May 21, 2013 Leave a comment
Everybody, it seems, has an Amway story. For some, the story is a good one. For others, not so much.
There are even numerous blog sites devoted to “exposing the scam”, or the “ambots” or whatever the name of Amway IBOs is to these permanently negative, angry, and, quite frankly, very small people.
After reading that last sentence, I’m sure you’re probably thinking I’m in the “Amway cult” as well, given I don’t have a very high opinion of people who devote their lives to tearing others down. If your mind’s made up, nothing I say from now on will change your mind anyway, so you may as well stop reading here.
The fact is, I am not building a business with Amway. I have used, and continue to use some of the products offered in the product line, because (a) it’s good stuff and (b) it’s easier to order online and have it delivered than it is to buy it in a store.
But that’s where it ends for me.
At one time, I was trying to build a business within the Amway business model. I call it that because, at the time, I was involved with Quixtar, a sister company which was more recently melded back into the Amway name. Be that as it may, the business plan was identical, and the people were the same in both.
People criticize Amway for a number of reasons. ”It’s a Pyramid Scheme” (false), “You never make any money” (subjective), “It’s a scam” (false), “It’s a cult” (subjective), and so on.
First, I can see why some people believe Amway to be a cult. There are various aspects to how some of the organizational groups operate which may be “cult-like”. I attended a meeting with one such group (and didn’t join) – they had their guest speaker come in to a standing ovation, whoops and whistles of joy, he gave a talk on living your dreams and presented Amway in the best way he could, and then shook everyone’s hand, asking, “are you going to do this?”
Afterwards, there was a “nightowl” where everyone who attended the meeting went and chatted over dessert, telling each other how wonderful they were to the early hours of the next morning.
So, yes, I can see why there are some perceptions of Amway being a cult – sleep depravation, caffeine and sugar, mutual admiration, admiration of a central figure with a message, and devotion to repeating the message to others.
That group wasn’t for me, clearly, so I didn’t get involved with them. The group I did join was far more business-oriented and down to earth. I’m also sure that there are some areas of criticism of the group I was with, because there was still the basic premise under which Amway operates: Use product, refer others.
Whether someone can make money at Amway is really dependent on them. It certainly is not easy, but then again, business isn’t easy. In fact, when I was talking to someone about the business, I pulled no punches – this is going to be one of the most challenging, frustrating at times, difficult things you’ve ever done, but if you succeed, you will make millions. (All true.)
(I didn’t make millions, and neither did anyone I talked to about the business.)
To really succeed at Amway, you need absolute focus. Every breath you take, every thought you think, every tube of toothpaste you buy, every decision you make must be around the question, “how will this benefit my Amway business?” I don’t know many people who have that kind of focus, and those people I do know with that kind of focus are contracting with Amway and doing very will at it.
I’m not one of them, and I’m okay with it.
The claim that Amway is a scam, however, is also false. Amway is a legitimate business, and after years of investigation by the authorities, has been cleared – at the corporate level – of any wrongdoing. The company was told to make some changes to their operation — which they implemented — and everything continued just fine. With any massive organization though, there are, yes, some nefarious people who have damaged the reputation of the company as a whole, despite not actually being employees. Some have, for example, made their millions selling “tools” (books, tapes, etc.) that would be used to build an Amway-affiliated business rather than actually building a business to begin with; and of course, that’s wrong on many levels. Then there are those who used “bait and switch” tactics – invite your friends over for dinner, and spring an Amway business presentation on them. Not only is that unethical, but it’s an incredibly good way to lose all your friends in rapid succession!
Amway’s legitimacy, though, comes from the fact that it is a business that actually sells product, unlike a pyramid scam, which does not.
Here’s the difference:
In a pyramid scam, the model may be hidden behind a “front” product, but it has little or no value, and usually purchasing the product is a requirement for entry. Essentially, it goes like this:
John recruits Andrew, who pays John $100 to join his “club.”
Andrew then recruits Steve, Bill, Bob, and Rene, all of whom also pay $100 to John to join his “club”.
Steve, Bill, Bob, and Rene all then recruit five others who each pay $100 to John.
Each of those five recruited by Steve, Bill, Bob and Rene then recruit 5 others, who each pay $100 to Andrew.
Those 5 then recruit 5, who pay $100 to Andrew. Those recruit 5 who pay $100 to Steve, Bill, Bob, and Rene.
And so on – until the whole thing collapses in on itself.
A model such as that cannot be sustained, because there is no real business going on. It’s just money being moved around between people, and eventually the promises made by the organization’s ownership cannot be kept, and the fraud is exposed.
Now, contrast this with Amway:
John signs a contract with Amway to distribute Amway products.
John then buys products for himself to use at home. He does this because he understands that if you own a business, it only makes sense to buy products from your own store. Does anyone think that the owner of Target would be caught shopping at Wal-mart?
John also starts marketing the Amway products to his contacts. Some buy them.
Because John is an Amway distributor, he buys product at wholesale (or, if you prefer, a discount from the list price) and then sells it for a profit. That’s instant money in John’s pocket.
Amway as a volume buyer from the manufacturer (they also manufacture some of their own products as well), can purchase at a discount. The profit they make is used to build a fund from which bonuses can be paid to distributors who sell larger volumes of product. Some products have higher dollar values which are added to this pool of bonus money, while others have very small dollar amounts. It all depends on how much profit the product in question produces for Amway. Likewise, every product has a tracking value associated with it – points. The points are added up every month to determine the bonus level of any given distributor. The more points, the higher the bonus. Like the dollar amounts, some products have higher point values than others. The higher the point value of a product, the more incentive there is to sell it, or buy it for personal use.
Now, what’s the difference between Amway and a pyramid scam? I’ve been using the word over and over again: Product. John, the fictional Amway distributor here, is selling product.
Note that, up to now, I have not one mentioned anything about referring others to the business. That’s because, up to now, I haven’t needed to, because referring others is completely optional. Obviously, if one helps others sell product, one will make more money than if one keeps to themselves.
So, as John establishes his business, he may meet people who are interested in doing the same thing. John, since he likes the products and is selling it very successfully may choose to bring those interested people under his mentorship. He then becomes responsible for training those people in how to build a successful copy of what he does.
Any product sold by the people John is mentoring gets included with John’s sales volume, and John gets a higher bonus accordingly. Any bonus that gets paid to those being mentored by John is deducted from John’s bonus, however. If John brings someone on board and then stops working himself, John stops making money, because once the person John is supposed to be training reaches or passes the same bonus level as John, the money passes John directly to the new person.
The difference in bonuses paid to John and those he’s mentoring is called an “override” in business circles, and it happens within sales firms all the time. The incentive therefore, is for John to work as hard as he can to help make those he is mentoring successful.
The downside to this is Amway requires work, and not just work, but the most difficult, frustrating and discouraging work there is – sales.
Even when I was a salesperson, I found the sales I was expected to do through Amway extremely difficult; so I can only imagine what someone who has no experience selling would experience. People are brought into the organization with all kinds of high expectations of making loads of money quickly. They hit the wall fairly rapidly too. Many quit trying within a few weeks, many hang in a bit longer and become jaded, many refuse to give up, thinking that giving up would make them a “loser” or something. Of course, the various higher-ups continually tell them that riches and success are just around the corner. They just have to keep at it and show that plan over and over again.
A few – a very, very small few – make a lot of money.
From a business perspective, deciding to leave Amway does not make someone a loser. A good businessperson knows when to cut their losses, so to speak. If it isn’t working, why keep doing it? A good analogy could be to remember the person who keeps banging their head against a brick wall because it feels so good to stop.
If you’re considering Amway, then by all means, consider it. Check it out. But do your due dilligence, though, and ask a LOT of questions:
- What is the startup cost? (About $100 plus perhaps some additional tools if you wish, and higher again if you want to get some initial product into your home)
- Am I going to need to buy additional tools every month? (nobody is allowed to force you to, but expect to be strongly encouraged. If it seems like you’re being pushed, then leave.)
- How long has the person who approached you been with Amway? How about their mentors?
- What is the monthly cost associated with doing business? (They may, or may not include your monthly groceries in their answer. Decide for yourself if this is reasonable to do. I consider groceries separate from business costs.)
The people “recruiting” you will likely spend a lot of time “dreambuilding” with you, saying things like “how would you feel when you’re fully financially free? What would you do if you knew you would not fail? What does freedom mean to you?”
If your current job or business is belittled by anyone within the group trying to recruit you, leave. If you’re told you can be making millions in a ridiculously short amount of time, leave. If you aren’t comfortable with the atmosphere of the room, or the way the discussion is going, leave.
The opportunity, the people, and the business vehicle you’re considering all MUST be a fit. If you don’t like them, you won’t succeed. If you don’t trust them, you won’t succeed. If they seem “smarmy” or “slick”, then you’ll become “smarmy” or “slick” too. If you like that kind of thing, then you’ll fit. If not, you won’t succeed.
Also consider your personality:
- Can you handle your friends laughing at you when you show it to them?
- Can you handle being told, repeatedly, “oh you’ll never make any money at that.”
- Can you handle years of frustration and rejection from virtually everyone you talk to about the opportunity?
- Are you able to focus and devote 5+ years of your life to the project, with every decision you make being related to building the business?
For the right people, Amway represents a tremendous business opportunity. I can’t tell if it’s for you or not; but it wasn’t for me, and for most, I expect, it isn’t for them either.
If you have an Amway story you’d like to share, please send it to me in a comment. Just keep it decent. If it’s bad experience, that’s okay, if it’s a good experience, that’s okay too. Just be reasonable and balanced in your account.