By Scott Johnson
Amway’s model is based on recruiting people. It’s people, not products. People recruiting other people.
When a person joins Amway, they become an IBO (Independant Business Owner). They sign a contract of partnership with the Amway Corporation. More than 99 percent of IBOs lose money. It’s how pyramid schemes work.
Amway was sued in 2007 for being an illegal pyramid, and several former high-level distributors disclosed the results of a confidential study Amway conducted. That study showed that only 3.4% of Amway products were sold to outside customers.
That’s right, 96.6% of Amway products are sold to IBOs.
It’s not surprising. There is no demand from the general public. Amway products are grossly overpriced. IBOs have to sell products to themselves and their downline.
But in reality, Amway is not based on selling products. Amway is in the business of selling memberships, a lifestyle, a chance at making a fortune. You become an IBO to get rich. It almost never works.
It can’t because they have no fairly priced products – no demand for their overpriced goods. Even the 3.4 percent of sales of Amway products to “outside customers” is largely to relatives and friends of IBOs.
Amway is a pyramid scheme. Very few IBOs sell any product. They are taught to recruit IBOs. The Amway culture is anti-selling product.
In order to be competitive on retail products, Amway would have to drop their prices which would mean Amway corporate would have to take less profit and/or pay out far less bonuses.
In order to pay commissions or bonuses to the upline, they have to double or triple the price of products compared to what you could buy at a retail store.
One of the largest sources of income for top-level IBOs – the few who make money – is selling tools.
I don’t mean hammers and drills etc. I mean tools for recruiting more IBOs for your downline. Amway sells books, tapes and other instructional material to members – sold to IBOs on the basis that these are tools of the trade – secret teachings that will help them recruit IBOs and get rich.
This sale of tools is the hidden profit source for most top-level distributors. They don’t make money on products; they can’t because they’re too expensive. They make it selling “tools” [tapes, etc.] to IBOs in their downline – for them to learn how to recruit more IBOs who, in turn, will recruit more IBOs and all of them need these tools to recruit more IBOs.
The upper layer in the IBO ranks make 2/3s to 9/10s of their profit from selling the tools and not from Amway products for use in the home or office.
They are not – no one is – selling hardly any product to non-distributor customers. That’s what makes Amway a pyramid.
Obviously, like any pyramid, only a few at the top make money. The vast majority of IBOs lose.
Most join with high hopes and quit soon after spending a few hundreds, or thousands, to find that there really is no demand for the Amway products and few people they know are interested in becoming IBOs.
The money they spent is absorbed by their upline and Amway Corp. itself.
The IBO then quits with a basement full of overpriced soap, sadder but wiser.
This is just a long-lived sh!tty scam. Most people who become IBOs and buy overpriced Amway products [and if they are eager and earnest buy the Amway tools] after a time realize the model does not work.
They might recruit a friend or a relative. They might buy some soap or shampoo knowing they can get a better deal for less at Walmart.
After they run out of the two or three relatives they got to sign up and get tired of paying more for detergent or bottled water, they give it up and rarely think about Amway again.
They blame it on themselves perhaps. Thinking they did not try hard enough. Or they just did not have what it takes.
They don’t realize Amway is set up just for them. To get their few thousand and a few of their friends – and for you to quit, after disposing of some of your money with them.
Of course, once in a while someone comes in and makes a little money, but the big money is at the top, not the base of the pyramid.
It is for Amway, a game for suckers. If they recruit 10,000 people and 9,999 each buy some overpriced soap and recruit one other person -who also buys a little overpriced soap, they keep the game going. That’s 20,000 IBOs each on average losing $2000 each – and that’s 20 million – almost all of it absorbed at the top of the pyramid.
What did the 19,998 people in the lower ranks get for their collective $20 million – about a million dollars worth of products in their collective garages.
Amway has taken in millions of people over the years
Scott Johnson has a weekly radio show/podcast:: http://www.buildingfortunesradio.com/scott-johnson-peter-mingils/index.php?start=0