Let me start out by saying that Amway, at least to the letter of the law, appears to be a perfectly legal company. Therefore I am not saying or implying that Amway is illegal. But I believe that the way Amway businesses are run, are like pyramids. In most groups, you will have the lowest level IBOs efforts and tool purchases being responsible for the upline bonuses and tools income. Many many IBOs are fooled into thinking that the ability to surpass your upline or that you don't get paid to recruit downline makes this a good deal. Think about it for a bit. Aren't most Amway gatherings about motivation and recruiting?
Unless you have a very very rare group where actual product sales to non IBOs is sufficient to cover the costs of running your business, functions and all, then it is true that the lower level IBO's jobs are the primary source of income for the uplines. How many groups are like that where selling is nearly exclusively to retail customers and not downline ? None that I have ever seen or know of. In fact, how often do IBOs even sell enough products to cover their expenses for even one month out of the year? The groups that teach "buy from yourself" end up doing the most financial damage to their groups because the downline's expenses are then covered exclusively from the downlines jobs, bank accounts, or drive the downline into debt.
I've seen and discussed group structures in forums many times and I can only conclude that tool sales easily wipe out what little profits/bonuses some of the downlines might receive. Only when an IBO is able to sponsor enough downline to absorb the losses for them will they finally break even or make a little profit. I would guess that the 4000 PV level or platinum is where a dedicated CORE IBO would break even and possibly start to make a small profit. On the other hand, a hard CORE dedicated IBO can still lose money at 4000 or at platinum. But we also know that most platinum groups have 100 or more IBOs in order to generate 7500 PV. Thus we can also conclude that less than 1% of IBOs make a net profit. The only way IBOs can earn a net profit at a lower level is to avoid purchasing tools and to avoid paying for functions. Those who get involved in a system such as WWDB or N21 almost guarantee that they will have a net loss.
Sure, my job may have a pyramid structure with the CEO making the most money. But the difference is that in a company, even the lowest paid employee still receives a paycheck and has money at the end of the month. The same claim cannot be made by IBOs. For these reasons, I believe Amway to be a product pyramid. IBOs and information seekers are free to participate, but I challenge them to sit down and really analyze their ability to make a net profit. In most cases, the analysis won't be favorable. If you are in the US in particular, you may have great difficulty in even being able to discuss "Amway" without getting strange looks your way from others. Good luck in whatever you decide
You comparing Job to a business.
ReplyDeleteHence you don't get the concept. Study the traditional bussiness model and the number of business houses shutting and owners committng suicide, as compared to minimum investment in tools and tickets for meetings.
Not comparable..
Why do Amway leaders compare their busiensss to jobs?
ReplyDeleteTo Maya:
ReplyDeleteThe whole thing about Amway and other MLMs is that they are not product-based, but recruitment-and-hype-based.
There is no real business going on where things are not sold to a public that wants them, and sold for a profit. Amway (and other MLMs) don't really sell products, except to their captive-salesperson base of IBOs. Sales to non-members are minimal.
One Amway racketeer used to say: "This isn't a business opportunity about sales! This is a business opportunity ABOUT business opportunities!"
This is proof positive that Away is just a racket where you try to get other people to join the racket. It's "an opportunity about business opportunities."
Maya talks about "minimum investment in tools and tickets for meetings." Yeah, sure. As long as you can convince other people to make the same investment. There's no actual business going on here -- it's just the transfer of money within a closed corporation.
As for businesses closing down and their owners committing suicide, don't bank on it, Maya. Real retail businesses are still the backbone of capitalism and free enterprise. Amway and the MLM schemes are nothing but two-bit chickenshit next to them.
While the risks of a traditional business are greater so are the rewards and the success rate is far greater than being successful in Amway. I have been a part of two LOS and while I initially thought I could be successful with one over the other, the basic philosophy is the same with both.
ReplyDeleteRegarding suicides, in my country we had a case of former Herbalife and then Talkfusion diamond who hang himself....
ReplyDeleteMartin Rysan was his name and on businnessforhome.org are still articles about how he is going to nail it.
Which he did...
@Maya. This post compares Amway to a job, to put the record straight on a claims about jobs that Amway leaders love to make. The Amway defender's cynical view on employment in corporations is not different from the founding philosophy of communism, neither philosophy provided a better alternative, and the similarity makes all the Amway talk about free enterprise sound pretty empty.
ReplyDeleteThe picture does not look any prettier for Amway when compared to business.
According to the US sensus (2010) there were 27.9 Million registered businesses in the US, out of a working population of 129 million, which means the odds of succeeding in a business some time in a lifetime, in even in the general population, seems to be quite a bit higher than in Amway. Source is the US sensus (and amway.com, regarding prospects in Amway).
I wonder what Maya's source is for data regarding higher suicide rates amongst non MLM business owners, compared to people that are employed and MLM "business owners". I suspect the source is a mixture of perception and Amway leader "wisdom" about business. Whenever Amway defenders share their wisdom about "traditional business" or any business, to put Amway into perspective, what follows is usually utter nonsense.
These wisdoms rely on a perception that start with a tiny grain of truth, and are warped with falsehoods that play into misunderstandings, and developed into battle cards to use against doubters. Since the arguments were originally heard in a hype, and probably met with cheers and applause, the IBO foot soldiers have a false impression that these are authoritative truths that would silence the doubters if they would only listen with open minds.
One example is Amway leaders saying the key to success in any business is "hard work, hard work and more hard work" and "not ever quitting". It sounds believable because good work ethic and perseverance are worthy virtues. But the the emphasis is so misplaced that it actually becomes a lie. The "not quitting" refers to a specific recipe and "hard work" refers to following a recipe such of CORE (of which 7 out of 9 steps are not income generating). In real business there is a time to quit something that has been tried over and again, and does not work anymore. There is even a time to work less, if activities that constitute the effort are not income generating. Hard work for it's own sake has no value (another communist founding philosophy mirrored in the Amway IBO thinking), it is what is produced for a real customer that has value.
At the same time, there are many equally important and perhaps (since hard work is a given) I'd say MORE important keys to business success, such as differentiation in the market, focus on customer value, financial management, and having a dynamic business model that can easily be adapted / changed. The whole message of Amway is that since a business can be copied, there is no such thing as market differentiation, fretting over numbers is for doubters (not much financial management), and the 1959 magic does not need to change because of look at all the sports cars and mansions. Like in communism, the Amway IBO paradigm has no real customer, let alone having room for focussing on customer value. The key drivers for business success are completely missing.
I would strongly advise Maya to follow her own advice, and study the "traditional bussiness model" (with one change, she'll get better results if she spells business correctly) and not rely on what upline says about it. Speaking of which. Real business does not have someone in it's supply chain as a mentor. What do you expect such a "mentor" to advise you about quitting that venture, and about increasing sales even if the overheads don't make the sales worthwhile, or about investigating real key drivers for business success that may compromise their share? Get a real mentor or do without one.