Tuesday, December 21, 2010

In The End, IBOs Are Just Salesmen

IBO = Independent business owner. I thought it was cool, but looking back at the bottom line, IBOs are just salesmen for Amway with no fringe benefits and no guranteed salary. Or, a comission only salesman. Salesmen earn their income by selling goods and services, and earn a commission. Sadly, many IBOs sell very few items because they have been taught that you make your money by purchasing items from yourself.

On the surface, buying from yourself sounds sensible but you don't truly make a profit by purchasing your own goods, you simply empty your checking account. Any profit you think you have earned has actually come out of your own pockets. In any business, you must have a base of customers in order to have a steady income. If you are purchasing the majority of your goods, you are only making a profit for Amway the corporation, who makes, or in the case of partner stores, distributes the goods. The ones who actually produce the goods are the ones who profit. An IBO is just someone who sells the goods and who distributes them for a commission.

For most "real" business owners, building their business might mean advertising, creating special sales, and increasing the number of customers or by increasing the volume purchased by existing customers. An IBO who is "building the business" is rarely ever trying to attain more customers. In factm some of Amway's regulations make it difficult to attain a mass of customers such as restictions on advertising. Therefore, most IBOs who are "building" are simply seeking to add downline who will hopefully buy their PV and also attain more downline. In this manner, IBOs are increasing volume, and therefore their commissions by adding people to their downline. Ultimately, the upline is making their money by the efforts of their downline and often, from the jobs of their downline because there are usually not enough customers to sustain any significant level of sales.

In this day of social networking and power advertising, Amway apparently remains a dinosaur. While they do advertise some of their product line on TV, the salesmen or IBOs have little ability to market their products on a large scale. Instead it is word of mouth, individual to individual. It is highly ineffective. Do you know why it costs hundreds of thousands of dollars for a 30 second commercial in the superbowl? It's because tens of millions of people are watching. What do you think is more effective on increasing sales, a superbowl commercial or word of mouth advertising. Keep in mind that zany IBO behavior has already damaged the Amway name, thus giving you a disadvantage over other opportunities.

In the end, or the bottom line is that an IBO is just a salesman who receives no fringe benefits, and a relatively small commission. It's a great deal for Amway, but is it a great deal for an IBO?


Anna Banana said...

I agree that IBOs are commissioned salespeople. Our upline would disagree because he says that IBOs are donkeys and he's the one dangling a carrot on a stick in front of them.

Anonymous said...

So what if we're sales people on commission? Wnat's it to you Joe Cool? Why the hell do you care if I choose to make some extra cash for my family by selling Amway? Who made you in charge of my finances and decided what is best for me? Seriously, why do you care? At least I'm not sitting at home chugging a beer and watching crap on TV. At least I'm trying to improve the fortunes of my family by doing something instead of doing nothing and complaining.

rocket said...

A better question for many WWDB IBO's would be who made your upline in charge of your finances?

Joecool said...

Good point Rocket! For some IBOs, their uplines not only control their finances but other aspects of their lives such as getting married, havings kids, etc.

Anonymous, nobody is criticizing you for wanting more in life and to supplement your finances. The problem is that most "serious" IBOs end up losing money as a result of the great advice they are given by upline.

Anonymous said...