they are talking about from the point of view of somebody who has never been directly involved (meaning actually sponsored) in an American line of sponsorship and "building the business" within our nation can stop.

The end.

Whump!

 

[Tex2]

It's not even close to being settled. It will be settled when there is no longer a tool scam in the U.S.

The Beginning.

Triple Whump!!!