icerat
Philosopher
I had to put it on hold for a couple of years due to a family crisis, so it's been a bit delayed. I still believe it's worth pursuing, so I am.
Friends and MLM recruitment. HELP!
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I had to put it on hold for a couple of years due to a family crisis, so it's been a bit delayed. I still believe it's worth pursuing, so I am.
icerat
Philosopher
Joecool is on my ignore list, so I didn't see his post, which is (as usual for him) somewhat deceitful. What he showed was a highly simplified example used to help explain part of the payment system, and even then he ignored a significant part of it. He tends to do that, which is why he's on my ignore list.
And Publix is a competitor to Coca-cola, for the retail sale. Coca-cola is still happy to recruit wholesalers and retailers because they make profit on the wholesale sale. Same with Amway.
Do you realise if you run a little kiosk down at the local sports field, and you buy your drinks from CostCo to sell to your clients, then you are a competitor to CostCo. They don't care, they still profit from the wholesale sale.
Heck, if you owned a small store and you were running it yourself, then you decided to hire an additional sales staff member on commission - you just hired a competitor!
For some reason I'm yet to fathom, people seem to think profiting from wholesale sales is a bad thing with MLM, but they don't care for other businesses ....
Don't know for sure. It's actually a little complex since it's spread among multiple countries. Total nowadays is probably 50 or 60.
Irrelevant, and the fact you asked it makes me suspect you have very little idea how Amway works.
As I said, average 10 to 15. some weeks were more, others were less. Doubtful I had a week where it was over 20.
(1) I'm not refusing, it's simply not a sensible thing to do so, nor really possible, since I have no record of how much time I put in to it 15 years ago on the other side of the world
(2) I've had some "formal" training, but I'm an entrepreneur, founded and sold a few for healthy profits. My wife has formal training in business and entrepreneurship. I'm pretty certain they never taught her to work out an "hourly rate" when trying to take an idea from concept to market.
If you think entrepreneurs with an idea are sitting around trying to calculate their "hourly rates" then I seriously value the worth of whatever business training you may have had. Heck, some successful entrepreneurs even recommend not bothering with a business plan! I do them, but there are tool for understanding, reality pretty much never matches business plans.
Obviously we have to judge where is the best place to spend our time, but financial considerations are only part of that. To be honest, short of something I'm doing turning in to another facebook (which is unlikely) if I was only interested in the money then I'd be focused on Amway - it has a very good return for the effort, and unlike other ventures it's highly predictible.
halleyscomet
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Oh, I get how it works. The question was more of a "degrees of separation" one than anything else.
icerat
Philosopher
Please, explain, it's very rare that people do. Though a lot of people think they do!
Why do you think it's relevant?
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Arisia
Graduate Poster
Boy, this is starting to sound like some threads in the CT section somehow.
halleyscomet
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It looks to me like Amway reps basically have two methods by which they can make enough money to make it worth their time.
1. Sell products.
2. Get people in your downstream who buy products or sell them themselves.
It sounds like your current position is largely the second one. You did enough recruiting early on to have something close to passive income now.
I'm curious how far out the "message" has spread from you. I'm asking not out of curiosity about the business model, but out of curiosity around the recruiting model. Were the people you recruited interested enough to in turn recruit other people, and if so, how far out did the chain go? Did the chain stop or is it still going? It's a sociological query, not a business or economics one.
MLM recruiting meetings borrow a lot from religious revivals, and in many ways an MLM program, particularly the scammy ones, can resemble a religion more than a business. This is not unique to MLM or direct selling, but I'm fascinated by the often creepy ways religious thinking intersects with business and commerce. For example, the knee-jerk "socialism bad" reaction many people have is based more on indoctrination during the cold war than an honest assessment of, for example, if it really IS better for the populace and business to have single-payer health care. The religious thinking is preventing honest debate.
The same thing is happening here. Your early defenses of Amway consisted more of attacking critics than in providing any actual information. You engaged religiously. The people who automatically assumed all MLM programs are scams were doing the same. Fortunately on a forum such as this the pattern can be broken by focusing on hard data. That's why I was asking for the math. That's why Joecool's post about the 6-4-2 plan is probably the most useful one here. It provides a mathematical base that demonstrates a viable profit model with Amway, even though it's quite modest for the people at the bottom of the stream.
I'd like to focus on the objective data. Take a look at Joecool's numbers. Set aside the ad hominem attacks and tell us, with actual numbers, what's missing from what he wrote. You made it clear you find it incomplete. Complete it for us.
Icerat, AKA "IBOFightback" likes to dismiss my analysis of the 6-4-2 plan because he claims that it's just a hypothetical model about how to make the money.
But having had personal experience in Amway, I can tell you that it's very common for a platinum level group to have a core of 50-100 IBO's who move their 100 points and a bunch who work the Amway business occasionally, some who do little to nothing and some who sign up and are never heard from again. Thus a typical platinum group will have 150 to 200 people overall.
What I have illustrated is simply that it's likely true in most cases for a platinum to have over 100 downline, most of who lose money and revealing that less than 1% of IBO's reach that level.
Yes, there might be some unusual IBO's who only exist to sell occasionally and might make a small profit for minimal effort but we know that these folks are rare exceptions and not the rule.
While 6-4-2 is hypothetical, all you need to do to make it look real is factor in the folks who do little or nothing and you'll get a pretty good picture of a real life group.
icerat
Philosopher
You're partly correct. For technical reasons to do with how we handled the business when I divorced I personally usually get more from (1) than (2). But by (1) I mean people registered as customers (not as IBOs) still purchase products through Amway and I'm credited as the salesperson, even though the active "selling" happened many years ago. Amway has 450+ exclusive products you can't get anywhere else, so people who like them keep buying them from Amway.
It's not quite so straightforward, as sometimes for stratigic reasons we might recruit someone and put them downline of someone else. It's less profitable initially but can have longer term benefits. I have a "leg" in the US that continues to grow, albeit slowly. Last time I looked, which is a while ago, it was something like 20 or 30 levels "deep". Because of the structure I rarely make any money out of this, and on occasions I do it's small (tens of dollars) but if I ever chose to build Amway again it would provide a useful foundation.
This has more to do with personalities than the model per se, though there is some cross-infection. Two of the most successful networkers in the United States were Bill Britt and Dexter Yager, with Amway. Both were very committed "southern" evangelical christians. Naturally enough their "circle" includes people with similar beliefs, so they developed very large Amway networks full of evangelical christians, and they proudly wore their faith, and politics, on their sleeves and used their Amway networks to proselytize their faith and politics, and their religious networks to proselytize Amway.
The approach works brilliantly with people of a similar mindset, but is alienating for those (like myself) who are not. Virtually all of the criticism of Amway that's around (including all of the critical books and all but one or two minor lawsuits) have originated with this "evangelical" Amway network. My research indicates it never represented a majority of Amway but it has had a hugely disproportionate affect on perceptions of Amway.
The influence spreads outside of Amway however, as a great many "leaders" in other network marketing companies had their first exposure to the industry from this Amway group.
Yes, I lost several republican friends on facebook during the last election because I dared challenge their indoctrinated beliefs.
Actually I provided a lot of information, but primarily through links to other sources. It's quite tiring seeing the same old myths repeated over and over again, even though some of them were addressed by authoritive investigations decades ago. I get extremely frustrated that otherwise rational people in the skeptic movement often simply believe these myths without questioning them. Take the VanDruff paper and the MLM "pyramid saturation" image. Even without understanding why it is wrong, it should be patently obvious to anyone with a modicum of intelligence that it must be wrong, since there are many MLMs that are many decades old, including one that's been operating continuously for nearly 80 years!
Joecool is a virulent anti-Amway critic who runs several blogs attacking the company, and has done so for nearly a decade. We have a history. He ended up on jref because he realised I was posting here and discussing MLM when it arose, so he joined primarily to attack me. I have him on ignore here, so if he says something you'd particularly like me to address, you'll have to point it out for me! I engage him on other forums that are dedicated to the topic, discussing MLM isn't why I'm a jref member. Though some people here could use some educating!
The 6-4-2/79 people 100PV model is purely a model used to explain the concept. It does not at all reflect the reality of how an Amway business is built or operated. It is not the only example model people use.
Now, some MLMs have quite complicated setups, and in my opinion the more complicated, the more likely they are to be scams. The Amway model is actually extremely simple and really no different to traditional business, it just appears complex when it's explained sometimes and because of some additions that make it less risky than most traditional businesses.
How does it work?
You buy products and sell them. As a registered distributor you get them for up to 35% off recommended retail price. If you buy larger volumes you get volume discounts up to another 30%, increasing gross margins.
That's it, that's how the money is made.
I have all sorts of data and statistics from various sources, more than happy to share if you're interested in an open-minded discussion.
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halleyscomet
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Is there a minimum you have to buy for certain time periods to stay a distributor? Could you, for example, not buy anything from Amway for a couple of months but still get the baseline distributor discount when you suddenly get an order from a customer?
tyr_13
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What claim? That if you're getting into MLM to buy products you're not buying a business? That's true. You can shift your goalposts from one end of the field to the other, but at neither end have your scored a point.
That people who are sold a business opportunity don't make money.
No, that people who try to do it as a business all lose money, and that that if you do join it as a 'discount club' you'd have to buy something, and buying things is a cost.
No, you're calling people who join what is marketed as a business lazy because almost NONE of them make any money and lose money.
Hmm, did a couple years ago. Here's another. "the average
net income after subtracting operating
expenses for these 200 top Amway
distributors was
about
minus $900
.
But still more expensive than they deserve to be. And again, it's marketed as a business first and foremost. And that's just Amway, which is one of the most reputable.
I don't think they're wrong, I think you're mischaracterizing everything in order to 'raise doubt' and seem to have a supported argument.
Of course it can and of course it is terrible at both.
And notice how people who work for Costco and Sam's Club make money. Notice how they aren't MLM. Notice how their business members also make money.
The top 1% of the top 1% of Amway operatives lose money. Are you telling me that fewer than 1 out of every thousand participants are trying to make money? At a thing that's a business? Even if it is a business and a discount club, that's still horribly bad. Terrible bad. It's more bad than roulette.
You've been down this road before and will rinse and repeat.
icerat
Philosopher
nope. I haven't ordered anything for several months. As long as I pay my yearly membership fee I get the distributor pricing.
minimum orders in order to "hold your place" are a big red flag.
(note, in the UKROI things are slightly different)
One of the myths about Amway's products is this 30 - 35% discount one receives as an IBO. Icerat made reference to this also.
The 30% discount is off the Amway suggested retail price.
So for example, Amway's flagship multi vitamin is double x. The retail price is approximately $80 for a one month supply. The IBO price is around $52. So yes, the IBO price is discounted.
What Icerat doesn't talk about it that you can get a 3 month supply of multi vitamins at Costco for $24.99.
While Amway does have a cheaper version of multi vitamins, you can bet your house that the uplines/upstreams are advising IBO's to purchase double x.
The 30% discount is off the Amway suggested retail price.
So for example, Amway's flagship multi vitamin is double x. The retail price is approximately $80 for a one month supply. The IBO price is around $52. So yes, the IBO price is discounted.
What Icerat doesn't talk about it that you can get a 3 month supply of multi vitamins at Costco for $24.99.
While Amway does have a cheaper version of multi vitamins, you can bet your house that the uplines/upstreams are advising IBO's to purchase double x.
halleyscomet
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How large is that annual membership fee?
icerat
Philosopher
Varies from market to market. Some places it's free. US it's $50.
halleyscomet
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I think the higher cost of Amway products can be considered "prestige pricing". Please note, prestige pricing does not require the product actually BE better, just that it be marketed that way.
One of the cheapest golf balls to manufacture (Titleist I think, but I could be misremembering the brand name) started off trying to sell based on a small markup. The golf balls didn't move because they were perceived as shoddy because of their low price. The marketing wonks pulled them, offered them ONLY through pro shops and added a substantial markup. They believed their product to be better so they priced it according to the quality they believed the balls represented and not the cost to manufacture them. The balls started selling really well, despite now being among the most expensive on the market.
There's ample evidence of Amway products costing more than objectively comparable products. The marketing apparently positions them as higher quality products being offered to you at less than what they're "worth." If that seems a bit amoral or even slimy remember, this is marketing we're talking about. Sales and promotions aside, prices are set to maximize profit, not adhere to a moral standard of what is and is not a reasonable markup.
I think the discussion of if Amway is a viable option for individual sellers is a separate discussion from if the prices are justified by the product quality level. While the markup is a factor in business model viability, there are more than enough examples of products sold successfully at huge markups. Even if the 200% to 300% price difference is accurate, it's not necessarily a deal breaker.
icerat
Philosopher
I disagree with that assessment. As I mentioned earlier virtually every example I've seen has not taken "objectively comparable products". The vast majority of examples you'll find on the 'net are by people who've made little or no attempt to actually ascertain if the product is comparable and in most cases have never even tried - they simply take a price off the web or out of a catalogue and assume it is the same as a competitor's product.
There's a reason many of these products have a place in direct sales rather than on a store front - they have differences that may not be readily apparent and need explanation or demonstration.
Where do you get this idea from? I've never seen this type of marketing from Amway.
eta: on further thought the groups that have a "shopping club"/"save money" type of focus might be interpreted as having this approach. That's really an IBO approach rather than "Amway's" approach, who actually discourage it.
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I agree with your post. You're right, there can be a market for "premium" goods. Amway supporters tend to cite Mercedes Benz as a premium made car that people are willing to pay more for than a Ford for example. The problem I see is that it is not a good comparison when the products are household cleaners or soaps. Have you ever heard of someone flaunting their dish soap or toilet paper?
Also, even in some cases where Amway is competitive in price and perhaps quality, you factor in the shipping costs and Amway still falls short. Amway enthusiasts will cite convenience but since Amway doesn't deliver fresh eggs, veggies and bread, people still need to venture to the store anyway, where they are easily pick up soap, toothpaste and cleaners, all at a lower cost than Amway.
I think in reality, Amway IBO's would need to find a niche market in order to compete.
That is unless, the products are mostly irrelevant because the true product is opportunity and hope, which leads to sales of inspirational cds, books and conventions, where the real money is made. That however, is another subject.
Shouldn't Amway have some responsibility for what their representatives say?
Mike!
Official Ponylandistanian National Treasure. Re
Not in the magical world of MLMs.
In fact, I think it's possibly encouraged to say whatever pops into your head at any given moment, if it might close a deal.
Agreed. That's how Amway recruiters gave Amway a bad reputation. There's hoards of stories of people tricked into attending a meeting, or outright lies and deception.