Wednesday, October 7, 2015

The Real Amway Business?

I have been reading some ongoing debates about whether the system income for higher pins is more than their Amway bonuses. I believe the systems such as BWW, WWDB, N21 or LTD, does generate more profit for upline than the sale of Amway products. How the system income is divided though, is still a mystery as it doesn't appear that there are bonafide written contracts explaining how tools income is split up among the higher pins. There is also the debate of whether diamonds themselves or their "corporations" receive the profit, which is laughable as a defense.

But it's very easy to determine that more income is made from the system than from Amway. If you move $100 worth of Amway products, Amway will pay about $33 back in the form of bonuses. These bonuses will be split among the Amway IBOs (middlemen), depending on your level. On the other hand, if your group bought say 20 cds at $5.00each, the system will profit about $90 as cds cost about 50 cents each to produce in bulk. Some Amway apologists will cite the fact that some groups sell cds for $2.50 or $3.00. While this is true, there is a "member's fee" which must be paid. And when you add in the member's fee, the profit for the system is the same or possibly higher! Even when you factor in the system employees, you can easily see the math and determine where the real money is made.

If you buy a major function ticket for $125, the cost of that function might be in the neighborhood of $25 to $30 per attendee, so the system may generate $100 profit on a $125 sale. I believe the smaller functions such as open meetings, books and voicemail have smaller profit margins, but still overall, it's easy to conclude that the profit from the system is greater than profits generated by moving Amway products. I might add that the sales on these functions are often made in cash, thus who knows if the diamonds are even paying the IRS taxes on these sales.

The only question is how much each individual earns. I have "heard" that platinums get a discount on the sale of standing orders and cds, but I have never heard of a platinum sharing any profit for functions, voicemail, or any of the other materials. This is puzzling to me as I believe the platinums do the most work in the system, helping downlines.

So for the lower level IBOs, if you move $300 in Amway sales (Approximately 100 PV), you will receive about $10 or 3% while upline enjoys the rest of the $90+ in bonuses from Amway. And then when you purchase and move tools volume, you receive nothing and some of your uplines enjoy all of the profit. While I don't see any problem in upline making a profit for selling training materials, I see a problem in the fact that the tools don't work. So few IBOs progress to levels where an actual profit is earned that the use of tools cannot be justified. Amway supporters will point out the new platinums emerging each year, but do not mention the platinums who do not re-qualify.

Based on my observations, I can only conclude (quite easily) that there is substantially more profit from the sale of support materials for upline to enjoy, and I can also conclude that the support materials are ineffective in training downline IBOs so they can progress to higher levels of the business. But as PT Barnum once said, a sucker is born every minute.


Anonymous said...

If the tools don't work (in the sense of not helping you sell Amway products or recruit new members), then they must have some other function. It can't simply be the enrichment of up-line, since down-line IBOs would have long ago rebelled against the practice. It must be that the tapes and CDs and books satisfy a certain need in a certain kind of Amway zealot.

Anna Banana mentions that her husband would often play the tapes or CDs at earsplitting volume, like heavy metal rock music. What the hell is THAT all about? You don't need to play an informational or instructional tape in that manner -- in fact, it's absurd to do so. It must mean that the tapes served to energize his enthusiasm, and to stoke up his fires of excitement. Don't Amway people talk about "getting fired up"?

I think it's clear now that what really fuels Amway, and has been fueling it since 1959, is emotion, feeling, desire, passion, enthusiasm, and sheer religious energy. Nothing else can explain why some Ambots actually WANT those asinine tapes and CDs. Nothing else can explain the destructive self-sacrifice, to the point of foreclosure and bankruptcy, of many IBOs. Nothing else can explain why people would buy, month after month, products that they don't actually need. Nothing else can explain commitment to the totally anti-rational notion that "If the dream is big enough, the facts don't matter."

Joecool said...

The tools keep you motivated in spite of the reality. How else can you retain your donwline when they are losing money month after month. You motivate them and teach them that failure is their own fault (despite the tools and upline advice) and that the business is not really about money but more about friendships.

You also teach them that Amway is their best or only chance to make more money than their current J - O - B.

It makes it harder to quit knowing that Amway might be your only hope and that quitting means failure. It's subtle but powerful.

Anonymous said...

Here are your answers--

Joecool said...

Read them carefull so you can see that 1 in 400 reach platinum.

Anonymous said...

One in 400 reaches platinum? Man, you had a better chance of survival on Omaha Beach in 1944 during the Normandy landings.

Joecool said...

Yes, according to, only .26 reach the level of Gold which is the level where IBOs (on the tools system) allegedly break even.