There's been much debate recently over the issue of IBOs selling products. Now of course in the IBO world, there are going to be some IBOs who are exceptional at selling products and possibly in foreign countries where Amway has not spoiled their reputation as it apparently has in North America, it might be possible to sell some products. But the experience of a typical IBO probably cannot be one where products flow to customers regularly. Now I do not wish to debate the merits of whether or not downline are considered customers as that is an endless and pointless debate because the bottom line would be that uplines are making their income on the backs of their downline, thus confirming the appearance of a product pyramid. Aside from downline, it would appear that the remaining customers are mostly sympathetic family and friends who buy a few token products.
But why do rank and file IBOs struggle to sell Amway products? Surely Amway has some decent and some good products. But in North America, Amway's goods are generic in nature but sell at premium prices. So, unless you are convinced that their quality is that great for the price, the average Joe is simply going to buy a similar product at WalMart or a Costco. Also, when you must justify and explain to potential customers that you actually provide a better value due to concentration and/or cost per use, it not only becomes labor intensive, but confusing for the average consumer. Add in the past reputation of the Amway name being associated with a scam or a pyramid and you have an extremely tough sell.Partner stores are often used by IBOs to bring name credibility, but I wonder how many of these products are actually sold to customers. I suspect that very few products are sold because the price is not that competitive and because many consumers, like myself prefer to touch and feel certain products before making a decision to buy. Even with a money back guarantee, customers don't want to be bothered with returning something via the mail. Also, the term partner store seems odd because Amway IBOs sell partner store goods, but "partner" stores don't sell Amway products. The relationship is not a two-way street, in other words.
Also, while Amway recently started to market their opportunity and goods with national advertising, I believe the advertising is more of a retention issue. IBOs can say "see, we're on TV, we must be credible". I believe it may be too late in North America. In the past. IBOs would say they had greater bonuses because Amway saved money on advertising. Thus IBOs engaged in the most inefficient manner of moving products. They did it person to person and in the past, door to door. The reason why super bowl commercials are so expensive is because they can reach tens or hundreds of millions of people worldwide. But basically, Amway IBOs to sell the products and the opportunity, must do it one person at a time, and they must also overcome the many negative opinions that North Americans have about Amway. Amway sales have been tanking since 2013. Amway revenues have gone from 11.8 billion at its peak in 2013 and dropped each year with 8.6 billion in 2017 being the most recent numbers.
But it is for these reasons that IBOs probably cannot move many products except to some family and friends. In what REAL business can you make a sustainable living, much less fabulous wealth by selling some goods to family and friends? I can't think of any, and you are seriously mislead if you think you can do this with Amway products and earn untold wealth and riches.
There is more than price vs value of products that makes it a particularly lousy sales opportunity (although that is a big factor). The starting commissions are quite low for the type of products on basket sizes.
ReplyDeleteTo illustrate that, for a person who earns, say 10%, commission, to earn a very average gross profit (commission) of $5,000 per month, sales need to exceed $50,000. If it is supplying households with a monthly basket of soaps etc worth $400, the business owner needs to sign up 125 recurring customers who need to be convinced to switch their buying habits. And I'm talking about gross profit, overhead expenses need to be factored in too. The personalised nature and the pitch needed makes it difficult. It is not a soft drink stand where it is very easy to have thousands of anonymous customers in a week, who just walk buy and think it's hot they could do with a cold drink. Nor is at a real estate agency or car dealership where the transaction sizes make up for the low commission and low volumes. As far as sales opportunities go, trying to make a living from peddling Amway products (or any non perishable monthly supplies for that matter) is by nature extremely difficult. It is not a need that many cry out for (oh I wish I could buy better quality dish washing soap or premium tooth paste).
A person with the sales skills to pull that off to make a modest $5,000 a month, would be able make an absolute killing selling cars, houses or computer equipment. And sales people who deliver the results, especially if it is commissions only, tend to have a lot of freedom in their schedules even in instances where they are technically employed. With the difficulty of authentic Amway sales, it is little wonder that for most who join it, it boils down to just selling to yourself and getting others to do the same. The opportunity, in practice, is unashamedly marketed that way too. That is why they say "not much into sales, no problem!". Even this is misleading, getting others to join the opportunity is quite a feat, much more so than selling a soft drink on a hot day, or a car in a showroom to a person who stopped to look because he was interested. Getting others to sign up is not only very much sales, it is a very difficult sell to pull off.
Lastly, many have written about whether the products are worth it, with quite tedious and lengthy comparisons. I believe answering the question is much easier than that. The bottom line is whether those who quit the opportunity for whatever reason, if the business is not for them, whether they tend to stay convinced that they are onto a basket of excellent value products and keep buying them. The cold fact is, they don't. Amway produces vast armies of quitters every year. If only a tiny portion of them stayed on as consumers, a company that has been operating since 1959 would long have had it's products in many more homes. If the products don't appeal that much to people who tried to sell them and who have used them, how one Earth can we argue the products have a natural appeal to most consumers if they only tried? The cliche question is always "wouldn't you pay more for quality?". The answer provided by most of those who at one time on their lives have asked the question themselves, seems to be, in this case, a resounding no. At least not that much more for this difference in quality.
Kwaaikat, excellent and spot on analysis!
ReplyDeleteKwaaikat is quite correct. Amway was never about selling the products to the general public, or even to your down-line. It was always about selling "the business opportunity," and all the wordy bullshit that went along with that.
ReplyDeleteI recall one Amway enthusiast saying the following: "This is a business opportunity ABOUT business opportunities!" In other words, products were basically insignificant -- your main task was to convince other persons to sign up for what you had signed up for.