It is my observation that people who join Amway usually end up losing money in the end. They may get involved to make a few bucks or because they are mistakenly led to believe that they will become millionaires in Amway in 2-5 years. I know my sponsor convinced me that we would be millionaires in a few years. These folks who recruit new IBOs into Amway are often associated with a "system" such as Worldwide Dream Builders (WWDB) or Network 21 (N21). These system promoters, often diamonds, may mislead the recruits by showing them pictures of mansions or other luxuries, implying that they attained these goods with their Amway business. In many cases, it is a deception, especially when to know for a fact that some diamond leaders who proclaimed that they only make cash purchases, had their homes foreclosed. Without the hype, I am sure there would be fewer sign ups. But what is the evidence?
It is simple. Amway reports that the average active IBO earns about $202 a month in gross income. This average includes diamonds and other higher end IBOs. I believe if you calculated the median, the average would be much lower. Also, Amway disregards IBOs who "do nothing" by counting only "active" IBOs. Active is loosely defined as an IBO making an attempt at a sale or to sponsor a downline. However, a true "average" income would thus be $100 a month gross income.But what makes IBOs operate at a loss is the system expenses. The system generally consists of voicemail, standing orders, cds, functions, books and other materials. An average business building IBO might spend an average of $250 a month (or more, depending on the level of commitment) on these expenses. Amway defenders like to decry the amount, but there are couples who would likely spend more and IBOs who must travel by air to functions would spend more. Single IBOs who buy only the minimum might spend a bit less. Some IBOs with abusive uplines might spend much more than $250 a month on tools. I believe my former sponsor probably spent easily an average of $1000 a month on average. (I am from Hawaii so the average cost of functions is greater due to long distance travel)
Thus, if the average IBO earns $202 a month but the same average IBO spends $250 a month, or more, on tools, the average active IBO is losing at least $48 a month, with lower level IBOs (i.e. 100 PV) would lose more.
Look at a group of 100 IBOs at 100 PV. (This is just a model). If a 100 business building IBOs average $250 a month on tools, they as a group would expend $25,000 a month on tools. Their volume would be 10,000 PV, or about 30,000 BV. This would generate about $7500 in bonuses per month. Thus, this group spent $25,000 to learn and be motivated while the group splits up $7500 a month in bonuses. The platinum would get the lion's share of the bonus but most of the rest of the group will suffer net losses. As the group grows, the bonus may grow, but so will their expenditures on tools.
The only way the group can make money as a whole is to avoid participation in the tools altogether. The evidence is right here with simple math. The systems do not work because the cost of the system is likely to consume all of the Amway generated bonuses and more. I gladly challenge anyone to explain in detail how this post is not reflective of the reality of being in Amway and a system such as WWDB or Network21.
The facts speak for themselves.
2 comments:
There are many ways to gauge evidence.
One could speak to someone who sells premium cars or premium real estate, or who are into premium baking services, or who works at a fancy golf course, and ask how their clients made their fortune. For example I have a friend who works in premium banking services, and have heard many income sources mentioned, some business models I haven’t really heard of. I have never heard Amway distributor mentioned. This is odd because I know a fair number of people have been involved with Amway.
We can each do this experiment for ourselves. The result is always the same.
Think about it. If an Amway distributorship made good money, luxury car dealers, investment bankers, tax accountants etc would be sponsoring those LoS events to promote their products and services to this supposed market of people with good disposable income. Why don’t they?
Now if we forget about filthy rich, forget about people who own premium assets, and just assess the ability to make any semi decent amount of money, for the business to work at all, well then the result is the same. Joecool has previously dared any reader to approach a bank manager to finance expanding a business with the Amway business plan. Remember, banks WANT to lend out money to prospective clients who they think can pay it back with interest. That is how banks make money. If he laughs at the plan, or an Amway defender is too ashamed to pitch it to a bank manager, that should be saying something!
There is a lot of common sense evidence around us that Amway does not produce wealth. Heck, the system does not even produce many who are able to quit their real job.
Very true. You don't see any big financial institution or major retailer sponsoring an Amway "function." The functions are totally funded by the fees of those who attend.
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