Amway TV ad

[Skeptic]

I think profit is usually defined as income minus expenses, not just income.

Yes, but if you used THAT definition, most Ambots would have to confess that they are losing money. So the definition must be wrong, you see...

 

[oggiesnr]

Many years ago I was approached to supply a UK near equivilent of Amway with a product we made. The usual retail price was £5 and we charged £2.10 wholesale giving the gift industry's "double plus VAT" standard margin.

In order to meet a £5.00 retail price they needed a price from me of 95p! This was so the end seller down the pyramid could sell it out £5.00 and everyone in between take their cut. I didn't supply them.

Steve

 

[Tex2]

Skeptic, you don't understand the 70% rule, compared to the retailing volume rule. If I were you, I wouldn't type about what I don't understand, but then we wouldn't see much from you on this forum, would we?

Are buying clubs also illegal, because most of what they sell is to "insider" members? Better call the FBI on that one....different doesn't mean scam, it means different. May be a scam, may not be a scam. In the Amway case (not including the tool scam), it means different and not a scam. In your Microsoft example, when a person answers the phone, they get paid, but so does Bill Gates, because on average they sell something. Bill gets paid more, so Microsoft must be a scam, according to you, because this is how MLM works as well.

Bob, it's obvious you skip over most of the content. The question is how YOU define rebate versus gross profit. As far as I'm concerned, the first 3% is a rebate, everything above it is gross profit. Make a decision, Bob. Just remember it isn't rocket science.

 

[Tex2]

ogg, the amount of markup you describe is typical for the manufacturer.

 

[oggiesnr]

ogg, the amount of markup you describe is typical for the manufacturer.

Only when involved in a pyramid, remember I was that manufacturer!

Steve

 

[icerat]

Sure, Amway claims a court decided it isn't an illegal business IF it were to obey the "70% rule" (70% of the products must be sold to non-distributors) and various other rules, but it is not hard to see that this is simply not the case.

Which just goes to show where YOU got your "MLM education" from.

There is no "70% rule" that says 70% of the products must be sold to non-dsitributors. That's a lie made up by anti-mlm zealots like Jon Taylor and Robert FitzPatrick.

It never existed. They suckered you, dude.

"The 70% rule" is about inventory loading - if you're just buying stock and stacking it up in the garage, you shouldn't earn a volume rebate bonus. To qualify you need to either use the product yourself, sell it to a customer, or resell it downline.

You might want to read MYTH: 70% retail sales rule

 

[icerat]

And now for the rest of that ridiculous post from Skeptic -

There is no such thing as a "legitimate" MLM. In all MLMs, the top 5% (at most) make 95% of the profit -- regardless of how hard those below them work.

What a nonsensical statement. Virtually by definition the 5% are the people who work hard. If you work hard then you're not "below" anyone.

That it itself would not be so bad if the profit actually came from paying customers.

The profit comes entirely from paying customers. What are you talking about?

What's far worse is that the vast majority of the profit comes from forcing the bottom 95% to pony up money for worthless "training" and "tools" and "seminars" or to stock their own homes with tons of unsold products.

Uhh, no. Amway makes ZERO (or close to it) from "training materials" and while some distributors do profit handsomely from providing these goods and services to others (nothing like as widespread as Tex claims), this is not included in any of the average income statistics. For example, Amway reported several years back that the average "Founders Executive Diamond" and higher had an Amway income alone of around US$1.5million/yr.

Take, for instance, Microsoft. Does Bill Gates make more than the guy who answers the phone at tech support? Yes, of course. But both of them make money from outside -- from the customers who are not part of Microsoft who buy Microsoft products. Of course Microsoft people buy MS products too (often at a discount), but they represent only a tiny fraction of Microsoft's entire customer base.

Tell me Skeptic, would that remain true if Microsoft said "pay us $50/yr, and we'll put you on the books as an unsalaried employee and you can buy all Microsoft products at employee price"?

I for one would quickly sign up to be an unsalaried MS employee! Why (assuming the $50 only covered admin costs), would this make MS a scam?

Not so with MLMs. In MLMs, and in Amway especially, the vast majority of the product is bought by those who are themselves in the MLM.

Even if this was a problem (it's not, I've already provided you with numerous independent sources on that, both legal and academic), that depends on what you call "in the MLM". The vast majority of products bought from CostCo are bought by people "in CostCo". "So what", you say - "they don't think it will make them rich!". Well, bright spark, the vast majority of people buying Amway products aren't trying to get rich doing that either. Indeed, according to Canadian guidelines (given earlier, you clearly didn't bother to read them), while they may have signed an "Amway IBO" form, they're not "participants", ie they're not "in the MLM". They're just customers.

Governments understand this stuff. The EU spent years studying this before they developed a new directive. So did Canada.

Why do you think you, doing little more apparently than reading a few falsehood filled anti-mlm zealot pages, know so much more than them?

Sure, Amway claims a court decided it isn't an illegal business IF it were to obey the "70% rule" (70% of the products must be sold to non-distributors) and various other rules, but it is not hard to see that this is simply not the case.

see previous post

The vast majority of Amway products, over 90% with all probability, are bought by people who are themselves distributors. When it comes to the "tools", the figure is probably closer to 99%.

No, in fact the complete opposite. Pretty much 99% of tools are bought by people who are NOT "tool distributors", but merely customers of the tool companies. You're not only wrong, you're wrong almost 100%!

It's as if Bill Gates, instead of paying the guy who answers the phone a salary, actually demanded that HE (the phone guy) pay HIM (Gates) money for the "privilege" of "joining the great opportunity" of being in Microsoft at all, and that THIS was the source of 90% of Gates' wealth.

It's a scam.

You'd be right, if that's how Amway operated. It doesn't. This is why you're so wrong again and again and again. What you just described is a clear illegal pyramid. The binary exponential growth example you gave earlier is a clear example of why illegal pyramids are scams and illegal.

Amway doesn't operate that way at all. Indeed in some countries what you "pay" for the "privelige" of "joining the great opportunity" is ZERO. Even in countries where it's not, Amway makes no money on it. It's not the source of any of Amway, or Amway distributors wealth.

Your nick is a misnomer. A true Skeptic is interested in studying the evidence and coming to conclusions based on the evidence. You clearly have not done this at all. You've made various significant and egregious assumptions and just moved on from there. You've apparently made little or no attempt at all to read relevant, reliable literature in the field and simply relied on hearsay of people with an agenda.

That's sad.

 

[Tex2]

ogg, that amount of markup is typical even when NOT involved in a "pyramid."

 

[Tex2]

Uhh, no. Amway makes ZERO (or close to it) from "training materials" and while some distributors do profit handsomely from providing these goods and services to others (nothing like as widespread as Tex claims), this is not included in any of the average income statistics. ---- I'm sure Amway builds the training costs into their product cost structure, has decided to take a bit less profit, or some combination of the above. Your attempt to minimize the tool scam is a waste of time. It is a huge amount.

For example, Amway reported several years back that the average "Founders Executive Diamond" and higher had an Amway income alone of around US$1.5million/yr. ----
The other thing not included in Amway statistics is the lifestyle created by the tool scam, especially for those LCKs who achieved a level once, yet their lifestyle exceeds what an IBO maintaining that level makes. Also, I believe the amount was just under about $1 million/year.

 

[Tex2]

No, in fact the complete opposite. Pretty much 99% of tools are bought by people who are NOT "tool distributors", but merely customers of the tool companies. You're not only wrong, you're wrong almost 100%! ---- I think you (again) twisted his words to meet your agenda. By "distributor" he meant "IBO". Most products are bought by IBOs and virtually all tools are purchased by IBOs. Nice try.

 

[oggiesnr]

ogg, that amount of markup is typical even when NOT involved in a "pyramid."

Sorry, you're wrong. I work in this business, I know what the margins are and how much each layer puts on the final bill. OK I maybe was different because I manufactured and wholesaled. The margin if I wasn't would be about 25% between manufactuer and wholesaler, ie factory cost about £1.70 to give a wholesale price of £2.10, again I know this because that was the price I charged my wholesaler when I got fed up with chasing payment from umpteen different accounts. The 95p the pyramid wanted represented margin for the intervening layers.

A franchise operation wanted the same product at £1.40 so they could add their margin when they sold it on to franchisees.

Now it may be different in the USA but that's how it looks from here.

Steve

 

[Bob Klase]

Bob, it's obvious you skip over most of the content.

If you think garbage = content then I do skip over most of your 'content'.

The question is how YOU define rebate versus gross profit. As far as I'm concerned

Of course that's the second problem with your posts (the first being the amount of name-calling, etc). You only look as far as you're concerned and ignore reality.

The question is not how I define rebate versus gross profit. The question is what do those words actually mean in the real world. Very different than "as far as you're concerned".

As far as you're concerned, if you spend $100 buying things you could buy for $50 then you can ignore the extra $50 expense and count a $25 rebate as 'profit'.

Just remember it isn't rocket science.

Both subjects seem to be over your head so I'm not sure you'd recognize whether it was rocket science.

 

[Tex2]

ogg, are you aware there are hundreds of Amway partner stores in the U.S., which pay out a PV/BV bonus? Now it isn't as much as the Amway products, but it is a bonus. Many Amway products are competitively priced, especially now, with the recent price reductions. Therefore, the 4-5X markup from the MANUFACTURER is reasonable. It may not apply to all products, or the specific product you were dealing in, but it is a reasonable markup.

 

[Almo]

Almo, that was deep....LOL

Glad you thought so.

 

[Tex2]

Governments understand this stuff. The EU spent years studying this before they developed a new directive. So did Canada. ---- Governments understand the tool scam, too. That's why there isn't one in the UK, even though your buddy/hero Jim Dornan stepped on his own crank trying to pin the guilt on Amway, only to retract and reissue a revised letter!

 

[Tex2]

Bob, you wouldn't know garbage versus fact if it crawled up your butt. LOL

There are many products competitively priced, especially with the recent price reductions. You simply don't know what you're talking about, which explains why you refuse to answer a simple question. LOL

Almo...as a puddle!!! LOL

 

[icerat]

Many years ago I was approached to supply a UK near equivilent of Amway with a product we made. The usual retail price was £5 and we charged £2.10 wholesale giving the gift industry's "double plus VAT" standard margin.

In order to meet a £5.00 retail price they needed a price from me of 95p! This was so the end seller down the pyramid could sell it out £5.00 and everyone in between take their cut. I didn't supply them.

Steve

Steve, if I read correctly you're saying your standard wholesale price was £2.10 and standard retail price was £5.00?

That means 58% of the final retail price was markup on wholesale.

I've no idea about the company you were dealing with, but the difference between Amway's best wholesale price and their recommended retail in the UK is roughly ... 30% retail markup + 21% volume rebates + 4% leadership profit sharing + 1% depth bonus + 0.5% "pin bonuses" + 1.5% "other" (Ruby, FAA, trips etc) which equals ....

58%

Remarkable. It's just like your business.

 

[Tex2]

I hope everyone is noticing how icerat/ibofb constantly ignores my posts. The reason is he knows he is wrong, so why bring attention to it?

 

[NobbyNobbs]

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.

Recommended by whom?

 

[icerat]

I hope everyone is noticing how icerat/ibofb constantly ignores my posts. The reason is he knows he is wrong, so why bring attention to it?

No, it's because I believe you clearly fulfill the DSM-IV criteria for NPD and/or ICD-10 criteria of OCPD and perhaps others and don't want to waste my time.