Amway, a subsidiary of Alticor, is the largest multi-level marketing (MLM) organization in the world. It is a multi-billion dollar a year company based on the sale of products as varied as soap, water purifiers, vitamins, and cosmetics.
| Type | Private |
|---|---|
| Industry | Direct selling |
| Founded | 1959 |
| Founder(s) | Rich DeVos Jay Van Andel |
| Headquarters | Ada, Michigan, United States |
| Area served | Worldwide |
| Key people | Steve Van Andel (Chairman) Doug DeVos (President) |
| Products | Amway Home, glister, G&H, Nutrilite, Artistry, AmwayQueen, eSpring, ATMOSPHERE... |
| Revenue |  US$ 11.3 billion (2012) |
| Employees | 20,000 |
| Parent | Alticor |
| Website | Amway.com |
Headquarters in Ada, Michigan
Amway was founded in 1959 by Jay Van Andel and Richard DeVos.
Based in Ada, Michigan, the company and family of companies under Alticor reported sales of USD$11.3 billion for the year ended December 31, 2012 - the seventh consecutive year of growth for the company.
Its product lines include home care products, personal care products, jewelry, electronics, Nutrilite dietary supplements, water purifiers, air purifiers, insurance and cosmetics. Amway conducts business through a number of affiliated companies in more than a hundred countries and territories around the world. Amway was ranked No.114 among the largest global retailers by Deloitte in 2006, and No.25 among the largest private companies in the U.S. by Forbes in 2012.
Amway® (Quixtar®) (Team of Destiny®) (TEAM®) (Network 21)
(new Note: This entry is several years old. Some of the information may be outdated. Two of the founders' children now run most of the operation. Even so, the basic idea hasn't changed. Amway makes a profit on every sale of every product it offers for sale.
The sales people are considered independent business owners (IBOs) and they make money on every sale they make and by recruiting others to makes sales of the same products.
They spend money buying Amway products, including the cost of materials and seminars aimed at making them believe that having a positive attitude and working hard are the keys to success.
I'll give everyone some free advice: these qualities are usually necessary conditions for success, but they're not sufficient conditions.
Anything you can buy from Amway, you can buy elsewhere for the same or less and get something of equal or better quality.
One of Amway's most important products is motivation. Selling motivational products at motivational seminars is one of the more lucrative aspects of this enterprise.
Amway proponents are fond of asserting that their products are of the highest quality, their company is very large (several million distributors and several billion dollars in annual sales), and does business with such giants as Coca-Cola and MCI (bought by Verizon).
Do the numbers add up?
[Note: the data used in the following paragraph is outdated. I am not going to try to keep up with the specific dollar amounts in sales and the number of distributors. The current Amway Global website does not give the numbers needed to determine how much the average distributor makes. Wikipedia claims that sales for 2008 were $8.2 billion, up from $7.1 billion the year before, when the sales force was over 3 million. Sales for 2010 are said to be $9.2 billion.]
According to Amway, their annual sales amounts to about $7 billion and there are 3 million distributors. Thus, the average distributor's sales amounts to about $2,333/yr. If 30% of that is profit, the average distributor makes $700/yr. Klebniov claims that the average income is $780, but the average distributor buys $1,068 worth of Amway goods himself and also has expenses such as telephone bills, gas, motivational meetings, publicity material and other expenses to expand the business. "The average active distributor sells only 19% of his products to non-Amway affiliated consumers," according to Klebniov. "The rest is either personally consumed or sold to other distributors." In the United States, the Federal Trade Commission requires Amway to label its products with the message that 54% of Amway recruits make nothing and the rest earn on average $65 a month. No such labels are required in other countries, but the facts are clear. Most people who get involved in Amway will not make money.
Far from boosting their incomes, the vast majority of those who become Amway distributors, particularly those in 'the system', are likely to end up losing money.
The majority of the wealth of the tiny number of top-ranked distributors in this country comes not just from the sale of Amway products but from selling motivational materials and organizing seminars and rallies for the people below them (Thompson).
Amway has made a very few people very rich while paying its foot soldiers more in inspiration than in cash (Thompson). There is nothing particularly unique about this in the history of business. What is unique is the faith, devotion and hope that the foot soldiers have. (Note: the numbers in the paragraph are from 2005-2006.)
Source: http://skepdic.com/amway.html#news
Skeptic's Dictionary
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Controversy
Pyramid scheme accusations
Amway has several times been accused of being a pyramid scheme.Harvard Business School of Leadership, which described Amway as “one of the most profitable direct selling companies in the world", noted that Amway founders Van Andel and DeVos:
- "...accomplished their success through the use of an elaborate pyramid-like distribution system in which independent distributors of Amway products received a percentage of the merchandise they sold and also a percentage of the merchandise sold by recruited distributors. DeVos was an extremely charismatic speaker and used this ability to mobilize and motivate Amway distributors."
- Knape: "Amway has been accused of being a pyramid scheme, of tax evasion and a host of other things. How much of the problems Amway has had over the years can you attribute to the decisions that you made or Jay Van Andel made?"
- DeVos: "We failed to come down hard enough, quick enough, to stamp that sort of thing out. That was a sin of omission. We failed to discipline the organization."
FTC investigation
In a 1979 ruling, the Federal Trade Commission found that Amway does not qualify as a pyramid scheme because distributors were not paid to recruit people and had to sell products to get bonus checks, and the company was committed to buying back its distributors' excess inventory.The FTC did, however, find Amway "guilty of price-fixing and making exaggerated income claims"; the company was ordered to stop retail price fixing and allocating customers among distributors and was prohibited from misrepresenting the amount of profit, earnings or sales its distributors are likely to achieve with the business.
Amway was ordered to accompany any such statements with the actual averages per distributor, pointing out that more than half of the distributors do not make any money, with the average distributor making less than $100 per month. The order was violated with a 1986 ad campaign, resulting in a $100,000 fine
International expansion
Amway expanded overseas to Australia in 1971, to Europe in 1973, to parts of Asia in 1974, to Japan in 1979, to Latin America in 1985, to China in 1995, to Africa in 1997, to India and Scandinavia in 1998, to Russia in 2005, and to Vietnam in 2008.Dateline NBC
In 2004, Dateline NBC featured a critical report based on a yearlong undercover investigation of business practices within the Amway organization.[127] The report noted that the average distributor makes only about $1,400 per year and that many of the “high level distributors singing the praises of Quixtar [Amway]” are actually “making most of their money by selling motivational books, tapes and seminars; not Quixtar’s cosmetics, soaps, and electronics.”- "In fact, about twenty high level distributors are part of an exclusive club; one that those hundreds of thousands of other distributors don’t get to join. For years only a privileged few, including Bill Britt, have run hugely profitable businesses selling all those books tapes and seminars; things the rank and file distributors can’t sell themselves but, are told over and over again, they need to buy in order to succeed."
Some Amway distributor groups have been accused of using cult-like tactics to attract new distributors and keep them involved and committed. Allegations include resemblance to a Big Brother organization with paranoid attitude to insiders critical of the organization, seminars and rallies resembling religious revival meetings and enormous involvement of distributors despite minimal incomes. An examination of the 1979–1980 tax records in the state of Wisconsin showed that the Direct Distributors, reported a net loss of $918 on average.
Source: http://en.wikipedia.org/wiki/Amway
Amway - Wikipedia, the free encyclopedia
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Amway Now
Who: Jesse Hertstein, senior corporate citizenship lead.
Company: Amway, a direct-selling company
Charitable giving highlights: Since 2003, the company has given $190 million in donations and in-kind services to children’s causes and 2.7 million volunteer hours.
Tell me about the company’s philanthropy?
Ten years ago in 2003, we were doing a lot of different things and realized that we couldn’t track the impact that well. We decided to focus. We’ve got millions of distributors and tens of thousands of employees around the world. The needs are different in every country. We built the One by One campaign as a way to focus our efforts on children’s causes but give each local group of distributors and employees the opportunity to find the issues that are most pressing and find a way to respond to them.
What programs do you have in the Washington region?
One organization that an Amway distributor introduced to us a decade ago was the U.S. Dream Academy, based in the District. They work with children whose parents have been incarcerated. We started to support it corporately and found other ways to support it besides money. Another one is Easter Seals, a national partnership in which we’ve given $30 million over the last 30 years. The office in the District also does programs to help local schools and works with WorldVision to provide backpacks and school supplies for Title I schools.
What books have been helpful for you? Company: Amway, a direct-selling company
Charitable giving highlights: Since 2003, the company has given $190 million in donations and in-kind services to children’s causes and 2.7 million volunteer hours.
Tell me about the company’s philanthropy?
Ten years ago in 2003, we were doing a lot of different things and realized that we couldn’t track the impact that well. We decided to focus. We’ve got millions of distributors and tens of thousands of employees around the world. The needs are different in every country. We built the One by One campaign as a way to focus our efforts on children’s causes but give each local group of distributors and employees the opportunity to find the issues that are most pressing and find a way to respond to them.
What programs do you have in the Washington region?
One organization that an Amway distributor introduced to us a decade ago was the U.S. Dream Academy, based in the District. They work with children whose parents have been incarcerated. We started to support it corporately and found other ways to support it besides money. Another one is Easter Seals, a national partnership in which we’ve given $30 million over the last 30 years. The office in the District also does programs to help local schools and works with WorldVision to provide backpacks and school supplies for Title I schools.
Scott Goodson’s book “How to Build a Brand — and Change the World — by Sparking Cultural Movements.”
It’s written by a marketer who is looking at the social space and saying that companies should be helping to define themselves to customers based on rallying people around a common cause.
Source: http://articles.washingtonpost.com/2013-02-17/business/37149856_1_amway-distributors-focus-groups
"Success doesn't come to you, you go to it."
- Marva Collins
