Saturday, June 30, 2012

IBOs Are Glorified 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?


Anonymous said...

You are right, "Independent Business Owner" is merely a feel-good title the Amway upline bestows upon their downline to make them feel important and to mask what they really are - poorly commissioned salespeople of whom the vast majority will lose more money than they bring in, selling overpriced products to themselves which even after they get a "bonus points" for buying them, they STILL will have spent more money for those products than for better brand products they would have bought in a real store. So, self-consuming is not a business. Let's see, how about recruiting? That is another thing they are taught as a way to make money, by tricking new suckers into the money-losing pit of Amway with the hopes that eventually if they get enough people below them losing money they will somehow crawl out of the pit themselves. Hardly a moral business model no matter how they try to wrap themselves in a Christian guise. And yet another way to "make money" they are taught is to deduct every single thing associated with Amway as a "business expense". Their upline pretend to be tax experts but the truth is they had better pray they are never audited. My brother works for the IRS and they know of Amway's reputation for deducting things that are not legally deductible, so they go over their forms with a fine-tooth comb. Plus, if the IBO hasn't earned a profit after expenses in two years, their business is then considered just an expensive hobby, and therefore business write offs do not apply. Besides, the very nature of getting a lot of money back on their taxes is a sign that they lost a lot of money to their "business" in the first place. Hardly a sign of "success".

Like just about everything within Amway, the "Independent Business Owner" title is as phony as a three dollar bill and a fantasy illusion in a "fake it til you never make it" company.


Anonymous said...

Sorry Amway didn't work for you. Good luck at whatever you are doing in life. Do not make it seem like you are a genius and IBO's aren't.

Anonymous said...

you just did. :p