Monday, December 4, 2017

The Amway Financial Disaster?

When I saw the Amway plan, it was presented sort of as a road to riches. Yes, the presenter was careful not o say it was "get rich quick", but 2-5 years is relatively quick when compared with working 40 hours a week for 40 years as the business plan was shown to us. And while some exceptional people do achieve diamond, there is a trail of Amway IBOs who suffer losses, some of them staggering. In our own group, I know of at least one couple who lost their home to foreclosure following upline advice, and another couple to ended up filing for chapter 7 bankruptcy. I must state that the bad advice leading to bankruptcy and foreclosure most likely came from upline leaders. I also know of a gal who quit her job to attend a function, faithfully following upline advice from WWDB. The thought was that the function would be so valuable and you can always find another job.

So what is the experience of many CORE IBOs? I'm not talking about those who "do nothing", but IBOs who actually make an earnest effort. Well, if they do their 100 PV, then they are spending about $300 a month and dedicated IBOs will typically spend about $200 to $300 a month on average for tools. Of course, your level of commitment can make this number higher or lower. This is for a single person. A couple or family would be expected to do more, thus spend more. So for these 100 PV IBOs, they will expend about $500 to $600 a month and get back maybe $10. Of course if they were not in Amway, they would still have some expenses for household goods, but not anywhere near $500 to $600 a month.

Over the course of a few months or a few years, these expenses add up and can become staggering losses. Hard core IBOs might expend even more. The only way a rank and file IBO can gain relief is to sell products (which is difficult given the prices and the Amway name reputation) or to sponsor downline who wil then suffer some of the losses for you. It would be my estimate that an IBO might break even at about the 4000 PV level. However, at 4000 PV, you might have 30 to 40 downline. The catch is that only about 1 in 5 IBOs manage to sponsor another IBO.

Over the years, I would suspect that millions of IBOs have come and gone through the Amway opportunity, and probably lost billions of dollars. But many of those who lose money think they are successful, because many upline will edify those who buy tools, regardless of IBO results. After a few months, if your group and PV are not growing consistently, it is highly unlikely that you are headed for success.

IBOs and newbies, are you on the road to riches or financial disaster? Keep in mind that a net loss is not success, despite what you upline mentor may tell you.

1 comment:

kwaaikat said...

All of the get rich quick schemes that I’ve seen in the media (and encountered otherwise), including the ones whose owners were eventually successfully persecuted, were at pains to emphasise, while in the middle of their operations, that theirs was not a get rich quick scheme. In a twist of irony, they would even add a warning against get rich schemes! This is not to say that all get rich schemes are blatantly illegal. Being legal is not a guarantee of anything. They are all bad in the sense of not delivering on the typical expectation created in the mind of the prospect.

With every opportunity apparently distancing itself from get rich quick, clearly the way to identify a get rich quick scheme is not on account of them saying so. No such scheme will say so. Amway comes as close to that as you can get.

The upline system of “independent” entities means many prospects actually do hear get rich quick claims, but not directly from Amway, and not in writing. That is extremely convenient.

Do the warnings apply? Oh yes. It is not hard to find people who can attest to the damage the organisation has caused to people who dreamed of making decent money. Of course these are brushed off by apologists as jealousy and bitterness, but in reality it proves the point of the cultish net even more. Clearly all the warnings pertaining to get rich schemes pertain very much to Amway.