Amway TV ad

[Nogbad]

for the numerous posters who ignored the earlier links that explained what a pyramid scheme actually was, I'd be interested in your explanations of *why* you think Amway is a pyramid scheme?

It seems to be based on the idea that people earn come kind of compensation or reward based at least partly on the efforts of folk "lower" in the distribution heirarchy. Given this same setup exists in virtually any heirarchy, whether it be a company or other organisation, or traditional distribution, do you folk consider all heirarchical organisations to be "pyramid schemes"?

It is a pyramid because of the maths involved. In order to be up line one has to recruit down line and they turn have to recruit down line. Even someone competent in Standard Grade maths can determine that this is not a practical proposition for those a few links down the chain. As far as I could make out the couple that presented to us also bought their presentation kit from Amway.

If the products were the primary rational for the business and they are as good as claimed then people would know about them and seek them out.

All businesses are hierarchical but the income of the business is not determined by the numbers recruited in to sell but rather the optimum number of units shifted ideally keeping the supply chain as streamlined as possible. Amway is primarily about numbers of people not products (although it does have products). Some pyramid schemes didn't even bother with products and were rightly blasted as scams pure and simple. The presentation I was given extolled the benefits of joining up, the Kirby presentation which also happened back in the early 80s extolled the product. There is a big difference.

As a student at the time I was looking for a part time job, needless to say, I didn't join Amway but gave the really nice Kirby presenter the number of a wealthy older relative who did buy one.

 

[fls]

And you're right, a junior high student could come up with a lot of what I've said, because it's that obvious and that well known. Even a momentary effort can find a deal of research talking about declining nutrient content in plants and the poor eating habits of most people today, and increasing problems of nutrient depletion or deficiency.

Here's a quick summary article of some of the research on declining nutrient content of food due to modern farming practices. Little more than logic and basic biology of is needed to predict this, yet on this forum it's been denied it's happening. I have papers from the US, Canada, Australia, UK, Denmark, and Sweden all with similar findings - the nutrient content of food is decreasing. It's not rocket science, particular with regards mineral content. The minerals come from the soil, if it's not being replaced, how does it get in the plants? Magic? And what about anti-oxidants and other phytonutrients? If the plants use them to protect against disease, and they no longer need to do this because we protect them .... what does evolutionary theory say will happen to production of these substances? Again, 100% predictable.

It also requires little more than logic and basic knowledge to understand that for example, if people eat less fish and spend less time in the sun or getting UVB exposure, then Vitamin D levels will likely decrease. It's 100% predictable, yet the constant mantra is that there's no problem with vitamin deficiences. A mantra that ignores the overwhelming research.

It does not help your credibility that you have characterized what I and others have said as the opposite of what was said.

And then there's the little more than reactionary obsession about "over-priced vitamins" that smacks of bias and intellectual laziness. The research is overwhelming that diets rich in fruit and vegetables are healthier, and there's also an awful lot of research indicating that synthetic vitamins don't seem to to do much. But increase dietary intake of fruit and vegetable nutrients with the aid of a plant concentrates? Oh no, waste of money! Just buy the cheap synthetics! Please ... where's the logic in that?

Foods contain nutrients of varying amounts. A balanced diet provides a more than adequate amount of those nutrients, but taking into consideration dietary habits, trends in the variation of nutrients, individual characteristics and social trends, some people may not obtain an adequate amount of specific nutrients. In addition to addressing each of those factors, it is reasonable for an individual to add to their nutrient intake so as to obtain an adequate amount. It has been demonstrated that one way this can be achieved easily and cheaply is by taking generic vitamin pills.

Your "plant concentrates" are either expensive food or expensive vitamins. You are asking us to either take them instead of simply taking in more fruits and vegetables, or you are asking us to take them instead of cheaper vitamin pills. The expense would be worth it if they provided more benefit than either of those strategies. Simply show us the evidence for either.

It is probably obvious that I am biased against the idea of taking a pill as a quick fix. I would rather that people simply eat an apple or carrot instead of popping a pill, but I realize that there may be more compliance with the latter. Although I have to say that you seem to put a helluva lot of effort into avoiding a balanced diet - far more than I put into maintaining a balanced diet. Why do all that research and why get involved with using Amway products when all you have to do is throw a few more vegetables and fruits into the shopping cart? Plus, I'd rather spend my money on yarn or multi-tools or books than on pills.

Linda

 

[Skeptic]

Yeah yeah yeah -- it's not vitamin C tablets, it's "organic plant concentrates". Gee. So why do they actually say it is "Vitamin C with broader benefits" on the product's own home page? Oh, I'm sure those squiggly lines in the graph -- it retains some of the vitamin for 30 minutes! -- are worth that extra $50.

Sorry, bud. Vitamin C is vitamin C. It can be made in the factory for $3.95 per 100 (or less), or it can cost $1,000,000 a pill, be delivered microgram by microgram into the pill by deaf-mutes using ancient tibetian rituals that only collect the vitamin from rare plants that grow only on the pubic hair of virgin silkworms. The molecules don't care.

Besides, once more: it doesn't cost an extra $50 because it is "natural" or "special" or "organic". It costs the extra $50 because that's the commission that is paid to the uplines.

 

[fls]

Why didn't you pick say the Daily Multivitamin? Didn't like the price comparison? Why didn't you pick Artistry and compare with it's competitors? Didn't like the comparison?

Nutrilite Daily (90 tablets), 180 tablets, list price $22.95 - 12.75c per tablet
* includes naturally sourced alfalfa, watercress, parsley, and acerola cherries and provides 100% or more of the RDA for 24 essential vitamins and minerals
Centrum Advanced Formula 325 tablets, list price $35.95 - 11.06c per tablet
* no organic concentrates, significantly less of many essential vitamins and minerals.

I'm willing to pay 1.69 cents more per tablet for a better product and so are many others. If you're not, that's your prerogative.

That's why I keep saying "generic". Costco's multivitamin tablets are 3 cents each.

I am willing to pay more for a better product. That's why I keep asking you for evidence that they are better.

Linda

 

[Furcifer]

The whole "is it legal?" argument is besides the point. Whether Amway is legal or not, it is simply a pathetic pyramid scheme where only the top 0.1% or so make money which is funneled to them by the 99.9% of the suckers below them.

lol, that's it in a nutshell. Direct marketing is supposed to save the consumer money by cutting out the middleman.

I'd like see someone show how Amway resembles the direct marketing business they claim to be.

 

[icerat]

It is a pyramid because of the maths involved. In order to be up line one has to recruit down line and they turn have to recruit down line. Even someone competent in Standard Grade maths can determine that this is not a practical proposition for those a few links down the chain.

This exact same critique applies to virtually all product distribution systems. Am I getting the impression you believe there's some kind of "endless chain"? This is a misunderstanding of the business model. As established in FTC vs Amway in the 70s, the distribution chain, and levels of profit sharing is of similar length to other product distribution chains. More than 70% of final consumers are with 4 "links" of Amway, 99% within 8. Similar length "chains" exist in traditional business. The "end" of the chain is determined the same way as in traditional business - there comes a point where your purchasing volume is so great you'd be better off dealing directly with the supplier/manufacturer yourself.

If the products were the primary rational for the business and they are as good as claimed then people would know about them and seek them out.

By this logic, if someone invented a true elixir of immortality, but nobody knew about it, then it doesn't work. Sorry, but that makes no sense at all. As it happens, people DO seek them out. As already mentioned, 25% of folk who stop being "agents" continue as customers - and that's in the context of understanding that 50% of folk who join never place an order in the first place - so they never tried the products.

All businesses are hierarchical but the income of the business is not determined by the numbers recruited in to sell

It's not determined by this in MLM or Amway either. You're thinking of pyramid schemes, were that does apply.

but rather the optimum number of units shifted ideally keeping the supply chain as streamlined as possible.

Precisely the same applies with Amway, its all about number of units shifted.

Amway is primarily about numbers of people not products (although it does have products).

As I stated earlier - recruit a million people, sell no products, make no money. Recruit nobody, sell lots of products, make lots of money.

On what basis can you claim Amway is "primarily about numbers of people"?

Some pyramid schemes didn't even bother with products and were rightly blasted as scams pure and simple. The presentation I was given extolled the benefits of joining up, the Kirby presentation which also happened back in the early 80s extolled the product. There is a big difference.

So if you instead happened to have gone to one of the many meetings promoting the products, then all of a sudden the exact same business model, with no changes at all, is suddenly not a pyramid? So if a friend is opening up a store to sell music, and he approaches you to be a business partner, then his business model is flawed, but if he approaches you to buy CDs, it's ok?

 

[icerat]

That's why I keep saying "generic". Costco's multivitamin tablets are 3 cents each.

I am willing to pay more for a better product. That's why I keep asking you for evidence that they are better.

I have a 90 minute seminar on health & nutrition, with supporting references available, I've no intention of giving it here - which I'm sure you're glad to hear!

This is the idea behind the business model. The product "story" cannot easily be told through mass marketing, so it's told 1-on-1 and in small groups. That's what we get paid for - well, creating results if we do it well.

 

[Furcifer]

I know there's little point in mentioning it again, since you've clearly ignored it every other time .... WE DON'T GET PAID BASED ON THE NUMBER OF PEOPLE RECRUITED.

If we did, then it would be a pyramid as you suggest.

Do you or do you not get a percentage of the sales made by the people you recruit? If you do then it's a pyramid scheme.

 

[icerat]

Sorry, bud. Vitamin C is vitamin C. It can be made in the factory for $3.95 per 100 (or less), or it can cost $1,000,000 a pill, be delivered microgram by microgram into the pill by deaf-mutes using ancient tibetian rituals that only collect the vitamin from rare plants that grow only on the pubic hair of virgin silkworms. The molecules don't care.

Did you read what I wrote? It's not just Vitamin C. Vitamin C is ascorbic acid, that's what you get in Centrum. It's made from Corn syrup, acetone, and hydrocholoric acid. Ascorbic acid has important roles in the body. If that's all you want, by all means stick with Centrum or Costco. I believe, and the research supports that belief, that fruit and vegetables high in C contain other important substances, not just ascorbic acid.

 

[icerat]

Do you or do you not get a percentage of the sales made by the people you recruit? If you do then it's a pyramid scheme.

Clearly you've decided on your own definition of pyramid scheme. Under your definition, I agree, it would seem that Amway, and indeed virtually any other business, is indeed a "3bodyproblem pyramid scheme".

Since you're using a different definition to that used in business and law, I'd request you stop commentating here in order to prevent further confusion, or at least preface your use of the term "pyramid scheme" with info clarifying it's your definition and that definition is different to the one normally used.

 

[fls]

I have a 90 minute seminar on health & nutrition, with supporting references available, I've no intention of giving it here - which I'm sure you're glad to hear!

You could simply provide the citations for your references. I can look them up myself.

This is the idea behind the business model. The product "story" cannot easily be told through mass marketing, so it's told 1-on-1 and in small groups. That's what we get paid for - well, creating results if we do it well.

That is my impression as well - that the value in your business model is its ability to capture a particular population.

Linda

 

[Nogbad]

Business is pretty simple really, bits in, bits out and add value along the way.
The presentation I attended was something other and a bit strange to boot. I have a recollection of recruiting 7 people. If such a process were successful, my country's population would not support 8 links (every man woman and child and a few pets signed up by then). Therefore logically not everyone was going to get 7 and the linked benefits would not accrue. One could of course just sell the product - a perfectly reasonable thing to do. However, I don't know anybody that uses Amway products or talks about Amway products.

That said, I have no strong issue with it. I was merely reminiscing about my experience more than 25 years ago. In truth I have never encountered the company or seen any of its products since. I did come across someone trying to sell Herbal Life a while back which I thought a similar sort of idea - but different product range. Perhaps Amway did sell vitamins back then but I mostly recall washing powder and the like.

Superdrug do a very reasonably priced range of vitamins and herbal extracts if people are into that sort of thing. I prefer an apple myself Edit: and grapes - I love grapes.

 

[icerat]

You could simply provide the citations for your references. I can look them up myself.

For reasons already discussed, the types of references you desire do not really exist.

That is my impression as well - that the value in your business model is its ability to capture a particular population.

All businesses have a target market, and generally require only a small percentage of that market to be very successful.

 

[Nogbad]

Clearly you've decided on your own definition of pyramid scheme. Under your definition, I agree, it would seem that Amway, and indeed virtually any other business, is indeed a "3bodyproblem pyramid scheme".

Since you're using a different definition to that used in business and law, I'd request you stop commentating here in order to prevent further confusion, or at least preface your use of the term "pyramid scheme" with info clarifying it's your definition and that definition is different to the one normally used.

That is not an unusual definition of pyramid selling.

Another more common model is the seller buying the products direct from the supplier (Amway) and selling them on. The seller keeping all the sales money (apart from taxes etc of course). There is no particular value added to the process by a chain of up line remuneration.

 

[icerat]

Business is pretty simple really, bits in, bits out and add value along the way.
The presentation I attended was something other and a bit strange to boot. I have a recollection of recruiting 7 people. If such a process were successful, my country's population would not support 8 links (every man woman and child and a few pets signed up by then). Therefore logically not everyone was going to get 7 and the linked benefits would not accrue.

What is shown in introductory business previews is generally a hypothetical model to get the idea across, they do not reflect how the business operates in the real world, which requires a deal more explanation, as well as tailoring to an individuals goals.

One could of course just sell the product - a perfectly reasonable thing to do. However, I don't know anybody that uses Amway products or talks about Amway products.

Now you know one. I haven't actively built an Amway business for a decade, but I still use the products. You probably also know others but don't know it. Seriously, out of the hundreds of people you know, how many of them do you know what shampoo, floor cleaner, supplements, cosmetics etc etc they use?

Perhaps Amway did sell vitamins back then but I mostly recall washing powder and the like.

Amway's founding grew out of a dispute within the Nutrilite company back in the 50s. Nutrilite as the US's first supplement company. Amway started with a concentrated organic cleaning product in 1959 and went on to add numerous other environmentally friendly cleaning products and it's what Amway became famous for. Over the years the competition in that arena increased, with other companies developing concentrates and jumping on the green bandwagon. While Amway still has those products and is very successful with them, if a company doesn't adapt to marketplace changes, it will fail. Amway bought out nutrilite in the 70s and through the80s and 90s developed that brand and the Artistry Cosmetics brand and they account for around two thirds of Amway's volume today.

 

[fls]

For reasons already discussed, the types of references you desire do not really exist.

So your claim that the supplements are better was not a claim based on evidence?

Linda

 

[Skeptic]

I believe, and the research supports that belief, that fruit and vegetables high in C contain other important substances, not just ascorbic acid.

Jeez. So take a multivitamin pill, then. Or some fibre. That'll cost you, say, another $4. Okay, then, to get the FULL effect of the Amway pill, you might have to spend $7, not $4. Sure makes it worthwhile to buy it for an extra fifty....

Oh wait, don't tell me -- Amway's super-duper seeekrit formula is unique. Only it gives you what you really need. That's why it costs an extra $50, right?

I suppose all these other products are also just special. Like the month's supply of vitamins & minerals for the low, low price of $72, or the "concentrated fruit and vegetable tablets" for $40.

Browse around that web site -- get an idea of just what "great deals" Amway offers. Other SPECIAL products include, for instance, the $60 makeup kit, the $15 lipstick, $350 knife set (a steal at $60 a knife!), $55 scissors, $130 frying pan, and a few other choice "deals".

Practically the only products that are sorta-kinda reasonable -- just a tiny little 50%-100% markup from famous top brands, to say nothing about economy brands -- are either the cosmetic -- a field where prices are absurd from the start -- or items that cost next to nothing to manufacture, such as "sports drinks" or kiddie cold medicine.

Each and every one of those products is just sooooooooooooo SPECIAL it could not POSSIBLY have been made any cheaper.

Gotta pay that upline!

 

[icerat]

That is not an unusual definition of pyramid selling.

Depending where you are, "pyramid scheme" and "pyramid selling" are either the same thing or different things.

Another more common model is the seller buying the products direct from the supplier (Amway) and selling them on. The seller keeping all the sales money (apart from taxes etc of course).

I disagree here, I don't think manufacturer->salesman->consumer is "more common".

It ranges everywhere from manufacturer->consumer to an extreme of something like

manufacturer->jobber->transporter->exporter->transporter->importer->national distributor->jobber->transporter->regional distributor->transporter->wholesaler->transporter->retailer->consumer with each layer earning some kind of profit.

The latter is an extreme of course, and the first becoming more common, particularly with the advent of the internet, but most distribution is still somewhere in between.

There is no particular value added to the process by a chain of up line remuneration.

Yes there is ---> incentive marketing.

 

[icerat]

So your claim that the supplements are better was not a claim based on evidence?

That's not what I said.

 

[icerat]

Each and every one of those products is just sooooooooooooo SPECIAL it could not POSSIBLY have been made any cheaper.

Clearly we have somewhat different philosophies on business. I'll quote Sergio Zyman, former Chief Marketing Officer at Coca-Cola:

The sole purpose of marketing is to sell more to more people, more often, and at higher prices.

There's variants, you can go the low price, low margin, high volume path, ala costco/walmart, or you can go high price, lower volume, high margin path.

Which one to take is a business decision influenced by the particular products you've decided to market. I refer you to the "not walmart and don't want to be" blog I linked to earlier.