Amway TV ad

[Ferguson]

I don't think calling an MLM a pyramid scheme is so off-base. I call my car a lemon because it's always breaking down and stalling out. Some would say I'm not allowed to call it that because "lemon" has a legal definition which my car does not qualify for.
As far as I'm concerned, if it quacks like a duck, call it a duck, even if in court you have to call it a mallard.

 

[icerat]

That would be appropriate if your car did actually break down and stall out, however it appears to me that many folk are calling Amway, or MLM, pyramid schemes based on attributes they don't actually have.

What attributes do you believe Amway has, and that other businesses you don't consider "pyramids" do not have, that makes you consider the term is appropriate for Amway?

 

[Skeptic]

Clearly we have somewhat different philosophies on business.

Gee, I thought you said Amway is a great way to SAVE money? That's its products are competitively priced and usually lower than the competition? Now that I prove the opposite is true, suddenly I get a lecture why it is a "philosophical" necessity for them to charge such ridiculous prices. Frankly, I don't really care about the "business philosophy" that makes it, for some reason, necessary for a company's salesmen to sell a six-knife set for $350, a frying pan for $130, or a vitamin supplement bottle for $70. You can keep your philosophy, and I will keep my money and buy somewhere else.

I *do*, however, care about the fact that I can get equivalent (or better) products, without the hassle of having to find an Amway representative, let alone being harranged about how I must join Amway, since it is a "great opportunity", or wait for delivery... and all that from anywhere between 1/10th to 1/3rd or so of the price. Why is that? Is it because the companies that sell similar products so much cheaper are charities, out there to help the poor? Don't those companies care about maximizing profits? Well, they do, but they are REAL companies -- concentrating on selling products to consumers -- so they cannot afford to charge more than what the market will bear. Charging too much would lower their market share.

But Amway is not a real company. It cares nothing about selling products to customers. So it doesn't care what price the market charges for similar products, or how its high prices will effect its market share. In fact, it doesn't have a market share of actual customers -- nobody who isn't already in Amway ever buys those $130 frying pans or $70 vitamin bottles. It is a pyramid scheme, which only cares about moving money from the "downline" to the "upline" in the pyramid, by forcing the "downline" to buy these overpriced products so that the "upline" will divvie up the fat comissions.

 

[Skeptic]

icerat's views -- "Amway's products are cheap but we must charge five times as much as the market for philosophical reasons, and if you disagree you're a @#$!! socialist, so there" -- are best illustrated in this famous "Calvin and Hobbes" cartoon.

 

[Derwoods]

Icerat, since the vitamin C example isn't a good one, could you provide us with a few examples where you would stand behind your amway product in a price comparison to its established retail competition? I am assuming that there must be some more simple comparisons that don't require 90 min of everyone's time.

 

[icerat]

Gee, I thought you said Amway is a great way to SAVE money?

Gee, and you seem to be hallucinating. I never said any such thing.

That's its products are competitively priced and usually lower than the competition?

Yes, if you're already buying products of that category. Most people don't. You clearly don't. If you want to start buying better quality products it won't save you money, it will cost you more.

If you plan on just arguing with yourself, I'll go do something else.

In fact, it doesn't have a market share of actual customers -- nobody who isn't already in Amway ever buys those $130 frying pans or $70 vitamin bottles.

Clearly you are just interested in arguing with yourself. You ignore facts and statistics and just continue with your rant, reality be damned.

 

[icerat]

Icerat, since the vitamin C example isn't a good one, could you provide us with a few examples where you would stand behind your amway product in a price comparison to its established retail competition? I am assuming that there must be some more simple comparisons that don't require 90 min of everyone's time.

Simple comparisons are not easy because there's so much subjectiveness in judging value. If I think Pasta A tastes better than Pasta B, then I might be willing to pay more for Pasta A, up to a certain point. Even washing powder isn't so simple to judge. Do environment concerns worry you? What about health concerns from soap residuals in clothes? If all you want is clean clothes then a 50c bar of soap can do the job. If you have other concerns you're willing to pay more.

You can only really do "simple" price comparisons when comparing the exact some product.

The next best would be to compare something like the Artistry product range. Artistry has been independently judged (by Euromonitor) to be in the "prestige category" of cosmetics and skin care, along with companies like Clinque, Lancome, Loreal, Shiseido. So we have an independent judge, not someone trying to sell (or attack) the product, at least telling us what brands are competitors. You can still argue that one brand is better than the other, or one specific product from one company is better than from another, but at least we're comparing products in the same ballpark.

Do that comparison you'll find Artistry very competitive, sometimes cheaper, sometimes more expensive, depending on what product features you're after.

We're not trying to sell on price, we're trying to sell on quality. If your #1 concern is price, then Amway products are not for you.

 

[icerat]

icerat's views -- "Amway's products are cheap but we must charge five times as much as the market for philosophical reasons, and if you disagree you're a @#$!! socialist, so there" -- are best illustrated in this famous "Calvin and Hobbes" cartoon.

Skeptic, please stop putting words in my mouth. I never said Amway products are cheap. They are not.

Since you've chosen not to be honest in this discussion, I'll be ignoring any future responses from you.

 

[Skeptic]

Yes, if you're already buying products of that category. Most people don't.

Gee. I wonder why.

Perhaps their 300%+ markup over the market price has something to do with it.

Gotta pay that upline...

Icerat, since the vitamin C example isn't a good one, could you provide us with a few examples where you would stand behind your amway product in a price comparison to its established retail competition?

An old page comparing the "old" Amway products can be found here (scroll to the bottom and click on the links). Even in its "core" products -- laundary detergents -- Amway was 40% higher. In other products it was anywhere from 70% to 280% higher. And that was DISTRIBUTOR, "discount" price. Add an extra 20-50% to the "distributor" price for the "retail" price (not that anybody who isn't a distributor who wants to be in his upline's good book actually buys that stuff.)

I doubt things have changed. If anything they've gotten worse: there's a limit to how much you can charge for laundary detergent, but you can always claim your vitamins, supplements, or cosmetics are sui generis -- you know, "natural", "organic", "holistic", whatever -- and, therefore, cannot be "fairly compared" to all those "inferior" products which cost 1/10th as much.

As I said, gotta pay that upline.

 

[Skeptic]

To discover all that is wrong with MLMs, Amway included, this is probably the best page on the internet.

 

[icerat]

To discover all that is wrong with MLMs, Amway included, this is probably the best page on the internet.

I wasn't going to waste my time with you any longer, but I'll respond to this one. The VanDruff page is full of the same discredited crap you're spouting. Clearly you got much of your education from the likes of VanDruff and FitzPatrick. Len Clements does a thorough dismantling of VanDruff in his excellent anti-mlm zealots article

 

[fls]

Simple comparisons are not easy because there's so much subjectiveness in judging value.

Except that you were asked for comparisons for supplements, which are judged in terms of health outcomes, not in terms of subjective judgements in value.

Linda

 

[Derwoods]

Simple comparisons are not easy because there's so much subjectiveness in judging value. If I think Pasta A tastes better than Pasta B, then I might be willing to pay more for Pasta A, up to a certain point. Even washing powder isn't so simple to judge. Do environment concerns worry you? What about health concerns from soap residuals in clothes? If all you want is clean clothes then a 50c bar of soap can do the job. If you have other concerns you're willing to pay more.

You can only really do "simple" price comparisons when comparing the exact some product.

The next best would be to compare something like the Artistry product range. Artistry has been independently judged (by Euromonitor) to be in the "prestige category" of cosmetics and skin care, along with companies like Clinque, Lancome, Loreal, Shiseido. So we have an independent judge, not someone trying to sell (or attack) the product, at least telling us what brands are competitors. You can still argue that one brand is better than the other, or one specific product from one company is better than from another, but at least we're comparing products in the same ballpark.

Do that comparison you'll find Artistry very competitive, sometimes cheaper, sometimes more expensive, depending on what product features you're after.

We're not trying to sell on price, we're trying to sell on quality. If your #1 concern is price, then Amway products are not for you.

You say there are some Artistry products that are competitive and sometimes cheaper. Could you give an example of each that you feel could be easily supported without requiring such deep analysis of unquantifiable data such as prestige and environmental concern?

I am truly interested since I am amazed that a company with such a broad selection of products could put so much nuance into every single one. It would even be helpful to see an analysis of a more expensive product where the higher price be easily justified by a more expensive manufacturing process or more expensive/higher quality ingredients. I think we have already had general agreement that a 50 dollar premium for fancier vitamin C, while not illegal, is more than most would consider paying for the added value.

I realize you are wary of putting out just any product without a fair evaluation, but as someone who can give a 90 min seminar on vitamin C, surely you have more than enough knowledge of your product to cherry pick a few to show that there are some very competitive and or lower priced products to be had from Amway.

 

[NewtonTrino]

Here is a quote from the same Van Druff page http://www.vandruff.com/mlm.html

Confidence Men and the Shadow Pyramid
The age-old technique of "con men" is to create "confidence" in some otherwise dumb idea by diversion of thought, bait, or force of personality. The victim gets confidence in a bogus plan, and, in exchange, the con man gets your money. MLMers are very high on confidence.

Since the brain inevitably intrudes itself into the delusion that an MLM could ever work, spirits drop and attitudes go sour. But this depressive state can itself be exploited. As doubts grow when the MLM does not do what recruits were first "con"fidenced to expect, then a further profit can be made keeping the confidence going against all common sense.

Thus, a parallel or "shadow" pyramid of motivational tapes, seminars, and videos emerges. These are a "must for success," and recruits are strong-armed into attending, buying, buying, and buying all the more. This motivational "shadow pyramid" further exploits the flagging recruits as they spiral inexorably into oversaturation and failure. The more they fail, the more "help" they need from those who are "successful" above them.

So, MLMs profit by conning recruits up-front with a "distributorship fee," and then make further illicit money by "confidencing" these hapless victims as they fail via the "sale" of collateral material.

This is the man behind the curtain people. This is how they make money off of each recruit. Yes they help build sales volume but the tools and function are typically good for a couple of hundred dollars a month each in illicit tool profit. If a typical diamond makes $150k a year on product they could easily clear another few hundred K a year in illicit income from the tools business.

Icerat btw will claim that the tools money is minimal. We established in the other thread that he has no idea where most of the tools money goes (he has a price breakdown chart for a small portion of the profits).

This whole thing is a symbiosis between the corporation who makes money on overpriced soap and the large kingpin distributors who make huge profits from tapes and books.

 

[Skeptic]

I realize you are wary of putting out just any product without a fair evaluation, but as someone who can give a 90 min seminar on vitamin C, surely you have more than enough knowledge of your product to cherry pick a few to show that there are some very competitive and or lower priced products to be had from Amway.

Looking for bigfoot would be a better use of one's time. At least bigfoot might exist.

 

[Furcifer]

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.

No, the FTC ruled that Amway wasn't an illegal pyramid scheme. They never said it wasn't a pyramid scheme.

This whole business is an issue of semantics. Earlier you were saying you don't make money for recruiting people. You make money on the money the recruits make. You don't get a better price, you get a percentage based renumeration for the products you order.

Whatever, you're never going to trick anyone with the slightest critical thinking ability into believing this isn't a pyramid scheme. It is, it's just not an illegal one.

This whole thread and your responses IR have confirmed what I always suspected; there is a fear that if people actually knew how these businesses worked no one would continue to buy the product.

 

[icerat]

Except that you were asked for comparisons for supplements, which are judged in terms of health outcomes, not in terms of subjective judgements in value.

I did not interpret his question as specifically referring to supplements. That area is difficult and controversial enough without confusing the issue with regards the legitimacy of MLM itself.

 

[Nogbad]

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



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.



Yes there is ---> incentive marketing.

Selling the product is the ultimate incentive - shirley? I have had a quick look at some of the links but there is a lot of the jargon that seems to go with MLM so I might be missing the point of your last comment.

At the end of the day people are free to buy whichever cosmetic or detergent they like. It is a big market and there are lots of products. Personally, I like the Ecover stuff - it smells nice, works and is available in my local supermarket. If people want to buy from networks then it is not for me to say they shouldn't. If people want to participate selling in such networks that is also their choice, although I think many will be disappointed if they view it as a get rich quick vehicle.

 

[fls]

I did not interpret his question as specifically referring to supplements. That area is difficult and controversial enough without confusing the issue with regards the legitimacy of MLM itself.

Well, why not answer the question as though it was specifically referring to supplements? Since that question can be answered without some of the issues that make it difficult and controversial (i.e. the legitimacy of MLM's and subjective value judgements), it would be the least confusing subject to address.

Linda

 

[Ferguson]

It's interesting to me how proudly the specific claim of "#1 in Online Health & Beauty sales" is touted.

If Amway can really offer a more convenient, higher-value, product right to consumer's doors, while "cutting out the middlemen," then after 50 years in business shouldn't Amway be cleaning the clocks of brick and mortar stores? Shouldn't they be dominating American market shares?
Why are they only leading in online sales in the woo-filled and notoriously exploitable "Health" and "Beauty" markets?