Is Amway a good business model ?
September 20th, 2007 by Samir | EMail This Post | 787 Views
Almost everyone would have heard of “Amway” or “Quixstar”. If you haven’t heard of it or come across anyone, who wants you to be part of it, consider yourself “Lucky” 
I mean it !!
Business Model
- Amway or Quixstar is based on “MLM” - Multi Level Marketing. Most of us are aware of this concept.
- One needs to recruit other people under their network to benefit and “grow” their business
- You get commission on any purchase your network ( Below you ) makes.
- Bigger your network, bigger the commission ( At least in theory! )
Issues
- My big issue with this model is that “One has to mix Business and social life to make this model work” ! In *real* business, you never do that ! Both have their separate place. You don’t mix both. And if you do, results won’t be pretty ! This model will never work for me !
- Your friends and relatives are in fact your possible customers or recruits Instead of a friend, you see them as “$”.. And no one sees an issue with it ? Wake up…!! When I meet my friends and family, I just want to socialize, enjoy and have good time. I don’t want to have a *secret* agenda of doing so-called business or try to recruit people to sell “stuff” to their friends/family.
- There is no innovation or risk involved in venture. This is fundamentally against rules of entrepreneurship and business. All you need to do is spend time to “convince” other folks to believe in this “unrealistic” model — i.e they can make good money without taking any risk and just spending 5 to 8 hours a week actually bugging and nagging people ! Sure.. that seems like nice way to make money or to do business !! (I am being Sarcastic here! )
- BTW, once you are part of this, your buying habits will change drastically - not suitable all the time. But well, you do not have choice once you are part of it. After all, you are part of the “Big” family !
Well, Can this be called entrepreneurship or even a business model ? In my opinion, a big “NO”. It does not even come close!
See what government has to say about it -> http://www.sec.gov/answers/pyramid.htm
Basically, it is like being a “sales agent” of a big company. If you try too hard, you may even end up making some (??) money, but at what cost ? — after losing dozen of friends and spoiling relations with few relatives. Is it worth ??
And don’t get me even started on how annoying those folks could be, who are “desperate” and “abrupt” to converse with you so that they can somehow convince you. It can be most annoying ( and funny ) to listen to their “artificial” friendliness and “interest” in knowing you. Their main motive is to somehow be able to recruit you as part of their network. This almost feels like “cheating” since *true* motive behind their “social interest” or “friendliness” is very different. This is unethical in my opinion. This is exactly what happens when you mix “social life” and “business life” ! Not pretty !
However, I have come across few folks in Amway, who seemed like good salesman ( good communicator, not so pushy etc ) . I strongly believe, if they use their selling skills somewhere else, they can do better. I do give them credit for one thing — their training ( or brain washing ) for selling is not that bad in my opinion and some folks pick up well too. It may help you become a shameless sales guy, which is in fact good for entrepreneurship
Note: If you are already part of Amway or Quickstar, these are just my opinions and not to offend any active participant in this MLM scheme. If you are, I frankly believe, you can do better then that !! For once, try to be real entrepreneur.
Don’t agree ? Let’s hear your side of story.
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Samir,
1. Most folk spend a great deal of their social life with work colleagues. Same happens with Amway. But if you’re trying to impose your business on others in social events, you’re not being very professional, and it’s not what successful Amway business owners do. Unfortunately most peoples impression of Amway comes from the new guys who are clueless and don’t stick around long enough to learn how to be professional.
2. Most friends and relatives rarely join someone in a new venture like becoming an Amway IBO. They may become your customers, but the same would apply if you opened a corner store or started offering accounting services. The professional approach is something along the lines of “this is what I’m doing, if you’re interested in checking it out, let me know”.
3. How much innovation is there in owning a McDonalds? Very litte, but still a legitimate business. As it is, within reason, most organizations that work with Amway are extremely innovative. We’ve changed how we operate quite dramatically in the time I’ve been involved, and are constantly interested in developing new ways of being more effective. One way of NOT being effective is “spending 5 to 8 hours a week actually bugging and nagging people”. It’s unfortunate that’s what you think we do. Some might, but I’ll virtually guarantee they won’t be successful! 15 to 20 hours is more realistic, and treating it just like any other business is the way to succeed.
4. Where do you get the idea “you have no choice” in your buying habits once your join? That’s absurd. Each IBO is “independent” and makes their own decisions. Personally I think some take “loyalty” to far and buy stuff that isn’t value. By doing so they corrupt basic economic principles and the manufacturers and suppliers have little incentive to improve a product or it’s pricing.
5. Finally, why are you linking to the SEC page on pyramids? Amway is a Multi-level marketing company, not an illegal pyramid. There is a significant difference. In pyramids the whole idea is to recruit people and you get paid for doing so. In Amway you make not a cent if all you do is recruit people. Amway essentially works the same way as any other product-based business. The more volume you create, the cheaper per-unit cost you get. Resell at wholesale (to folk who resell it) and retail (to folk who use it) with a profit margin and you make money. That’s pretty much it. Finding other IBOs (folk who also resell it) is just a marketing strategy to increase volume, much like employing an extra salesperson or opening another store. It’s a strategy, not a goal.
Finally, successful Amway IBOs *are* real entrepreneurs. Building a successful Amway business requires entrepreneurship. But even if you don’t believe that, I have founded and run and sold, and continue to found and run, numerous other business ventures as well. It’s what I do. Of all of them though, I still consider Amway the best business opportunity for the average person without a brilliant talent or brilliant idea. But even then it’s not an either/or situation. Amway’s not a full-time proposition, though it can give a full-time income.
www.thetruthaboutamway.com
ibofightback,
Thanks for your comments. I agree with few of them.
You seem to be well involved this MLM scheme.
In theory, I don’t have any issue with model. In fact, it must have been very innovative, who thought of it first time. Genius ! BUT, in today’s world, if one has to make it work in real world, there are some obvious issues.
1) About your point of “Most folk spend a great deal of their social life with work colleagues. Same happens with Amway” — I will totally disagree. People don’t always spend great deal of “social” life with colleagues. Please, try to refer to any statical data, if available. It really depends. One may have his best buddy as his colleague — But this is really *rare*. One may be lucky to have that.
Even if one socializes with work buddies a lot, they don’t make social life as business life. There is big difference. It is one thing to give your friends idea of what you do and give your proposal about this direct marketing MLM scheme. It is entirely different thing to socialize with your colleagues or friends — just to push your business and end up nagging everyone about it. Most folks get desperate and end up doing the later.
So again, if you MIX social and business life — It is a mess !!
2) Unfortunately, ** 90% ** of people, I have come across, who wanted me to be part of this scheme, were very “desperate”, unprofessional and abrupt. My so many friends have similar experiences.
How will you react, if a total stranger immediately wants your phone number and email after less then 2 minute of casual talk in a grocery store. ??? It is annoyingly absurd. It is actually a nuisance.
I have had worse experiences even from known folks, who suddenly became “so over friendly and social” without any reason and then later I realized the *true* motive behind it. It is ** unethical ** in my opinion. Needless to say, I totally avoid them now and want to stay as away as possible.
———
In general, this model only looks good on paper or for those who joined this scheme way before. Well, This may work for few folks even in today’s time and going forward, but please, keep in mind the social “cost” one will pay. Is it really worth ?
I do agree with you that its not always good to mix business with family.
There are different aspects to both grounds.
Its just that when a family unites to make business work that’s what makes it big.
Reliance, Birla,Tata, Torrent, Core, Cadila etc. are good model of business and family.
Cheers
Vihang
To me, MLM is not a good business model. In general, I have obserbed that MLM suits to aggresively extrovert people who like to be identified as profoundly assertive creatures.
No to MLM,
Well said. I agree. One needs to be very extrovert and a shameless salesman to have even hint of success. Most of people may not fit this category. Again, always keep in mind the “social” cost one will pay in order to achieve this.
Hi Guys,
The only reason we comment on amway is because it is available to us. Should you try to start a real estate biz, or a restaurant or a dental practice….you will have to apply the same principles of biz and marketing. (first ones to come eat at your restaurant is family !!! )
Agreed, you dont need to include “social” circles, however, you should read some good biz books…coz products, people and profits are part of every biz.
Bottom line..biz is not for everyone…so good luck to those for whom it worked…and those who can ONLY comment….get up and do something yourself :)…or next time someone approaches you for amway..have the courtsy to say ‘no thank you’ instead of grunting!!
think biz !
quite great!