Tuesday, December 13, 2016

Amway Numbers?

One of the things Amway IBOs are taught is to ignore facts, or to ignore numbers. I believe this is because the numbers are not pretty when you take a business like approach to the math behind the Amway business, for most IBOs. It is why upline teaching often "evolves" into things such as Amway saves marriages, or Amway makes you a nicer person, or that Amway is not about money, it is about friendships. That is a load of garbage. Business is about making a profit. If you hear some of these lines from your upline, it should be a red flag. Upline may also feed you other deceptive lines such as an IBO being successful because they showed up at a function, or because they just signed up for standing order. These are all just false lines to encourage an IBO who is not making money.

When you take a good look at the Amway presentation, the majority of IBOs are at the 100 PV level. At that level, they are spending about $300 monthly to reach 100 PV and for their efforts, they receive approximately a $10 check from Amway. Most IBOs will be encouraged to participate in some kind of system, often consisting of voicemail, websites, cds, books, seminars and other meetings. MOST IBOs will not recoup enough cash to cover any of these expenses, let alone all of them. At a glance, the system expenses may appear nominal such as $6 for a cd, $6 for an open meeting, $100 to $125 for a major function, $12 for a book. It is how upline gets you involved, and then after a while, an IBO starts to notice the negative cashflow and then a tough decision needs to be made. Either quit and cut the losses, or press on hoping that the system will eventually deliver on its promises.

What most IBOs don't notice, is that less than one half of one percent ever reach platinum. A fraction of one percent! And in many cases, platinums might break even or even suffer losses! So why would IBOs want to work so hard to reach platinum? They have less than a 1% chance of reaching that level. They have a tiny chance of maintaining that level, and they are still unlikely to earn any significant income at that level. A stody done by an attorney general in Wisconsin (Bruce Craig) revealed that platinum level IBOs averaged a net loss of about $900 annually. While Amway defenders will decry that the study is a bit dated, I will say this: The basics of the Amway business has not changed since that study was done, AND there are actually more system expenses today than there were back then, thus platinums may actually be losing more money annually than before. While not all platinums will lose money, I believe hard core dedicated platinums would stand to lose money.

As an IBO, I hope you are tracking your expenses versus your income. Most IBOs will see a negative cashflow month after month. Even though the Amway business is often promoted as low or no overhead, the system expenses (overhead) eventually begin to add up. Beware and please follow the numbers.


Anonymous said...

Then IBO' s should sell more products to make a bigger profit margin? Every business makes more when there is more volume flowing through their business. Also there is ton of tax benefits there as well.

Andrei D. said...

hi there,
I did read your post, but please allow me to disagree.
1.Yes you do have costs, but as in any business, if you don't manage your cash flow you will have problems.
2. since you need no stocks I saw lots of IBO's investing in stocks and therefore having money blocked and sometimes leading to losses.
3. training materials. you CAN spend money on those if you want to participate on an independent training system focused on building networks, but this is only individual option. Amway is not requiring that at all. I am personally involved in a system like this, but it's my option and I have to renew every month if I want that.
4. last but not least. it is true that only a small percentage reaches Platinum level. my experience shows that this happens because of lack persuasion and focus. if you fail on these in any other business, you will not reach real success.

i'm not saying at all that Amway is the ultimate answer, but it'seems an opportunity that is offering a great tool and income for those willing to work on that.


Joecool said...

1. Yes you have costs. But Amway is touted as low risk and low overhead. Those training materials and the high cost of Amway products start to add up after a couple of months.

2. Investing in stocks is irrelevant to this discussion.

3. Amway doesn't require training, but you'll be shunned and disenfranchised if you're not part of a system. Can you name even a single individual person who made significant money in Amway without being part of a system?

4. Only a few people reach platinum because that's how the system is designed. You sponsor 6 who sponsor 4 who sponsor 2. That's 79 people and 1 person is platinum. And that's assuming nobody quits and everyone moves enough volume to earn a bonus rebate.

Amway offers you a fraction of a 1% chance to make money. You're seriously better off working part time for minimum wage and investing the income for your future.

Andrei D. said...

I am from Romania but I do have small Amway business in other countries. if you treat this business like any other regular one, you can compare the benefits.

also in a traditional business if you dedicate the part-time to invest in you will have results. bit most people treat Amway as a spare time and not dedicated.

I agree with the 1%, although I cannot say the number is totally correct, but it's your position that you have to fight for. it is available only if you will do the work. and then the passive income is something that you can't get in any other job or business.

Joecool said...

If you compare Amway to a real business, Amway cannot compare. Only in Amway do you desperately need to recruit. Only in Amway are you the best and possibly the only customer of your business. In fact, when you break it down, Amway is a commission only sales job with a quota.

And there is no passive income. That's why diamonds never "walk away" and retire. They work until they end up quitting Amway or they work until they pass away.

Anonymous said...

To Andrei D. --

There certainly is "passive income" in many jobs. It's called a pension.

Unlike in Amway, a pension is a fixed amount that cannot vary. It lasts for the rest of your life. In Amway, the supposed "passive income" from your down-line's activity is highly vulnerable to change when IBOs drop out of the business, switch to another MLM, or simply don't sell enough product. Do you want to depend on that in your old age?

Don't be a jerk, Andrei. Amway is a total fraud. "Passive income" in Amway is basically just a pipe-dream.