One of the major reasons why I think Amway is not such a good opportunity is because of the unfair multi tiered compensation plan. I have heard that Amway pays out about 32-33% to their IBOs, but I find it unfair in that you get rewarded for sponsoring people who move volume more than you do for actually selling products. I believe this is why so many IBOs are desperately trying to sponsor people and in some cases, deception and trickery is used in recruiting, which contributes to Amway's bad reputation.
This multi tiered compensation plan also rewards a few people at the expense of the masses. If an IBO works really hard and sold 100 PV worth of goods, that IBO would get $9 or $10 in a bonus from Amway and layers of upline would split up about $90. I fail to see how that is fair, especially when IBOs seemingly say "do the work and get paid". In this case, you do the work and your uplines get paid.
I think Amway would be more efficient by giving all IBO's 20-25% back as a bonus, with the remaining 8-13% in bonus (33 - 20 or 25) going to certain levels os achievers. I believe that this would truly allow someone to change their buying habits and gain some value. It would also be good for retention of IBOs because a 100 PV would get you a monthly bonus of about $60. If you sold 100 PV to customers, you would get the retail profit plus the bonus. I believe there would be less of an emphasis on sponsoring and more of an emphasis on selling. It would put less pressure on IBO's to recruit and sponsor, and I believe that Amway's reputation could be repaired in this manner. While you would have less emphasis on "going diamond", those who did achieve it could still get handsome bonuses.
I believe implementation of this type of compensation would also eliminate the endless need for cds and seminars. Sure, product expos and some teaching on salesmanship might help, but I believe that compensating the "majority" of IBOs would keep them interested in doing business and would lessen the need for tools. I believe this is a win-win for the majority of those in the business.
I'm sure some Amway apologists will find fault in my line of reasoning, but I believe this is a long term sustainable solution for Amway. Comments are welcome.
Thursday, May 10, 2012
Sunday, May 6, 2012
Amway - Just The Facts?
So many people get caught up in hype about Amway. Perhaps not from Amway the company, but the Amway groups leaders such as WWDB, N21, or BWW. They may present themselves as the ultra rich, or you may be shown pictures of wealth such as jets, mansions and nice cars and jewelry. Amwayers dress up in suits and business attire. It is all to give prospects the illusion of success when the reality is a stark contrast. I remember as an IBO, seeing all kinds of IBOs driving clunkers to the meetings but dressed up in a nice suit. But the reality was cars on their last legs and (probably) car payments. These nice folks were probably just misled that Amway's opportunity could lead them out of debt, or they could earn enough for their wives to be "job optional" or they might even make enough to walk the beaches of the world while residual income rolls in. The audiences see hope, but it is false hope.
That fact is that IBOs on average earn a gross income of about $100 a month. Amway says the average income of IBOs is $204. But their small print also says only 46% of IBOs are considered active, and therefore, Amway did not count inactive IBOs. So that representation is not a true "average". I might also add that the $204 is gross income, and IBOs who attend functions and purchase voicemail and cds are more than likely operating at a net loss.
Amway presenters also like to talk about the money you can save by shopping with Amway. The fact is that you can get a great deal more value (and products) by shopping at Walmart or Costco. Some Amwayers will say that Walmart doesn't sell Amway products, and while that is true, Walmart does sell some similar or same products which will almost always be cheaper than obtaining them from an IBO. I can't imagine that laundry soap or shampoo would be cheaper through Amway. In past price comparisons that I posted, you can get up to 4 times more product for the same price. This is very plausible when you factor in the real money added to Amway's cost because of the IBO bonuses that they pay. That's not to say that you can't find a single Amway product that might be competitive, but overall, there is no comparison. If you use a cashback credit card like I do, then you too, can be "paid" for shopping at Walmart or Costco.
It is also a fact that diamonds are not the care free uber wealthy people they would lead you to believe they are. As time passes, we see examples of former and current diamonds who spoke of their incomes and in some cases, foreclosures and bankruptcy also revealed through public documents, some background on what a diamond might earn and spend. It is my educated guess that many diamonds, if they try to keep up with the Joneses, are in financial difficulty. Ask your diamond for the facts. In real business, financials are verified, but alas, diamonds and Amway presenters are secretive about their income. Because they don't want you to see the facts? '
That fact is that IBOs on average earn a gross income of about $100 a month. Amway says the average income of IBOs is $204. But their small print also says only 46% of IBOs are considered active, and therefore, Amway did not count inactive IBOs. So that representation is not a true "average". I might also add that the $204 is gross income, and IBOs who attend functions and purchase voicemail and cds are more than likely operating at a net loss.
Amway presenters also like to talk about the money you can save by shopping with Amway. The fact is that you can get a great deal more value (and products) by shopping at Walmart or Costco. Some Amwayers will say that Walmart doesn't sell Amway products, and while that is true, Walmart does sell some similar or same products which will almost always be cheaper than obtaining them from an IBO. I can't imagine that laundry soap or shampoo would be cheaper through Amway. In past price comparisons that I posted, you can get up to 4 times more product for the same price. This is very plausible when you factor in the real money added to Amway's cost because of the IBO bonuses that they pay. That's not to say that you can't find a single Amway product that might be competitive, but overall, there is no comparison. If you use a cashback credit card like I do, then you too, can be "paid" for shopping at Walmart or Costco.
It is also a fact that diamonds are not the care free uber wealthy people they would lead you to believe they are. As time passes, we see examples of former and current diamonds who spoke of their incomes and in some cases, foreclosures and bankruptcy also revealed through public documents, some background on what a diamond might earn and spend. It is my educated guess that many diamonds, if they try to keep up with the Joneses, are in financial difficulty. Ask your diamond for the facts. In real business, financials are verified, but alas, diamonds and Amway presenters are secretive about their income. Because they don't want you to see the facts? '
Saturday, May 5, 2012
Amway And "Get Rich" Systems
Based on my experience in Amway, my blogging experience, and observations of other people who give financial advice such as real estate gurus who teach you to buy property with no money down, or others such as Robert Kiyosaki for that matter, all show testimonials of sucessful people. Obviously they do not show you the vast majority of people who try their systems and fail. They only show the best case scenario which might account of a fraction of 1% of the people who participate in their systems.
It is my informed opinion that whether it is Amway, WWDB, BWW, N21, real estate or the cashflow business, the vast majority of people who try these systems do not make any kind of significant income, if any income at all. Sure, some do, and those are shown as the possibilities. But if you watch infomercials, you will see in small print on the bottom of the screen, "unique experience", your results may vary. I believe that a similar message used to be at the end of Amway diamond recordings as well.
These systems in general do not work for various reasons. Many people simply do not have the acumen to work the system. Or the system has too many variables for the system to work, or the system calls for things beyond your control. For example, success in Amway generally requires you to sponsor others, something that is beyond the control of most people. Add in the lazy and people who are hoipng for a quick score and it is understandable that most will fail. But these systems are often set up where the majority simply cannot all succeed. Nowhere is that more true than the Amway business where the pyramidal compensation plan nearly guarantees failure for the lower level IBOs. People should also note that the common 6-4-2 Amway plan has 1 platinum with 78 downline. Most if not all of these downline will be losing money.
So what can someone do? Well, it may not be as sexy or attractive but a part time job and investing and saving might be something to think about. Even a part time business where you focus on selling products for a profit might work. It just seems prudent to avoid these "systems" as the primary beneficiary of these "systems" are the ones who directly profit from them. Do your due diligence!
It is my informed opinion that whether it is Amway, WWDB, BWW, N21, real estate or the cashflow business, the vast majority of people who try these systems do not make any kind of significant income, if any income at all. Sure, some do, and those are shown as the possibilities. But if you watch infomercials, you will see in small print on the bottom of the screen, "unique experience", your results may vary. I believe that a similar message used to be at the end of Amway diamond recordings as well.
These systems in general do not work for various reasons. Many people simply do not have the acumen to work the system. Or the system has too many variables for the system to work, or the system calls for things beyond your control. For example, success in Amway generally requires you to sponsor others, something that is beyond the control of most people. Add in the lazy and people who are hoipng for a quick score and it is understandable that most will fail. But these systems are often set up where the majority simply cannot all succeed. Nowhere is that more true than the Amway business where the pyramidal compensation plan nearly guarantees failure for the lower level IBOs. People should also note that the common 6-4-2 Amway plan has 1 platinum with 78 downline. Most if not all of these downline will be losing money.
So what can someone do? Well, it may not be as sexy or attractive but a part time job and investing and saving might be something to think about. Even a part time business where you focus on selling products for a profit might work. It just seems prudent to avoid these "systems" as the primary beneficiary of these "systems" are the ones who directly profit from them. Do your due diligence!
Friday, May 4, 2012
Amway Or Costco?
In my informed opinion, Costco is a much better bargain than Amway. Since I was an IBO and a Costco member, I have seen noticeable differences. The main one being that when I leave Costco, if I spend $200, I leave with a cartload of stuff, as compared to an armful of goods that I got through Amway for the same price. I wrote a post about price comparisons between Costco and Amway a while back. Costco came out ahead in nearly all price comparisons. That is not to say you cannot get any good products from Amway, but overall, I believe Costco to be the better bargain.
I live about 10 miles from my nearest Costo but driving there takes me along the coast of the island (I am from Hawaii) and it's a nice drive. When I arrive, I can fill my gas tank and using an Amercian Express card, I can get a 4% rebate on my gas purchase. I can also stop for lunch and get a foot long hot dog and a bottomless soda for $1.50, a deal that is hard to top. Additionally, there are great deals there. For example, a case of water, 35 bottles is $5.99. (How much for a case of perfect water?) I can also purchase a whole slow roasted chicken for $5.99, or a full rack of BBQ ribs for $9.99 or a whole 20" pizza for $9.99. I might add that the food at Costco is great.
While Amway's laundry detergent and cosmetics might be somewhat competitive to other retailers and Costco, the overall array of products can be found cheaper at Costco and other big retailers. Additionally, I get up to a 2% rebate when I make my purchase with American express. No other strings attached! So yeah, I get "paid" to shop at Costco. I also get the rebate with no minimum quota.
But the biggest reason I like Costco? Nobody has ever tricked me into a Costco meeting which will try to sell me a Costco outlet! There is no Costco upline. Nobody has ever called me a broke loser because I didn't join or buy goods from Costco. Nobody tries to question my character if I decide not to shop at Costco. There are no Costco employees calling me names because I choose to shop elsewhere. There are no cds teaching me how to shop at Costco, nor do I have to attend any seminars to learn how to shop at Costco. I simply shop and save.
Some Amway defenders have tried to make price comparisons between Costco and Amway. If you compare Costco online to Amway, the prices are closer, with Costco prevailing, but Costco prices are much cheaper if you are there in person and you can really add to your savings using a cash back credit card. I challenge prospects and current IBOs to walk down the aisles at Costco and compare prices.
I live about 10 miles from my nearest Costo but driving there takes me along the coast of the island (I am from Hawaii) and it's a nice drive. When I arrive, I can fill my gas tank and using an Amercian Express card, I can get a 4% rebate on my gas purchase. I can also stop for lunch and get a foot long hot dog and a bottomless soda for $1.50, a deal that is hard to top. Additionally, there are great deals there. For example, a case of water, 35 bottles is $5.99. (How much for a case of perfect water?) I can also purchase a whole slow roasted chicken for $5.99, or a full rack of BBQ ribs for $9.99 or a whole 20" pizza for $9.99. I might add that the food at Costco is great.
While Amway's laundry detergent and cosmetics might be somewhat competitive to other retailers and Costco, the overall array of products can be found cheaper at Costco and other big retailers. Additionally, I get up to a 2% rebate when I make my purchase with American express. No other strings attached! So yeah, I get "paid" to shop at Costco. I also get the rebate with no minimum quota.
But the biggest reason I like Costco? Nobody has ever tricked me into a Costco meeting which will try to sell me a Costco outlet! There is no Costco upline. Nobody has ever called me a broke loser because I didn't join or buy goods from Costco. Nobody tries to question my character if I decide not to shop at Costco. There are no Costco employees calling me names because I choose to shop elsewhere. There are no cds teaching me how to shop at Costco, nor do I have to attend any seminars to learn how to shop at Costco. I simply shop and save.
Some Amway defenders have tried to make price comparisons between Costco and Amway. If you compare Costco online to Amway, the prices are closer, with Costco prevailing, but Costco prices are much cheaper if you are there in person and you can really add to your savings using a cash back credit card. I challenge prospects and current IBOs to walk down the aisles at Costco and compare prices.
Thursday, May 3, 2012
Why IBOs Don't Make Money?
One of the things touted by many upline leaders as the "key to success" is CORE. I have outlined the elements of CORE here. I believe most AMO groups teach CORE as the key to success.
1 - Show the Plan
2 - Retail the Products
3 - Tapes/cds
4 - Books
5 - Functions
6 - Accountability
7 - Counsel with Upline (Be teachable!)
8 - Buy 100% of your own products
9 – Communikate
In these nine steps, only #2 may actually net the IBO a profit, but this step is not emphasized in many groups. Some leaders gloss over this step and instead, promote "buy from yourself". In all the other core steps, you either spend time and/or money doing things that do not produce income for your business. If you, as an IBO spend most of your time in non income producing activities, guess what? You will suffer losses. It is no wonder nearly all IBOs lose money, they are taught to spend most of their time in activities that do not produce income!
Imagine owning a brick and mortar store where you open the store for one hour a day. The rest of the day you are reading books, listening to tapes/cds, and paying to attend seminars and listening to voicemail messages. Oh, and in addition to opening your store for an hour a day, you don't advertise except for word of mouth. Could you survive in business? I think not. Amway now advertises, but you are not Amway, you are an independent business.
So can an IBO make money by spending most of his/her time in non income producing activity? I think not.
1 - Show the Plan
2 - Retail the Products
3 - Tapes/cds
4 - Books
5 - Functions
6 - Accountability
7 - Counsel with Upline (Be teachable!)
8 - Buy 100% of your own products
9 – Communikate
In these nine steps, only #2 may actually net the IBO a profit, but this step is not emphasized in many groups. Some leaders gloss over this step and instead, promote "buy from yourself". In all the other core steps, you either spend time and/or money doing things that do not produce income for your business. If you, as an IBO spend most of your time in non income producing activities, guess what? You will suffer losses. It is no wonder nearly all IBOs lose money, they are taught to spend most of their time in activities that do not produce income!
Imagine owning a brick and mortar store where you open the store for one hour a day. The rest of the day you are reading books, listening to tapes/cds, and paying to attend seminars and listening to voicemail messages. Oh, and in addition to opening your store for an hour a day, you don't advertise except for word of mouth. Could you survive in business? I think not. Amway now advertises, but you are not Amway, you are an independent business.
So can an IBO make money by spending most of his/her time in non income producing activity? I think not.
Wednesday, May 2, 2012
Amway IBO vs. A College Graduate?
According to a U.S. Census Department study entitled "The Big Payoff: Educational Attainment and Synthetic Estimates of Work-Life Earnings" (http://www.census.gov/prod/2002pubs/p23%2D210.pdf), over an adult's working life the following are average lifetime earnings based on educational level attained:
High school graduates - $1.2 million Bachelor's degree - $2.1 million Master's degree - $2.5 million Doctoral degrees - $3.4 million Professional degrees do best at $4.4 million.
In 1999, average annual earnings ranged from $18,900 for high school dropouts to $25,900 for high school graduates, $45,400 for college graduates and $99,300 for the holders of professional degrees (medical doctors, dentists, veterinarians and lawyers).
Given empirical, verified and objective data demonstrating that a college education more than pays for itself, it is foolish for someone to suggest that they can't reasonably expect a return on their investment in a college education. It would take a real moron to suggest that they could exceed that return by wasting their time building an Amway business. Especially given the data showing miserable average results.
As far as the cost of that education and the implication that a person will incur massive debt, that too is a complete fabrication.
For those of you interested in the actual data on student loans and the effect of a college education on earnings, look here:
http://www.studentloanfacts.org/NR/rdonlyres/97FD743A-8F38-4641-916A-C4D907A84EE5/0/factbook.pdf
and here: http://www.collegeboard.com/prod_downloads/press/cost03/cb_trends_aid_2003.pdf
and here: http://nces.ed.gov/programs/coe/2003/pdf/42_2003.pdf
Oh, and if you are an "average" IBO, spending 40 years working Amway with the average earnings of $115 a month, your career of 40 years will gross you $55,200.
High school graduates - $1.2 million Bachelor's degree - $2.1 million Master's degree - $2.5 million Doctoral degrees - $3.4 million Professional degrees do best at $4.4 million.
In 1999, average annual earnings ranged from $18,900 for high school dropouts to $25,900 for high school graduates, $45,400 for college graduates and $99,300 for the holders of professional degrees (medical doctors, dentists, veterinarians and lawyers).
Given empirical, verified and objective data demonstrating that a college education more than pays for itself, it is foolish for someone to suggest that they can't reasonably expect a return on their investment in a college education. It would take a real moron to suggest that they could exceed that return by wasting their time building an Amway business. Especially given the data showing miserable average results.
As far as the cost of that education and the implication that a person will incur massive debt, that too is a complete fabrication.
For those of you interested in the actual data on student loans and the effect of a college education on earnings, look here:
http://www.studentloanfacts.org/NR/rdonlyres/97FD743A-8F38-4641-916A-C4D907A84EE5/0/factbook.pdf
and here: http://www.collegeboard.com/prod_downloads/press/cost03/cb_trends_aid_2003.pdf
and here: http://nces.ed.gov/programs/coe/2003/pdf/42_2003.pdf
Oh, and if you are an "average" IBO, spending 40 years working Amway with the average earnings of $115 a month, your career of 40 years will gross you $55,200.
Tuesday, May 1, 2012
Amway Creates Millionaires?
I keep hearing from some IBOs that they belive that Amway has created more millionaires than any other company in the US. I call BS on that claim. I am not saying that Amway hasn't created any millionaires, obviously, the Amway owners are worth billions of dollars. But what the IBOs are apparently implying is that the diamonds are millionaires. I'm sure there are some diamonds who indeed are millionires, especially if they are tenured diamonds, in particular the double diamonds and higher. But conversely, I believe that many high level diamonds are not millionaires. I believe it is just as common for a diamond to be in debt as it is for a diamond to be living large. I also believe that many diamonds did not accumulate their alleged wealth exclusively from Amway.
The reason why this is an issue is because these big pins will stand on stage and show off excessive wealth and imply that it is their Amway income that pays for these mansions, sports cars, and in some cases, jets. In the US, I attended a function called "Dream Nite" where these kinds of trapping are displayed, to the tune of the song "I wanna be rich". The diamonds would say that you can have what they have, if only you will do what they advise. These functions still go on today and I believe it is now called Winter Conference.
Stanley and Danko's book, "The Millionaire Next Door" http://www.personalfinanceplaybook.com/2009/08/the-millionaire-next-door/
This book makes some very interesting points which I believe applies to Amway diamonds. I will outline the significant ones and I will comment below:
**Predictably, the data shows that most people who you believe to be very rich are not.
**High net worth individuals, statistically, tend to be people that live within their means. They don’t spend a lot of money. They don’t waste money. They tend to be pretty frugal people.
**The authors point out that most of the richest people you know aren’t driving expensive luxury automobiles. That’s what the people who want everyone to think they’re rich drive.
Joe's commentary. The book does say that about 1/3 of millionaires acquired their wealth thru a J-O-B and saved and invested, but did mention that many millionaires were also business owners, such as a pest control company, etc. But based on the points made by the book above, I can see where it is likely that diamonds portray a wealthy lifestyle as a recruitment tactic, when the reality is they may be living very middle class lifestyles off stage, or may even be in debt. I have seen evidence of diamonds having their homes foreclosed and being in debt (Ruth Carter's book: Amway: Behind the Smoke and Mirrors). Recently, there was also a report that Triple Diamond Greg Duncan filed for bankruptcy. The report indicated that he could not make his mortgages, or something to that tune. Odd, because when I was in WWDB, some of the upline leaders said diamonds paid cash for everything because paying interest to the bank wasn't very smart.
My question is why IBOs continue to make up these claims? Try googling millionaire or Amway millionaire. There is nothing to indicate that Amway was responsible for creating the "most millionaires" of any US company. If this were true, wouldn't Amway state it on their website?
The reason why this is an issue is because these big pins will stand on stage and show off excessive wealth and imply that it is their Amway income that pays for these mansions, sports cars, and in some cases, jets. In the US, I attended a function called "Dream Nite" where these kinds of trapping are displayed, to the tune of the song "I wanna be rich". The diamonds would say that you can have what they have, if only you will do what they advise. These functions still go on today and I believe it is now called Winter Conference.
Stanley and Danko's book, "The Millionaire Next Door" http://www.personalfinanceplaybook.com/2009/08/the-millionaire-next-door/
This book makes some very interesting points which I believe applies to Amway diamonds. I will outline the significant ones and I will comment below:
**Predictably, the data shows that most people who you believe to be very rich are not.
**High net worth individuals, statistically, tend to be people that live within their means. They don’t spend a lot of money. They don’t waste money. They tend to be pretty frugal people.
**The authors point out that most of the richest people you know aren’t driving expensive luxury automobiles. That’s what the people who want everyone to think they’re rich drive.
Joe's commentary. The book does say that about 1/3 of millionaires acquired their wealth thru a J-O-B and saved and invested, but did mention that many millionaires were also business owners, such as a pest control company, etc. But based on the points made by the book above, I can see where it is likely that diamonds portray a wealthy lifestyle as a recruitment tactic, when the reality is they may be living very middle class lifestyles off stage, or may even be in debt. I have seen evidence of diamonds having their homes foreclosed and being in debt (Ruth Carter's book: Amway: Behind the Smoke and Mirrors). Recently, there was also a report that Triple Diamond Greg Duncan filed for bankruptcy. The report indicated that he could not make his mortgages, or something to that tune. Odd, because when I was in WWDB, some of the upline leaders said diamonds paid cash for everything because paying interest to the bank wasn't very smart.
My question is why IBOs continue to make up these claims? Try googling millionaire or Amway millionaire. There is nothing to indicate that Amway was responsible for creating the "most millionaires" of any US company. If this were true, wouldn't Amway state it on their website?
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