One of the things IBOs like to tout is how Amway had over 8 billion dollars in sales. That's great for Amway. The Amway corporation surely made a good profit from those sales. I'm pretty sure that the DeVos and Van Andel families would use Amway products. But I'm also sure that their purchases are an insignificant portion of the Amway Global sales. Most of their sales are to IBOs and to customers of IBOs. After paying operational costs and their employees, Amway makes a nice profit, which is why the families who own Amway are (last I heard) registered as billionaires.
IBOs, regardless of level, make up the sales force for Amway. But IBOs do not work for Amway. They are "Independent Business Owners". They are supplied products from Amway and receive their bonuses from Amway for the amount of volume they move. They can also sponsor downline which helps them to move more volume since downline's volume is also credited upline.
Many IBOs however, in the past and even today, hold the philosophy of "buy from yourself and get others to do the same". I believe this method of running an Amway business was created because many people do not like the prospect of selling products, especially when the business often requires a "personal touch". Thus many IBOs simply buy from their own business and hope to sponsor a lot of downline. Sadly, most IBOs cannot sponsor anyone and cannot or do not sell Amway products.
Many IBOs are taught to move at least 100 PV, which is equal to about $300 in sales. However, if an IBO fails to sell any products, then effectively, the $300 in sales belongs to Amway and the IBO had nothing, rendering the IBO as a customer.
If the IBO sells a few items and consumes the majority of their 100 PV, then Amway still gets most of the sales and the IBO gets the rest.
The point is this. If your consumption dollars exceed your sales dollars, then whatever income you receive, is simply coming out of your own pocket. It would be like clipping coupons and then when you use them at the store, you count the coupon value as profit. Ridiculous right? But sadly, it is what many IBOs have done, and continue to do today. What makes things worse is when an IBO spends their hard earned money to purchase standing order, voicemail, and seminar tickets where they teach this garbage. It's like paying your upline and Amway for the privilege of consuming and selling Amway products. Everyone makes a buck except the lower level IBOs.
Amway had over 8 billion dollars in sales last year. How much net profit do you think they would have if the DeVos and Van Andel families consumed most of that volume? Right, they would have massive losses. What makes IBOs think they are any different?
7 comments:
Joecool, you talk to simply and have to much common sense. It is common knowledge to any educated American over 18 that Amway just doesn't work for people. This begs the question that with $8 billion in sales could Amway set up a compensation plan that is equitable to the people schlepping the vast majority of the product? It seems with $8 billion in sales they could more evenly distribute the profitable so that their front line reps at least turn a profit.
I once did a post showing how can be made fair. If you're familiar with Amway's commission plan, the lowest level IBO gets like 3% and the upline platinum gets 25%. Other middlemen take a cut if there are IBOs in between the platinum and the lower level IBOs. I would simply turn the scale upside down so the IBO who buys or sells 100 PV, would get the lion's share of the commission with the layers of upline receiving the smaller bonuses.
Then it would truly be the one who does the work gets paid. Thus a 100 PV IBO would get something like $50 to $60 in the form of a bonus instead of $10. Amway would still overall be a bad idea when you factor in that Amway products cost too much to begin with, and adding in the tool and function expenses. But increasing that bonus could actually help someone profit if they actually moved some products instead of exclusive self consumption.
Diamonds could still get bonuses and such, plus they profit from the same of tools and seminars. But IBOs should wonder where diamonds get mansions and sports cars from. It's from their loyal purchases of Amway products and from loyal tool and function purchases.
I was recently pitched Amway about a month ago. Here is my story:
I am an employment specialist and assist people with disabilities find community jobs. Part of my job is to obviously network with employers/businesses and build good working connections and relationships and convince the employers to hire the people I am assisting. Anyway, I assisted an individual and that person ended up getting a job at Burger King.
I job coached him through the process and the person was successful in his employment. I built good working relationships with the regular employees, assistant managers/mangers and the franchise owner. I got along really well with an assistant manager at BK. One day he texted my work cell phone and wanted to meet for coffee and I figured sure why not, as we got along well
Met the BK manager at the coffee shop. He started asking me more personal type questions such as am I married, do I have kids, what are my future goals and dreams. Since we connected well and I am an open book for the most part, I answered his questions. The BK manager then talked about how he is working on an amazing business opportunity and is being mentored by a married couple who are about to retire in their 30's and live off the residual income the rest of their lives.
Bk Manager asked if this was something I would be interested in. I then asked the typical questions, what kind of business is this, what type of work would I be doing etc etc... He side stepped the questions and said out of respect to his mentors, he would like to invite me to a meeting his mentors were hosting and they would go over the business with me. BK Manager gave me a book called The Business of the 21st Century by Robert Kiyosaki for me to read and he would text me when the meeting was.
BK Manager texted me the day, time and place of the meeting and told me to dress really sharp. I showed up to the meeting and there was 40-50 nicely dressed men and women. I met the mentors and they asked me what I thought of the book and just general life questions about where I work, etc etc. The meeting started, talked about working the 9-5 job and basically shaming the 9-5 job vs working this business and in 2-5 years making enough passive income to retire and being a millionaire.
At the end of presentation This business opportunity was through Amway and something about LTD, but don't totally recall the LTD part. You would be an IBO or Independent Business Owner. Working the business as an IBO he said you would need to spend $300 a month on products that you consume yourself and then recruit others under you to do the same, which is where the real profit is in a recruitment plan of 6-4-2. Also showed a chart of PV and BV and how much you receive in bonuses based on the volume of your group.
Talked about the different levels achieved in Amway and how your bonuses get higher when you reach these certain levels. I don't totally recall but I believe he said some of the level names such as Ruby, platinum, emerald and diamond. The mentors were Emeralds if I recall correctly. Then the meeting ended.
I met with the BK Manager a week or 2 later after the meeting. In those 2 weeks, I researched Amway and read many negative things about the company and many negative experiences from IBO's losing lots of money, how it's cultish and how the uplines scam the IBO's out of money with the tools scam of books, voicemail, CD'S, meetings and the big functions. It's all one big scam... Anyway, I told the BK Manager that it wouldn't be the right opportunity and I wasn't interested. He was nice and cool about my decision. Before leaving, I told him to do his due diligence and really keep track of his profit vs expenses and to do some actual research online. Sorry this was long haha
Thank you for your comments and for being upfront about our experience. It helps othe information seekers who get recruited. The opprtunity is only a good deal if you somehow can attain diamond status. But even if you do that, are you willing to deceive and rip off people t make your fortune? The diamonds make their brea and butter from tools and functions. But they also make bank if everyone downline does 100-300 PV.
I couldn't morally or ethically do that to family and friends. I also couldn't do to people I didn't know, it's just not right to me. The BK Manager is a young guy in his early to mid 20's, and I feel he is a good kid who thinks he is helping people. He just got swindled good and just doesn't realize yet. I'd like to help him realize it as a scam though, but I also believe a person has to figure it out on their own...
The fact is that a Burger King manager probably makes good money just from that franchise. Why the hell would he want to get involved in a two-bit operation like Amway?
He's just an assistant manager. I am guessing he's around $14-$16 an hour, which isn't too bad for South Dakota.
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