One of the things IBOs like to tout is how Amway had over 9 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 (if any). After paying operational costs and their eomployees, 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 youself 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. Again, a product of human nature.
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 the sales and the IBO gets a tiny bonus but upline still gets the lion's share of the bonus that Amway pays out..
The point it 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 priviledge of consuming and selling Amway products. Everyone makes a buck except the lower level IBOs. The lower level IBOs comprise the vast majority of the IBOs in Amway.
Amway had over 9 billion dollars in sales last year. How much net profit do you think they would have if the DeVos and VanAndel families consumed most of that volume? Right, they would have massive losses. What makes IBOs think they are any different?
Good for the owners of the company but not for the IBO's who advocates prosumerism.
ReplyDeleteAbsolutely true!
DeleteSponsoring people is already "personal touch", it is just that you are selling them hope instead of selling the soap.
ReplyDeleteDude,
ReplyDeletePlease go read Business Of The 21st Century by Robert Kiyosaki
Why would I buy a book from that scammer?
DeleteKiyosaki's book should be titled "The Con-Job of the 21st Century."
DeleteThe man's a racketeer, who has never been in an MLM business himself, even though he sells materials advising other people to join them.
I heard that Kiyosaki was practically broke when some diamond read his rich dad book and incorporated it into their teachings. Suddenly he became a best selling author and a pseudo authority on finances. However, he has never revealed how he accumulated his alleged wealth bit I'm nearly certain it was selling material to brainwashed Amway IBOs.
DeleteI can go into a lot of details about Robert Kiyosaki, however I feel John T. Reed does a better job. You can read his entry here, http://johntreed.com/blogs/john-t-reed-s-real-estate-investment-blog/61651011-john-t-reeds-analysis-of-robert-t-kiyosakis-book-rich-dad-poor-dad-part-1. While it may be a little long, I do believe it is worth the read and then some. I found it fascinating.
DeleteThere are thousands of business books that you can find, why read the the ones written by Kiyosaki?
DeleteJoe, isn't that sponsoring a downline is also considered selling? It is just that you are selling hope to your downlines and downlines buy it hook line and sinker.
DeleteYou don't get paid directly to sponsor anyone but you're hoping they will buy stuff and sponsor others too. That's how you begin to leverage your volume.
DeleteTo the Anonymous that suggested Kiyosaki...why? What did you learn from that book? What do you know of his history? Have you ever run a business that wasn't MLM/Network Marketing/Direct Selling/Social Commerce/Relational Marketing/Next made up business name...?
ReplyDeleteI'm always curious as to why people find Kiyosaki's book anything other than laughable...he offers no depth to his business mindset, doesn't describe how to be successful in the business, and blathers about himself for 90% of the read...Oh and apparently he couldn't afford a good editor, because his writing is atrocious.
Yes, from the reviews I've seen, he offer bad and possibly dangerous advice. One of his tips was to get to know higher ups so you can do insider trading, which is illegal.
DeleteKiyosaki is just one of those flash-in-the-pan bullshit artists who for some reason becomes popular with dreamers fixated on "the big time." Like Alvin Toffler, he presents a kind of futuristic, sci-fi picture of "how things will be," and how you too can latch onto the wave and surf into financial freedom.
DeleteHe's a snakeoil salesman and a scammer.
DeleteWhy they make billion in sales? It's because 99% of its customers are the IBO's themselves and not the general public.
ReplyDeleteI don't think it's 99%. There are purchases from sympathetic family and friends.
DeleteIt escapes me how anyone can think that you can make money by buying stuff from yourself.
Delete"I'll order tons and tons of Amway stuff for my personal use, and I'll get rich!"
In a sane world (not Kiyosaki's), a statement of that nature would get you committed to a psychiatric clinic.
Yes, that's like using a cashback credit card and charging one million dollars so you can make $10,000. It silly how IBOs thinkg you make any money by purchasing products.
DeleteI believe one of the only people who bought from themselves and actually broke even was Jay-Z. He went to HIS club and bought HIS vodka. He literally put that entire purchase back in his pocket...but that is the absolute best example. It is mathematically impossible to spend money on consumable products for daily use and expect to make a profit.
ReplyDeleteYes, in Amway, you take dollars out of your bank and put a few cents back in your pockets. That's how Amway "pays you" to shop with them.
Delete