Is Amway A Scam?

[icerat]

So, would you agree with this? "Amway is effectively an opportunity for someone to start their own retail product business, without the tremendous overhead usually associated with starting one."

Yes, that's well put.

However, I also understand that there is more to it than that. I hear there is a whole MLM angle associated with it. Would you be able to justify that particular aspect on its own merits? Why would I, as a retail entrepreneur want to be part of an MLM?

MLM is really no different from a fixed location retail establishment opening new stores.

If these products were so good, why would they need the convoluted system of Amway to sell them?

(1) I don't think it is convulated, though I think it does get explained in a convulated way sometimes
(2) Contrary to popular belief, no product "sells itself". Products sold through the direct sales channel typically benefit from having 1 on 1 or small group presentations that more clearly define and demonstrate the features and benefits of a product, something that can be very difficult (and expensive) to do on a shelf or through mainstream advertising.

Also: I could sell products that are just as awesome the traditional way. Yes, it would cost more. But, it still means that the "high quality products" argument is not a very strong or unique selling point.

It is when you include the "exclusive" part. One reason why people I introduced to the products more than a decade ago are still buying them from me (via my automated website) is because they can't get them anywhere else.

Amway could be seen as an opportunity to tap into all of that infrastructure for very little cost.

If you agree that is the case, you SHOULD be defending Amway more along those lines. Push forward the positive; and cut out all the wordy, elaborate defensive maneuvers!

All of those points are irrelevant if people don't believe them, or think the model works in some bizarre way.

Believe me, those kind of points are what's presented when promoting the business opportunity. Contrary to the beliefs of some, that's not why I'm talking about Amway on this thread. I'm not here to promote Amway. I'm debunking irrational beliefs that fly in the face of evidence. That's kind of what JREF is about, no?

This, I think, is a BIG ONE.

If I were serious about considering joining Amway, I would certainly want this bullet point to be delineated into more specific details. What are the key things I am allowed or not allowed to do? As compared to a more conventional retail business.

Mass market advertising is the main one. In some markets there are also limitations in promoting competitor business/products.

And, how does the MLM structure fit into those?

On the con side there are things like rules around cross-line promotion.

On the pro side, the MLM compensation structure allows you to continue to be compensated for the sales volume you helped generate even if one of your customers (wholesale or retail) develops big enough volume to start dealing directly with the manufacturer.

Typically in traditional business if one of your customers starts ordering in big enough volumes they can bypass you and you lose their business. In MLM you still get commissions of some variety.

The US contract and associated rules are available online for perusal.

This is true for any business.

In general, I agree, but it's closer to a sales job than say a programming contract.

 

[icerat]

Good enough. How should I describe those who are running scams to distinguish them from those who are not and somehow avoid impugning Amway itself? It sounds like I have been making the error of thinking IBOs are a part of Amway, rather than Amway being a corporation which merely sells stuff to IBOs who may be perpetrating scams.

Forgot the "independent" part so quickly?

Would it be proper to say that Amway is ethical, but those who sell Amway products and recruit others to sell the products might very well be con-men?

I even wrote a post that said as much - Amway is not a scam but you can still be scammed

Is it even possible to deal with Amway directly and avoid any chance of being taken advantage of?

Everyone who registers can deal directly with Amway. While you need to be "sponsored" in, there is no obligation to have any contact at all with your sponsor or their upline.

 

[Joecool]

Icerat would be better off defending someone's corn field with all the strawmen he's erected. He claims that "his" group operates above board. That's he's never seen any of the unethical behavior that is posted all over the internet and this very thread.

That is a stark contrast to the reality. Back in 1983, the owner of Amway made a famous speech called "Directly Speaking" where he said the tools business was likely an illegal pyramid and that IBO's buying all the Amway products instead of selling them was wrong. But Amway did not sanction these tool groups as they could adversely affect Amway sales. Amway has not created some cosmetic attempts to clean up the mess. If nothing else, it gives people like Icerat something to point to in defense of Amway.

The reality is that most presentations are about "owning your own business". It's about dreams and I still remember seeing an Amway presentation where the speaker (A diamond) was introduced as one of the richest men in the US (Top one tenth of one percent in income). The speaker talked about his new Mercedes and how he wakes up when he wants to while the rest of us have a J-O-B.

You can't go diamond without sponsoring downline. I have never heard of or seen someone paraded around who made a fortune simply by selling Amway products. You need to recruit Amway skirts the law by not compensating directly for recruiting but the bottom line is that recruitment is high priority.

They prey on the needy and gullible. Uplines tell you to look for people in need because they are most open to opportunities. It can't be that all these folks cannot or will not do the work to succeed. More likely they get in and test the waters, or try really hard but see that the Amway opportunity is truly futile and useless and quit. Or maybe they recognize it before making an effort and end up doing nothing. That would explain the poor success rate in Amway. Icerat is indeed cherry picking his stats. Else I could say that nearly 100% of people who picked the right numbers won the lottery.

There's no other way to describe how many/most Amwayers operate other than to say it's a scam.

 

[dudalb]

ANd I would like to know why Amway products.pretty much personal health items... are better then stuff I can get much,much cheaper at Target or my local grocery store....

 

[icerat]

ANd I would like to know why Amway products.pretty much personal health items... are better then stuff I can get much,much cheaper at Target or my local grocery store....

Amway makes somewhere approaching 500 products. Care to be more specific?

 

[Joecool]

Quote:
However, I also understand that there is more to it than that. I hear there is a whole MLM angle associated with it. Would you be able to justify that particular aspect on its own merits? Why would I, as a retail entrepreneur want to be part of an MLM?

MLM is really no different from a fixed location retail establishment opening new stores.

Total BS. We are talking about Amway so let's examine the differences. Retailers have actual customers. Amway would practically close their doors without their own sales force buying most of the products.

Retailers don't recruit other retailers so they can make money off them and sell them training.

Retailers, when seeking to find business partners don't have to obfuscate and make deceptive claims. They typically have a profit loss statement.

Retailers can market and advertise as they please. Amway IBO's are restricted by Amway's rules which inhibit sales.

Retailers typically look at demographics before opening an establishment. Amway IBO's would sponsor all their neighbors if they could because the majority of their sales are not to customers but to themselves.

Lastly, lower overhead for Amway IBOs most certainly doesn't translate to lower prices for Amway products.

 

[Wowbagger]

MLM is really no different from a fixed location retail establishment opening new stores.

Okay, for my own arguments' sake, I will buy that... for a little while...

But, what if I'm not interested in opening "new stores"? What if I believe in Amway's products and just want to buy a bulk quantity of them, then resell them? What is stop me from doing that?

Actually, one thing that might stop me is that I'm not allowed to advertise my business, at least not without their approval. Why is such a restriction in place? Seems, to me, like a tactic to force IBOs to funnel their products through other IBOs.

(2) Contrary to popular belief, no product "sells itself".

If Amway's products are soooo exclusive and of such high quality, why don't they sell them on the open market, where they have a chance to be sold without the MLM infrastructure behind them?

It sounds like IBOs need to be convinced that their products are exclusive and high quality, so they would be willing to sell them. Normally, word-of-mouth can do the job effectively... if it is truly a superior product, that is.

If I was going to start an Amway business, I would be more confident in the products if I knew they could sell well in a more open market, I think.

Products sold through the direct sales channel typically benefit from having 1 on 1 or small group presentations that more clearly define and demonstrate the features and benefits of a product, something that can be very difficult (and expensive) to do on a shelf or through mainstream advertising.

But, what if I'm not interested in direct sales, or small group demonstrations.

If I thought the products were so good, I would hand out free samples, and let the people and the press spread the word!

Wide-scale sample giving is probably more expensive than small group presentations, of course. But, if the product is soooo good, I should be able to make up for that expense with sales.

It is when you include the "exclusive" part. One reason why people I introduced to the products more than a decade ago are still buying them from me (via my automated website) is because they can't get them anywhere else.

Can you give me some examples of worthwhile exclusive products from Amway, that I can't get anywhere else?

Believe me, those kind of points are what's presented when promoting the business opportunity.

Okay, but there seems to be something more than that, at stake, here.

Providing a program to allow small business to tap into a large, strong logistical infrastructure is all well and good. But, the price you pay seems to be your freedom: You are locked into an MLM structure, whether you are interested in "opening new stores" or not. Right?

It seems absurd that the first priority of a new business owner would be to find more people to be business owners in the same field, right off the bat. What if I just want to sell the products?

Also: Why doesn't Amway sell straight subscriptions to their superior logistics infrastructure, without the MLM element in it? If it is soooo good, it should almost sell itself, as well!

Mass market advertising is the main one. In some markets there are also limitations in promoting competitor business/products.

Why do they restrict advertising like that?

the MLM compensation structure allows you to continue to be compensated for the sales volume you helped generate even if one of your customers (wholesale or retail) develops big enough volume to start dealing directly with the manufacturer.

Typically in traditional business if one of your customers starts ordering in big enough volumes they can bypass you and you lose their business. In MLM you still get commissions of some variety.

So, this is the big advantage of MLM: Your own customers can't compete with you without them giving you a percentage of what they earned.

This implies that, if I started a IBO, I would have to give over a percentage of what I earned to someone above me. Yes?

So, what if:

1. I'm not interested in giving someone above me a chunk of what I earn. I just want to sell the superior, perhaps even exclusive, products that I would believe in.

And,

2. I'm not worried about large customers bypassing me, and buying from manufacturers. Those would be few and far between, and I would have plenty of other customers to sell to.

Bonus question:
What if I thought of ways to innovate the products, myself? I understand Amway has its own R&D department. But, what if I discovered something they missed? What would be the procedure for doing that?

I'm not here to promote Amway. I'm debunking irrational beliefs that fly in the face of evidence.

Well, that's good. So far, you have not been promoting Amway, anyway. So no worries, there!

In general, I agree, but it's closer to a sales job than say a programming contract.

It sounds like your programming contracts are only made with astromech droids, then.

 

[icerat]

But, what if I'm not interested in opening "new stores"? What if I believe in Amway's products and just want to buy a bulk quantity of them, then resell them? What is stop me from doing that?

Nothing.

Actually, one thing that might stop me is that I'm not allowed to advertise my business, at least not without their approval. Why is such a restriction in place? Seems, to me, like a tactic to force IBOs to funnel their products through other IBOs.

To help provide a more level playing field for distributors. At least that's my understanding of the reasoning behind it.

If Amway's products are soooo exclusive and of such high quality, why don't they sell them on the open market, where they have a chance to be sold without the MLM infrastructure behind them?

This was discussed extensively in FTC vs Amway, you may want to read it.

It sounds like IBOs need to be convinced that their products are exclusive and high quality, so they would be willing to sell them.

It sounds like you're just making stuff up for the sake of argument

If I was going to start an Amway business, I would be more confident in the products if I knew they could sell well in a more open market, I think.

Many of them are the world leading sellers in their categories. That speaks for itself I think.

But, what if I'm not interested in direct sales, or small group demonstrations.

Then clearly a direct sales business is not for you

If I thought the products were so good, I would hand out free samples, and let the people and the press spread the word!

You are free to do so

Can you give me some examples of worthwhile exclusive products from Amway, that I can't get anywhere else?

All the Amway brands are exclusives, obviously.

But, the price you pay seems to be your freedom: You are locked into an MLM structure, whether you are interested in "opening new stores" or not. Right?

Nope, if all you want to do is single level sales you are free to do so. Many do. I did the first time I joined.

It seems absurd that the first priority of a new business owner would be to find more people to be business owners in the same field, right off the bat. What if I just want to sell the products?

So just sell the products, like I did. I disagree with your "first priority" claim by the way. Indeed in some markets you can't even sponsor people until you already have customer sales

Also: Why doesn't Amway sell straight subscriptions to their superior logistics infrastructure, without the MLM element in it? If it is soooo good, it should almost sell itself, as well!

They do sell their logistics infrastructure - Access Business Group.

Your line of question indicates you seem to think people are somehow forced to engage in network building. They aren't. Indeed, most don't.

So, this is the big advantage of MLM: Your own customers can't compete with you without them giving you a percentage of what they earned.

Not the way it works. Not unless you think offering your customers volume discounts is making your customers pay you a percentage of what they earned

This implies that, if I started a IBO, I would have to give over a percentage of what I earned to someone above me. Yes?

No. If anything it works the other way around

What if I thought of ways to innovate the products, myself? I understand Amway has its own R&D department. But, what if I discovered something they missed? What would be the procedure for doing that?

Talk to Amway obviously. One of their best selling product lines is XS Energy drinks, which was developed by some IBOs (and is owned by them) and presented to the corporation to see if they would be interested in distributing it.

 

[tyr_13]

The University of Westminster study I linked to earlier provides pretty clear evidence that few "family and friends" feel like they've been "guilted" in to anything.

Can you provide evidence to counter the University of Westminster research?

I don't see where the study said any such thing, mind citing it?

Your claims of inventory loading are serious. The FTC spent years investigating it and found no evidence it was true.

Can you provide evidence to counter the FTC findings?

They found no laws were broken, care to cite where it says what you say?

The results of the Quixtar class action settlement provide pretty clear evidence that very few IBOs feel they were misled or scammed or lost money.

Can you provide evidence to counter the settlement outcome?

Again, legal breaches. And why say IBO? If that doesn't mean customer then it's completely irrelevant to what I said. Cell phone people scam others all the time, but that doesn't mean illegal scam.

Overall I find Amway products good value.

Which products have you tried that you don't think are good value?

The jewelry, soap, toothpaste, and all the other crap my friend gave me when she was stuck with it, unable to sell it, even though the person who recruited her and the 'educational' material he gave her advised, and she cut her losses when she moved away.

I have to hand it to you, you're very good at deflection. That's probably a useful skill for Amway.

 

[icerat]

I don't see where the study said any such thing, mind citing it?

Try reading it, the whole paper is about attitudes to direct selling

They found no laws were broken, care to cite where it says what you say?

Try reading it, there is extensive discussion on inventory loading, which was a key issue.

Again, legal breaches. And why say IBO? If that doesn't mean customer then it's completely irrelevant to what I said.

As per earlier post, the term is used for convenience as Amway US uses it. It incorporates anyone who registers, for whatever reason, and no matter what they actually do. I think they should change it too.

The jewelry, soap, toothpaste, and all the other crap my friend gave me when she was stuck with it, unable to sell it, even though the person who recruited her and the 'educational' material he gave her advised, and she cut her losses when she moved away.

(1) Why did she buy it if she didn't have orders for it?
(2) Why didn't she just give it back to Amway for a full refund?

 

[Wowbagger]

Nothing.

So, the whole MLM aspect of Amway is optional, eh?

I could just join Amway as an IBO, buy a lot of products, sell what I can, and Amway will buy back what I can't sell. And, that's all I would do. Does that sound like a plausible course of action?

To help provide a more level playing field for distributors. At least that's my understanding of the reasoning behind it.

What if I am not interested in a "level playing field". I would own a business, dang it, and would want to compete on grounds of business and marketing savvy!

Instead, it sounds like a tactic to hamper sales, so that you are inclined to sell to other IBOs. But, perhaps you can explain why I am wrong about that?

This was discussed extensively in FTC vs Amway, you may want to read it.

Can you summarize, concisely, why Amway's superior products are not sold in a more open market?

It sounds like you're just making stuff up for the sake of argument

My main argument assumes the products are terrific. Though, I haven't seen any actual evidence of that, yet. I have been taking your word for it, for the most part.

Many of them are the world leading sellers in their categories. That speaks for itself I think.

That doesn't mean much. Selling well in an open market means a lot more about the marketability of that product, than selling well within the confines of a closed system dependent on selling those very products, often (but not always) amongst themselves.

Then clearly a direct sales business is not for you

I would like to see Amway put more effort into communicating exactly who Amway is for, or is not for.

All the Amway brands are exclusives, obviously.

"Exclusive" does not mean "worth having". Can you give me examples of Amway items that are worth having, that no one else offers?

I disagree with your "first priority" claim by the way. Indeed in some markets you can't even sponsor people until you already have customer sales

Then it seems like the MLM factor gets a lot of hype, but is largely unhelpful.

Perhaps "first priority" was not accurate, but I see an awful lot of pressure to sponsor people, with little benefit to the general system.

The main reason to do sponsors is what? Being able to continue to sell to your customers, even if they would grow too large to buy from you in a normal market?

I wonder how often that becomes a real issue to deal with.

They do sell their logistics infrastructure - Access Business Group.

I didn't know about Access Business Group, before.

I wonder if one can do an Amway-like business in a peace-meal manner: Buying various Amway-related services and products, ala carte, but without the rules and restrictions of being an Amway IBO. Hmmm......

Not the way it works. Not unless you think offering your customers volume discounts is making your customers pay you a percentage of what they earned.

You are making a profit off of those customers you sell to, even if it is a volume discount, right?

What prevents them from buying direct from Amway Corp., instead of from you?

If I wanted to start an IBO, would I need someone to sponsor me to buy from? Or, could I just go in and buy directly from Amway without one?

Talk to Amway obviously. One of their best selling product lines is XS Energy drinks, which was developed by some IBOs (and is owned by them) and presented to the corporation to see if they would be interested in distributing it.

What if either: Amway isn't interested, or I decide to keep the "secret sauce" to myself?

 

[tyr_13]

Try reading it, the whole paper is about attitudes to direct selling

I'm not about to go proving your claim of what the paper says.

Try reading it, there is extensive discussion on inventory loading, which was a key issue.

Oh was it? Was it what I was postulating? No. So...

As per earlier post, the term is used for convenience as Amway US uses it. It incorporates anyone who registers, for whatever reason, and no matter what they actually do. I think they should change it too.

Which means it is unrelated to what I said.

(1) Why did she buy it if she didn't have orders for it?
(2) Why didn't she just give it back to Amway for a full refund?

Because she was advised to, and she had had it for too long a time I'm told.

 

[KatieG]

I have met people living comfortably off of Amway but I worked in market research for years so had access to private financial data from 1000's of people. In that time I met one person off the street that made it big in Amway. I generally equate working for Amway with either being on disability or being secretly unemployed. There are tons of unemployed people who say they are working in these multilevel companies. It can be a good cover for them I guess if someone doesn't know I guess

WTF? I've been on disability for almost 4 years and see many people at physical therapy who are on disability and don't know a single one who does Amway! Is this some speculation on your part or problems with people on disability?

Don't know about unemployed, under the table kind of thing, don't know any of those types of people.

 

[icerat]

So, the whole MLM aspect of Amway is optional, eh?

I could just join Amway as an IBO, buy a lot of products, sell what I can, and Amway will buy back what I can't sell. And, that's all I would do. Does that sound like a plausible course of action?

Sure, though i'd probably only buy a few products and then order as required. Though I suppose you save on shipping with a big order

What if I am not interested in a "level playing field". I would own a business, dang it, and would want to compete on grounds of business and marketing savvy!

There's pluses and minuses, that's a minus.

Instead, it sounds like a tactic to hamper sales, so that you are inclined to sell to other IBOs. But, perhaps you can explain why I am wrong about that?

Can you summarize, concisely, why Amway's superior products are not sold in a more open market?

Read FTC vs Amway. They covered it better.

I would like to see Amway put more effort into communicating exactly who Amway is for, or is not for.

You don't think just letting people give it a go, risk free, so they can decide themselves is a better option?

"Exclusive" does not mean "worth having". Can you give me examples of Amway items that are worth having, that no one else offers?

Depends on the individual of course. The Nutrilite range is fairly unique. So is eSpring. Artistry is not unique but tends to be quite a lot cheaper than competitors in the same class. The LOC range usually works out a lot cheaper than other environmentally friendly competitors. Other things are more a matter of taste. I've never found an energy drink I like except XS. I love the smell of SA8 washing detergent, and think it's healthier. The toothpaste I just prefer the taste and texture of. Here in Europe we have a range of italian pasta and pasta sauces. Not unique but for restaurant quality products they're significantly cheaper than competitors.

Perhaps "first priority" was not accurate, but I see an awful lot of pressure to sponsor people, with little benefit to the general system.

Most people don't sponsor anyone, so your alleged "pressure" can't be too much.

The main reason to do sponsors is what? Being able to continue to sell to your customers, even if they would grow too large to buy from you in a normal market?

time and network leveraging

You are making a profit off of those customers you sell to, even if it is a volume discount, right?

Only if I order in larger volumes, and get a larger volume discount. Then I pocket the difference. Pretty much just like "traditional" distribution.

What prevents them from buying direct from Amway Corp., instead of from you?

If I wanted to start an IBO, would I need someone to sponsor me to buy from? Or, could I just go in and buy directly from Amway without one?

Apart from some open stores around the world (one in New York now I believe), you need a membership or customer number to shop from Amway (the volume from stores is still allocated to IBOs). That number will be appropriately linked to whoever introduced you to the products.

If you don't have a sponsor, one will be allocated for you. They provide additional customer support, if you want it. You can register on Amway.com and be allocated a sponsor but say you don't want to be contacted.

What if either: Amway isn't interested, or I decide to keep the "secret sauce" to myself?

What if you decide you want to row a dinghy to hawaii instead? Go ahead.

 

[icerat]

I'm not about to go proving your claim of what the paper says.

So you're not going to bother reading the paper that says something different to what you claim it says?

Oh was it? Was it what I was postulating? No. So...

Yes, you were talking about inventory loading. Unfortunately you seem ignorant on the subject so don't even know enough to know what you are talking about.

Because she was advised to, and she had had it for too long a time I'm told.

So it appears she inventory loaded, a violation of Amway's rules, and clearly a stupid thing to do even without knowing the rules. She could have returned within 6 months for a full refund, even if used, or if it's unused product she could return it pretty much any time for a partial refund. She chose to purchase inventory she did not want herself and had no orders for, and she chose not to return it. Then she complained? I gotta say, I ain't feelin the sympathy. Then again, it might just be you whining.

 

[marplots]

So it appears she inventory loaded, a violation of Amway's rules, and clearly a stupid thing to do even without knowing the rules. She could have returned within 6 months for a full refund, even if used, or if it's unused product she could return it pretty much any time for a partial refund. She chose to purchase inventory she did not want herself and had no orders for, and she chose not to return it. Then she complained? I gotta say, I ain't feelin the sympathy. Then again, it might just be you whining.

Wow, that's a lot of mistakes she made.

From Amway's site:

As you build your business, you will likely have some questions. Your sponsor has a vested interest in mentoring you and helping you succeed. As your network grows, other Independent Business Owners can become a valuable source of support, too.

The system didn't seem to work in her case. But, when things go wrong, we just point out that "independent" applies. So that's nice.

 

[AdMan]

The more I read it, it's the same old garbage, pushed by the same old shill, again and again and again...

 

[marplots]

The more I read it, it's the same old garbage, pushed by the same old shill, again and again and again...

I'm aghast. Don't you want to be independently wealthy and have plenty of time to spend with your kids?

Perhaps you aren't getting enough training on how to build a successful business. We can help you there.

From the Amway site:

Some successful Independent Business Owners share their knowledge of success through the creation and sale of Business Support Materials.* These may include DVDs, CDs, books, websites, seminars, and business conventions. The intent of these optional materials is to help Independent Business Owners succeed in reaching their goals.

*Amway does not compensate Independent Business Owners for Business Support Material (BSM) sales, nor does Amway receive compensation for BSM sales.

 

[marplots]

How to make money with Amway?
Buy the products at auction and sell them on ebay:
http://www.mlive.com/business/west-michigan/index.ssf/2012/06/ebay_seller_surprised_to_be_su.html

But be careful or you might be sued.

 

[icerat]

The system didn't seem to work in her case. But, when things go wrong, we just point out that "independent" applies. So that's nice.

So if you go down your local store, buy something, realise it wasn't what you wanted, and don't return it - it's the stores fault?

Yup, that's pretty much the way MLM critics think it is.

Nobody is responsible for their own decisions. They're all somehow miraculously forced in to doing things - I can only surmise through some kind of psychic powers! And the companies have managed to get away with it by using these same psychic powers on governments around the world!

That's it, damn Illuminati!

Or maybe you're just wrong.

Geez.