Thursday, December 30, 2010

Why Amway Is A Pyramid

Let me start out by saying that Amway is a perfectly legal company, and therefore I am not saying or implying that Amway is illegal. But I believe that the way Amway businesses are run, are like pyramids. In most groups, you will have the lowest level IBOs efforts and tool purchases being responsible for the upline bonuses and tools income. Many many IBOs are fooled into thinking that the ability to surpass your upline or that you don't get paid to recruit downline makes this a good deal.

Unless you have a very very rare group where actual product sales to non IBOs in sufficient to cover the costs of running you business, functions and all, then it is true that the lower level IBO's jobs are likely the source of income for the uplines. How many groups are like that? None that I have ever seen or know of. In fact, how often do IBOs even sell enough products to cover their expenses for even one month out of the year? The groups that teach "buy from yourself" end up doing the most financial damage to their groups because the downline's expenses are then covered exclusively from the downlines jobs, bank accounts, or drive the downline into debt.

I've seen and discussed group structures in forums many times and I can only conclude that tool sales wipe out what little profits/bonuses some of the downlines might receive. Only when an IBO is able to sponsor enough downline to absorb the losses for them will they finally breal even or make a little profit. I would guess that the 4000 PV level or platinum is where a dedicated CORE IBO would breal even and possibly start to make a real profit. But we also know that most platinum groups have 100 or more IBOs in order to generate 7500 PV. Thus we can also conclude that less than 1% of IBOs make a net profit. The only way IBOs can earn a net profit at a lower level is to avoid purchasing tools and to avoid paying for functions. Those who get involved in a system such as WWDB or N21 almost guarantee that they will have a net loss.

Sure, my job may have a pyramid structure with the CEO making the most money. But the difference is that in a company, even the lowest paid employee still receives a paycheck and has money at the end of the month. The same claim cannot be made by IBOs. For these reasons, I believe Amway to be a legal pyramid. IBOs and information seekers are free to participate, but I challenge them to sit down and really analyze their ability to make a net profit. In most cases, the analysis won't be favorable. If you are in the US in particular, you may have great difficulty in even being able to discuss "Amway" without getting strange looks your way from others. Good luck in whatever you decide.

P.S. Happy New Year!


Anonymous said...

Greg D. used to make fun those who had jobs with, "Do you go into the office for the 'aura' of it all?"

He would say this with much sarcasm and disgust.

O.K., Greg, just what aura are you experiencing at yet another amway function? Do YOU love love love your amway job?

Do you do these functions out of pure love for your downline? Really? then don't you take so much as one cent from any part of these functons ever again. Let's see how cozy you feel then.

Anonymous said...

sick people. just SICK!!!

Anonymous said...

I would recommend if your reading this blog to look up the true definition of a pyramid scheme .. This blog misrepresents what a "pyramid scheme" is, references it incorrectly in shape only. Then I would recommend thinking on this , in many ways the internet has become the bathroom wall of america search for facts not opinions. Fact I was an IBO for a year and a half in college I turned a profit " thats right its possible" , Fact most people will fail, Fact Amyway is a 11.8 billion dollar company - that has created alot of millionaires in this nation , second to microsoft only. Lastly, This definitely isn't for everyone ,its not a get rich quick scheme , the direct sales game isn't for the faint hearted , but the training system is phenomenal, and the opportunity is real. Do whats right for you good luck .

Joecool said...

Better yet, why don't you tell us what a pyramid scheme is? The FTC doesn't even have a clear definition of a pyramid scheme.

Anonymous said...

Exactly. I would like to know what makes up a pyramid. I remember asking about this before I became an IBO and they gave me the "A job is more of a pyramid than this is" talk. And I believed it. Thing is, that is incorrect. Management doesn't make a profit off of the employees they manage. They get paid for the work they do. Unlike Amway where up-line DOES get paid for what down-line does.

Joecool said...

LOL. A job being a pyramid (not true) doesn't mean Amway isn't one.

Anonymous said...

Exactly. And notice how they avoided giving me a direct answer with the one that they did give. They didn't deny Amway was a pyramid scheme, just that a job "is more of a pyramid than Amway is". It is sad that one does not see the truth until one leaves the Amway "business".

Joecool said...

Spot on. And it's sad that they put down jobs, especially when these folks could not even buy the Amway crap without their day jobs.