Friday, June 2, 2017

Is Amway Reaching Market Saturation?

ADA, MICH., USA (Feb. 8, 2017) – Amway today announced sales of $8.8 billion USD for the year ending Dec. 31, 2016, a decline of 7 percent when compared to 2015 figures. The direct seller increased sales in seven of its top 10 markets, but experienced softening market conditions in China.

“Across the world, Amway did well in 2016,” said Amway Chairman Steve Van Andel. “We experienced sales growth in several top markets, saw double-digit percentage growth in nine additional markets, and continued to evolve the business in China as we seek to take advantage of shifting market conditions and achieve the market’s long-term growth potential.

“Above all, we are pleased to see the continued and growing relevance of the direct selling model in today’s marketplace as people place real value on personal recommendations, and technology enables our distributors to connect with customers at any place at any time.”

Joecool's commentary: Amway's 7% decline follows two previous years of double digit declines. At it's peak, Amway had revenues of 11.8 billion and has been in a downward spiral since. While the Amway corporation tries to put positive spin on this, it signals to me that Amway is reaching a point where they cannot prevent the inevitable.

During Amway's years of "strong" growth, it appears to have been done in foreign and new territories. But once these other countries start to figure out what the US already has, it's expected that sales will eventually decline. I believe Amway's products are generally overpriced and not competitive but IBOs seeking to "go diamond" typically won't mind shelling out cash for products when they think Amway will make them wealthy. When the dream fades, so goes the desire for Amway's products.

I believe Herbalife is starting to see a similar decline as their China market saw a decline this past quarter.

It will be interesting to see what happens going forward. I can't say I'll be sad to see a "legal" product pyramid whose "leaders" have scammed tens of millions of people over the years start to see serious decline to a point where their "diamond lifestyles" take a serious hit. I wonder what the diamonds are saying these days now that the corporation is seeing serious declines?


John Doe said...

This is how you know these people are criminal. They say the same stuff as the politicians and business leaders at the upper echelon's of society when bad news comes out.

Normal owner sees 7% decline. Oh crap, we are going to have to make some major cuts. We can't sustain losses like this, and we need to focus on a new strategy to improve our sales. CREATIVE GET YOUR BUTTS IN HERE!

Amway sees 7% decline. Everything is wonderful! Our growth in our emerging markets is through the roof! I also want people to know I love rainbows and butterflies. Everything is great!

Joecool said...

And it should be noted that the two years prior to the 7% decline saw double digit declines and the corporation also had rosy things to say then. While I do not believe that Amway will go out of business, the serious declines of about 25% over the last 3 years represents serious money. Less sales means fewer distributors churning through the business which also means lower tool sales which affects the diamonds "lifestyle".

I have heard but cannot confirm that functions are taking place in smaller venues. If that's true, it would confirm my suspicion that the diamond's tool money is also drying up. I'm crying crocodile tear for them. LOL

Anonymous said...

How interesting that Amway refuses to give figures for its North American sales. I'm sure the decline there is a lot more than seven percent.

Joecool said...

Yes, some years back, Amway stopped reporting on individual markets. If you read the link I provided, Amway says sales were "great" in several markets. Well, that means giant losses in other markets. 7% is a HUGE decline in revenue.