Tuesday, October 7, 2014

IBOs Or Customers?

I've been debating with others about the concept of customers. Amway's most prolific defender is arguing that IBOs are customers and holds the position that there are alot of people who register with Amway simply to be customers. Now I don't know how anyone can possibly make that determination, but regardless of whether it's true or not, these folks are still considered IBOs. I don't want to debate the legal ramifications about the 1979 FTC ruling and the 70% rule, although the spirit of the rule was to prevent IBOs from buying their bonus. I would also note that Amway doesn't consider IBOs as customers and Amway defines a retail sale as a sale to a non IBO.

IBOFB/Insider/Icerat/David Steadson apparently contends that IBOs who purchase and then resell to downline are meeting the retail sales requirements and the downline are customers. Okay, let's go with that. But wait, IBOs do not buy and then resell to their downline. IBOs order directly from Amway do they not? If IBOs order directly from Amway, their upline gets some volume credit for downline purchases but the upline doesn't buy and then resell anything to downline. So are IBOs actually making any sales to non IBOs, save for sympathetic friends and family?

If in fact, IBOs are not selling their goods, and are primarily self consuming them, it means that most of the upline bonus is basically generated from the pockets of the downline. I believe the tools business is a pyramid as only IBOs are buying standing orders and attending functions. The lack of selling Amway products to the public would put the Amway business opportunity in pretty much the same category. I wonder what the FTC would rule today if that were the case? I wonder what the FTC would rule on the tools systems as it is today?

Something to think seriously about. If you are an Amway business owner, and you are selling little or nothing, where do you think your bonus comes from? It either comes from your own pockets, or it comes from taking advantage of your downline, who then pony up a portion of your bonus from their pockets. In a system such as this, the only way to maximize your bonus is to recruit as many downline as possible. Because the more people you can leverage, the more bonus you can get. The problem with this system is that people realize they aren't making money, and that paying in some cases, ridiculous high prices for "prestigious" soap and vitamins is not worth it, and they quit. When these folks lose their Amway dream of mansions and jets, they somehow lose their desire to keep making purchases and revert to shopping at WalMart or Costco.

If former IBOs kept on buying Amway goods, then Amway sales would climb pretty much every year as the former IBO's purchases coupled with current IBO purchases should keep going up, not down. But that's not really the case is it? In what business can the employees or company owners be the primary customers and prosper. The answer is none and Amway is not an exception.


Anonymous said...

Amway disguises things and make it look like major growth. By jacking prices up on products like vitamin c for 70.00(excluding shipping). The tools scam is worst than a pyramid. It only pays platinums and above. Leaving the average ibo losing their shirts. With a reg pyramid doesn't it pay lower levels also? Even if its not a legit product and a money game.

Joecool said...

Yes, I believe the Amway sales growth is due to price increases because there are no significant growth as far as I know, in the number of IBOs.

Anonymous said...

If I where to own a direct selling company. I rather own Avon compared to Amway. Even though sales are lower than Amway and profit margin is less. Just seems Avon is more stable with real repeat retail customers.

Joecool said...

I believe Avon is more actual sales to non Amon reps whereas I believe most of Amway's good are consumed by the Amway IBOs. Avon also has reasonable prices compared to Amway.