Friday, January 20, 2017

Amway Salesmen?

IBO = Independent business owner. I thought it was cool, but looking back at the bottom line, IBOs are just salesmen for Amway with no fringe benefits and no guranteed salary. Or, a comission only salesman. Salesmen earn their income by selling goods and services, and earn a commission. Sadly, many IBOs sell very few items because they have been taught that you make your money by purchasing items from yourself.

On the surface, buying from yourself sounds sensible but you don't truly make a profit by purchasing your own goods, you simply empty your checking account. Any profit you think you have earned has actually come out of your own pockets. In any business, you must have a base of customers in order to have a steady income. If you are purchasing the majority of your goods, you are only making a profit for Amway the corporation, who makes, or in the case of partner stores, distributes the goods. The ones who actually produce the goods are the ones who profit. An IBO is just someone who sells the goods and who distributes them for a commission.

For most "real" business owners, building their business might mean advertising, creating special sales, and increasing the number of customers or by increasing the volume purchased by existing customers. An IBO who is "building the business" is rarely ever trying to attain more customers. In fact, some of Amway's regulations make it difficult to attain a mass of customers such as restictions on advertising. Therefore, most IBOs who are "building" are simply seeking to add downline who will hopefully buy their PV and also attain more downline. In this manner, IBOs are increasing volume, and therefore their commissions by adding people to their downline. Ultimately, the upline is making their money by the efforts of their downline and often, from the jobs of their downline because there are usually not enough customers to sustain any significant level of sales.

In this day of social networking and power advertising, Amway apparently remains a dinosaur. While they do advertise some of their product line on TV, the salesmen or IBOs have little ability to market their products on a large scale. Instead it is word of mouth, individual to individual. It can be highly effective but you just can't create serious volume in that manner. Do you know why it costs hundreds of thousands of dollars or millions for a 30 second commercial in the superbowl? It's because tens or hundreds of millions of people are watching. What do you think is more effective for increasing sales? A superbowl commercial or word of mouth advertising? Keep in mind that zany IBO behavior has already damaged the Amway name, thus giving you a disadvantage over other opportunities.

In the end, or the bottom line is that an IBO is just a salesman who receives no fringe benefits, and a relatively small commission. It's a great deal for Amway, but is it a great deal for an IBO?

4 comments:

Unknown said...

Are you an IBO?

Joecool said...

Former IBO. You can read my profile for more information.

Diamondave said...

Joe!! I love Hawaii!!.... Greetings from the great white north ( Canada)for many years I had a successful courier owner/ operator business,got into Amway for the forever residual income.....Right.....I had " Dave's business service" in which I supplied my courier customers with Amway cleaning products and the like.....I had several customers.... Probably because I gave them outstanding courier service and they liked me.it wasn't long before they were complaining of the high prices in which I responded like a typical ambot " they're concentrated!.. That's where you save!" I had a printing company give me ALL their paper towel business , they bought lots!!... soon the owner complained of again prices too high..I eventually had to sell ALL products from "Dave's business service" AT COST !!!! Just to reap measly P.V ......Amway even had a coffee service complete with machines, coffee ,cups etc...Couldn't compete with local services.....Joe they weren't even in the ball park with thier prices!!!...This was the beginning of the end for me!!....Ain't it great....

Joecool said...

DiamondDave, thanks for your comments. I think your experience is not uncommon. IBOs selling at cost. The prices are high because the "generous" bonuses that Amway pays is included in the price of their products. If you move 100 PV, and you don't have downline, you get 3% and your upline enjoys the rest of that 33% bonus that Amway pays.