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But the only way to go through $200 a month of those kinds of products is to pay enormously inflated prices for them … When people try to sell you on the plan, they don’t show those crappy little bathroom products.“But that’s no problem at all”, say the distributors (aka IBOs, or “Independent Business Operators”), because you don’t have to sell them every month, and you’ll have enough sales volumes to qualify for bonuses.Then, get everybody you know to do the same thing, and everybody wins!But if you can sign up 10 people, and they sign up 10 people apiece (and so on, and so on), eventually you’ll have 7,000 people, which will qualify you for the “diamond” distributor category. Crunch the numbers: 4 x 4 x 2.5 = 40 evenings per active, long-term distributor.And if each of those people buys $200 a month of Amway products, you will generate nearly $17 million in yearly sales! The model usually collapses long before that, because quite frankly, most people aren’t gullible enough to go for it. Let’s say that 1 in 4 prospecting attempts is successful (a very optimistic figure). But you want 10 of them, so now you’re talking about And that’s not even including all of the silly pep talk rallies and inspirational meetings that you’re supposed to attend! A measly 10 people under you, each of whom has to do the same thing, and so on down three levels if you plan on making serious money. Let’s suppose you’re a stubborn sunuvabitch, and you’re confident that you can do it. The truly amazing thing about the Amway business model is the sales volume required in order to make any money.In fact, when I got the chance to inspect an Amway catalogue, I made note of several key prices and later compared them to those found at discount retailers. When you consider that Wal-Mart has many times Amway’s annual sales, you will see that the situation is even worse than it looks, because Wal-Mart has enough muscle to squeeze its suppliers for much lower prices than Amway could ever hope to negotiate.
Amway makes some grossly exaggerated claims about the markups in traditional retail, but if you honestly believe that Wal-Mart has to go through a manufacturer’s representative, a jobber, and a wholesaler in order to get to their suppliers, you need to give your head a shake.
Worse yet, this is strictly the distributor’s markup, and it doesn’t yet include Amway’s markup! Compare Amway catalogue prices (including shipping and service fees) to the price tags down at Wal-Mart or Costco, and you’ll see that all the marketing in the world can’t change reality. ” However, both claims are fraudulent: Amway distributors will sell you on the idea of compounding.
You buy $200 a month of Amway products for yourself, upon which you get a few dollars back.
They show you brand-name electronics, and cars, and all the glamorous items in the catalogue … Quixtar reported year 2000 sales of $518 million, out of which they paid $143 million in commissions. When dreams crash head-on into reality, a lot of people let the dreams win.
all of which would cost if you bought them elsewhere. You don’t have to be a mathematics genius to see what this means: when you buy from Amway, 28% of the price is pure commission! You know the sales pitch: “it costs you nothing, and the potential is limitless!
Now you can sit back, relax, and just rake in the profits! They can talk about compounding all they like, but according to the FTC, some 75% of Amway distributors drop out, and according to Amway’s own figures, nearly 60% of those left are “inactive”. Now let’s factor in the FTC’s estimate that 75% of Amway/Quixtar distributors drop out within a year, as well as Amway’s figure that nearly 60% of distributors are “inactive”. And since you’ve been doing all of this in addition to your day job (one of the great “benefits” of the Amway business model) you haven’t seen your family in two years. You’re willing to sacrifice most of your family life for two years or more, in order to collect 10 distributors who will be active, and who will stay on for the long haul. A 1985 issue of Forbes magazine gave the example of Robert Crisp of Tulsa, Oklahoma.