Amway Analysis
by Kamesh

Article received by email. Created on Oct. 19, 1998

I was recently contacted by an AMWAY representative asking me--naturally--to join their "business". This is an account of my experiences with AMWAY and what I think about this "business". My recommendations about this are based on the extensive research I did on this business in addition to personally talking to AMWAY distributers, attending their meetings, and reading all the material that I got from them. BTW, I am NOT an AMWAY distributor nor do I intend to become one for my own reasons. I am a computer consultant by profession with over 12 years in the field and I also hold a Master's degree in Computer Science. This is an objective assessment of the AMWAY business from what I saw and heard. Please do not take these recommendations literally. Consider your situation, circumstances, and needs before you decide to take the plunge. Or if you are already a distributor--good luck!

To start with, and to put things in perspective, let me tell you that I had never heard of AMWAY in my life. I also never got a chance to hear anybody's opinions--good or bad-- nor did I do any research about this business. Out of curiosity, I went ahead and talked to this AMWAY person and attended some of their meetings and read some of their publications. Only after this initial exposure did I actually hear some opinions from friends and then I decided to dig deeper. I researched extensively-- looking up stuff in the library, talking to some ex-distributors, searching the Internet, reading what people had to say in newsgroups, asking the distributors themselves thousands of questions etc.

Recently, I received a forwarded mail from a friend that this business is a "fraud". Here is the argument I saw in that mail:

FRAUDS:

1. Lets start with one person -he recruits 6 more and each in turn gets 6 others and so on. Using Maths and answer no 3. 1+6+36+216+1296+7776+46656+279936+1679616+10077696 + 60466176. Already in 11 months the total has crossed 9 Crores. So in USA any new member joining now will just be member and he won't get any new recruits, he has as good as lost his money.
2. According to him there are more than 25 levels of chain which means there are Fifty thousand crores (50,000 Crores) It is more than the population of earth. This contradicts his first answer about 1 lakh members.
3. Lets take answer 3 considering the same equation as in fraud 1 in 12 months he has crossed 30 Crores. Which is again contradicting answers 1 & 2.
4. Finally you will never know who is the founder as he is happily sitting some where and enjoying on your money.

First of all, let me point the fallacy of this argument. The example that AMWAY distributors give: 6 people recruiting six other people and so on is just that -- an example to show how the business can grow. Obviously, the busines does not and has not grown at that rate. If it had grown at this rate, then all the people in the world would have become AMWAY distributors by now! The fact is that currently ONLY about 1% of the U.S population are AMWAY distributors. This is also the case in other countries where AMWAY is operating. So if anyone tells you that this business is saturated--do not believe them. Also the number of levels of the chain has nothing to do with the total members in the team. What if it is only a linear chain with only one individual in every node? In this case, there are just 5 people in a 5 level chain! On the other hand if there were two people recruited by every distributor, then this becomes a binary tree and there will be just 55 people (1+2 +4+16+32) for a 5 level chain. In fact, this is REAL reason why you cannot hope to make much money in this business. You must get a broad and a deep pyramid under you to get any significant returns.

Ever wondered why AMWAY guys are SO desperate for new recruits? In fact to reach the so called executive diamond position, you must get so many people under you that the chances of your reaching that position is 1 in 15000! THE BIGGEST FALLACY THAT AMWAY DISTRIBUTORS PROMOTE IS THAT EVERYONE CAN BECOME A MILLIONAIRE IN 3-5 Years. This is a lot of bull-- don't believe them. The average money earned by an average distributor is 88 dollars per month!! Half of the new recruits drop out in the first year of operation and most of them in fact LOOSE MONEY!! By the way, everything about the TOP guys running the company is well known. The guy who founded the company more than 20 years ago is a guy called DeVoas --check out the amyway.com website if you want more information. There have also been numerous articles in Forbes, MoneyWeek and scores of other financial magazines about AMWAY and their way of business. Remember these are all well respected magazines and they have reported the facts!! check them out before making any comments based on rumours...

I found that the basic concept behind this business is very sound and based on very solid logical reasoning. It is NOT true that the man on top of the so called chain is making all the money. Did you know that for every new recruit even the the guy at the "top" has to pay some money out of his earnings?!? You see money is actually flowing down the chain also.

This is a not an illegal pyramid structure nor is it a chain in a traditional sense of the word. It is based on an excellent business idea that is called "network marketing" and is actually a multi-level pyramid structure. (By the way, the Department of Justice carried out an investigation on AMWAY and concluded that this business is not an illegal pyramid nor is it illegitimate.) There have been some law suits against AMWAY though. (There are some Web sites that talk about this--if you are interested, just contact me)

What happens is once you (as a distributor) reach a certain volume (this is called PV and BV in AMWAY terminology), you get cut off from the "main" pyramid and you can then build your own chain. When you get cut off from your sponser, *HE/SHE* now makes money by the way of (direct distributor) bonus rather from the number of people under him/her. So he/she has an incentive to make you grow as fast as possible. So it is really all about team work and a relatively fair distribution of money based on the motivation and leadership of the people involved.

This brings me to the main theme of my recommendation. You see the whole problem is getting people excited, motivated etc..So what I saw was an OVERWHELMING emphasis on motivational training rather than focusing on the business aspects of it. It appears that the people up the chain are making more money selling motivational stuff (books, audio/video tapes, seminars, meetings etc) than in actually selling AMWAY products. Moreover, I have heard some people talking about it in an almost a religious tone.. They attend the same meetings talking about the same things OVER AND OVER AND OVER AGAIN.. Quite frankly, this turned me off!

A business--one that is as lucrative and fantastic as "Network Marketing"-- must be run professionally. I was surprised to see so many distributors who are professionals including doctors, computer guys, professors etc., get into the motivational stuff and pretty much ignore the business aspects of it.

You see any scheme can be made illegal by just a few imposters. AMWAY business is not exactly flawless. We have heard lot of bad things about it. Remember this busines demands trust, confidence, and team work. There is no doubt money can be made- tons of it--if only it worked perfectly. If you can start your own Network marketing business (similar to Amway) and if you can get just 50-100 of your family and friends into it, you and many of your team members will be making more money than you ever dreamed of--believe me. The question is--do you trust and believe completely all or any of these 50-100 people? That is a million dollar question!

Remember that is the nature of this business. So before you call AMWAY a fraud or say anything bad about it, or discourage others to join it, think again. Get your facts right, check it out yourself, and decide by yourself and for yourself if this is something you want to do.

Here are some reasons for NOT joining:

1. It takes more time than 8-10 hrs/week they claim is necessary to get into the business. As for me, I intend to use this time for my own interests. The two times I attented AMWAY meetings, I came home at 1 a.m. night!! It might mean lot of hard work, sleepless nights, and continuous hammering by your sponsers and other distributors. It means at least twice a week meetings.
2. You have to talk to lot of people you don't know. In fact, you are supposed to talk to at least 2 new people a day. I don't exactly dig doing this. Do you? Would you want to accost a total stranger on the street and start talking business? Well! I don't. Some people like doing it and may well succeed--that's the key.
3. There is NO guarantee, repeat NO guarantee that you will reach any significant level upline unless you are extremely enterpring and get at lease 2 new recruits every month. But, Can you? Remember there is no saturation, it is just a matter of persuasion and getting people motivated and excited about it. It is indeed very difficult given all the bad propaganda and wrong information floating around.
4. Finally, is this something you really want to do. Whatever the AMWAY guy might tell you (becoming a millionaire, financial freedom and all other sorts of BS), YOU have to decide if this interests you and this what you see yourself doing down the road.

With a bit of luck, AND A LOT OF HARD WORK, you might make it in AMWAY. Don't forget the odds though.

Remember the road to financial freedom is careful personal financial management and "right" investments NOW and of course hard work and dedication in your line of work.

If you have questions, I will be glad to answer them.. Please email me at [email protected]

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