Thursday, October 8, 2015

IBOs Or Glorified Amway Customers?

I've been debating with others about the concept of customers. Amway's most prolific defender argues 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. Also, it will be interesting to see how the FTC action against VEMMA will play out. In this case, the FTC said Vemma's distributors only sell 22% of their products to people who are actual customers. This was part of the basis for the recent shut down.

IBOFB/Insider/Icerat/David Steadson apparently contends that IBOs who purchase and then resell to downline are meeting the 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.

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...

Prospecting 1 client is already a difficult task. Maintaining the people you prospect is also a difficult task. If you recruit 100 people, What is the likelihood of maintaining 100 people within a year or two?

Joecool said...

No way anyone can maintain 100 people. About half will quit the first year and about 95 will be gone in 4-5 years.

Anonymous said...

The FDA really needs to go after Amway, and come down hard on it. This is a company that creates products to essentially sell to itself and its members, in a way that drains money from down-line to enrich up-line,

Amway is just legalized theft.

Anonymous said...

I think that's obvious but the FDA just do not care

Joecool said...

It's very hard because Amway is politically connected and likely protected by the politicians they donate to.