Monday, September 16, 2013

What If Everyone Joined Amway?

Imagine an island with 100 adult residents. One guy gets sponsored into Amway from a cousin in another area off the island. Well, the island residents are a pretty tight knit group so the one IBO immediately sponsors his six best friends and eventually, all 100 island residents. They are all dead serious about the Amway business so they all work hard, but because everyone is an IBO, they can only self consume 100 PV each. Thus the 100 IBOs move 10,000 PV each month. The group as a whole generates about 30,000 BV and the group receives $7500 in bonus money from Amway. Of course, the first IBO sponsored is now a platinum receiving most of that money with the rest of the group receiving smaller bonuses.

Being serious IBOs, they all get standing order, books of the month, and travel by air to functions. They pay on average about $250 a month for their Amway training/tools. Thus the group pays about $25,000 a month for the training that will one day allow them to retire and quit their jobs. The island community is losing a net of $17,500 from their local economy each month. However, there is one resident IBO who is making a nice income urging everyone one. Let's evaluate the group.

The platinum IBO is making a nice income and will receive a $20,000 bonus at the end of the year. His 6 downline friends make just about enough to break even (approximately 1000 PV) or lose a little. The rest of the residents have lost over $200,000 ($17,500 a month). The guy who owned the local grocery store went out of business and all the entertainment related business went down because the residents had no disposable income to spend money on anything except for Amway related activities. Eventually they all quit, including the platinum because once his group quit, he too, began to lose money.

Now Amway defenders will cry that this could never happen, but it shows that even if you could get everyone in the US to join, this scenario is what would happen. I believe the Amway name and reputation is for the most part, saturated in the US. Nearly everyone will have heard the Amway name and/or will know someone who had a brush with Amway. Because of the tool peddlers such as WWDB, BWW, or Network 21, there are likely millions of people in the US who ended up with a bad experience, perhaps tricked into attending a meeting, or lied to about something related to Amway.

While this story is fictional, it is what would happen if there was a city where everyone joined the business. It is what happens today. Few people benefit at the expense of their downline. And as usual, it is the tools that drive people to lose money - on Amway island, or anywhere else.


Anonymous said...

Your scenario is a good one, and shows the power of exponential growth. What's scary is that you'd only need a few more levels deep to engulf the remaining population of the entire planet! It literally is impossible for everyone to succeed in an MLM through sponsoring.

But I have a question. Who says someone isn't serious because they don't get the books and tapes? Does Amway corporate say that, or is it the MOs? The MOs certainly aren't an objective voice, since they profit directly from the sales of books and CDs.

While I think the fictional organization still would have lost money, how much less would they have spent if they bought none of the motivational materials?

Anonymous said...

You are right. Markets will saturate somewhat eventually. Maybe its the case in USA. Nevertheless there are 7 billion people outside the usa. So it will take say 150 more years. With the population expected to be 10 billion in a few generation there are lots of pv out there yet. Relevant from your comments i feel is you will never find 6 platinums for your group nearby. Hence a lot of travel and time needed to build your diamond group. No doubt a reason why few make diamond and even fewer maintain the pin

Joecool said...

Not buying the motivational materials is the only realistic way an IBO can eek out a few bucks.

Anonymous said...

You're really negative, im an ibo ive reached the saphire rank already make at least 6k month after month, its helped people who are at nothing, come out on top. It survived through the great depression, that alone is enough to say that this buisness is legit. And no not everybody in the us will join because you're all sour and negative. I'm 16 and i got a future ahead. People like you can just stay in the working class. Its fine with me.

Joecool said...

Amway wasn't around during the depression. But the mafia was and it's still around. The mafia must be legit!

Even if you make money, you're doing it at the expense of your downline. It's like you're proud of being a scammer.