Monday, June 8, 2009

Amway - High Prices?

In my opinion, one of the biggest challenges with being an IBO was trying to sell Amway products because overall, their prices were too high. Now this is not to say that every single product sold thru Amway is priced higher than retailers, but certainly, a price comparison with WalMart or Costco would show that Amway prices are indeed higher for the exact same or similar products.

Sure, there are some Amway zealots like IBOFightback who will try to justify paying up to 3 times more for products such as meadowbrook toilet paper versus Kirkland. But Kirkland is much much cheaper, if you buy it at Costco, and still cheaper even if you order online and have to pay for shipping. I even saw an 8 pack of progresso soups in an Amway catalog for $18.99 and the exact same 8 pack was sold at Costco for 11.99. IBOFightback and other Amway apologists can try to justify the prices all they want but these numbers don't lie, and Costco and WalMart sales back up my claim. IBOFightback has only rhetoric and other apologists to back his claims.

But maybe it will help if I offer why I believe that Amway, and apparently most other MLMs have to have higher prices. It is because they need to pay IBO bonuses.
If Amway had about a billion dollars in sales and gave back 343 million or so in bonuses a few years back, it means quite clearly, that Amway could have charged a customer 30-34% less without paying IBO bonuses. Thus $300 worth of Amway products could have been purchased at Walmart or Costco for about $200. (Same or similar products).

The problem for most IBOs is that Amway pays 34% in bonuses, but most IBOs get nothing or perhaps 3% while layers and layers of upline (middlemen) take their cut of that (approximate) 34%. IBOFightback himlself said on Qblog he was a (founder's) 3%. I assume that to mean that he does 100 PV every month.

So in Amway and most other MLM opportunities, you are handicapped with paying higher prices because of the IBO bonuses which are included in the price of the products. You as an IBO, compound that problem if you participate in a system of cds, voicemail, books and functions which teach you that this is a good opportunity.
It is also, in my opinion, the reason why only about 4% of Amway goods are sold to people who are not IBOs. IBOs are their own best customers because the rest of the US shops at Costco and WalMart.

1 comment:

Casillas said...

Hi

I like this post:

You create good material for community.

Please keep posting.

Let me introduce other material that may be good for net community.

Source: Costco interview questions

Best rgs
Peter