Amway is a direct-selling business that has been in business for more than 50 years, operates in more than 100 countries, and claims to have helped more than 3 million Independent Business Owners (IBOs) “forge their own path to success.” The company claims to accomplish this by offering a large, exclusive line of products, extensive training opportunities, complete customer support, and more.
Amway is based out of Ada, MI, and has an A+ rating with the Better Business Bureau, with only 11 closed complaints over the past three years. It appears that Amway has a generally negative reputation among IBOs, and the most common complaints we encountered during our research cited difficulty making money, high prices, and dishonest recruiting tactics.
How Amway Works
Similar to Herbalife, Amway is a direct-selling company at its core. This means that their business model is based on individuals selling their exclusive products, who earn commissions off each sale. As such, there are two ways you can enjoy Amway; as a customer (e.g. purchase products), and as a business owner (e.g. sell products).
Amway product categories include:
- Nutrition – Vitamins & supplements, weight management, sports nutrition, and energy drinks.
- Beauty – Skincare, makeup, and more.
- Bath & Body – Hair care, body care, and oral care.
- At Home – Laundry, surface care, dish detergent, cookware, and more.
- Jewelry & Accessories – Necklaces, bracelets, gift sets, and more.
- Fragrances – Several selections from Personal Accents.
- B2B Products – Commercial-size agricultural, cleaning, and laundry products.
To sell Amway products, you’ll first need to register as an Independent Business Owner (IBO), which will then give you the opportunity to earn an income through their Compensation Plan. After signing up as an IBO, Amway claims that you’ll never be alone due to their world-class business resources, support, education, training, as well as mentoring. However, despite how great the company makes their business opportunity appear, the fact is that most people never make any money (see Bottom Line section for additional information).
Prices for signing up as an Amway IBO vary depending on the Business Kit you choose:
- IBO Literature Kit = $62. Includes a step-by-step guide to starting your own business with Amway, brochures and training programs, as well as information about the company’s bonus programs.
- IBO Product Kit = $83.99 – Includes everything found in the Welcome Kit, in addition to $150 worth of full-size products that you can try.
If you’re dissatisfied with your Amway business opportunity, you can receive a 100% refund within 90 days of purchase. Simply contact customer service at 800-253-6500 or firstname.lastname@example.org.
Bottom Line: Is Amway a Scam?
When it comes down to it, Amway has been in business for more than half a century, and they pay according to their compensation plan. As such, despite their negative general reputation, they do not fit the traditional definition of a scam. However, if you’re thinking about becoming an Amway Independent Business Owner, there are several things you should keep in mind.
First, as with most direct sales/MLM opportunities, your initial startup cost is typically just the beginning. You’ll also have a monthly sales quota to meet, on top of monthly meetings, regional meetings, as well as conferences that you’ll be required to attend. And unfortunately, nearly all of these costs will be your responsibility. On top of this, most IBOs will use any Amway products they’re attempting to sell, which may further increase your startup costs. Between the travel, training, and product purchases, the reality is that only a select few will ultimately realize financial freedom by selling Amway products, which, by almost any measure, are fairly expensive.
Next, talking with other IBOs or Amway representatives may make it seem like a great opportunity to earn a lot of money, to make your own schedule, to build your own business, and more. However, the reality is that any type of direct sales opportunity takes a huge amount of time and money in order to become successful, not to mention a natural ability to sell. And frankly, MLM companies like Amway are often very misleading in how simple they make their business opportunities appear, because the reality is nothing could be further from the truth (see the following section for additional details). As a testament to this, be sure to watch Dateline NBC’s year-long undercover investigation of Amway right below.
Because of this, the vast majority of IBOs who join Amway end up making very little (if any) money. For example: Taking a look at page 11 of the company’s online brochure, they claim that only 46% of IBOs were active during 2010, and of those, the average monthly income was only $202. Furthermore, out of 300,000 active IBOs during the 2010 calendar year, only 0.25% achieved Platinum status, 0.08% achieved Founders Emerald, and 0.02% achieved Founders Diamond or higher.
According to this article, “The way that you’re actually going to make residual income is by sponsoring people into a downline. Yes, this means that you are going to need to get really good at recruiting your friends and family into the business to become an active distributor just like you.” This means that if you’re looking to make it to the top of the Amway hierarchy, you’re going to need to create a large network of IBOs underneath you, and earn a commission off of each sale they make. In other words, creating recurring monthly income occurs not necessarily by selling Amway products, but by recruiting others to sell them for you. And this simply can’t be avoided, because in order to begin selling Amway products, you’ll have to sign up under an existing IBO, who will make money off each of your sales.
If you think a lot of this smacks of a pyramid scheme, you’re not alone. In fact, the company was the subject of a 1979 Federal Trade Commission ruling that found Amway’s business practices to not be “inherently illegal,” though they were required to “cease price fixing and cease misrepresenting the apparent success achieved by the average distributor.”
6 Things to Remember When Attending an Amway “Opportunity Presentation”
If a friend or family member asks you to attend an Amway Opportunity Presentation, you may think to yourself, “Sure, I’d love to help out. After all, what’s the big deal?” The reality is that these presentations are carefully formulated to cause you to make an emotional decision, rather than an informed one.
As such, in order to insulate yourself from being sucked in by the hype, keep the following in mind: You’ll encounter numerous claims throughout the presentation, but few of them will be based on facts. Because of this, ask as many questions as you can.
- Ask how much money you’ll have to spend each month on products, training material, seminars, and conferences.
- Ask how much time is required to reach a significant income level.
- Ask for proof to back up their claims. After doing so, don't allow them to change the topic. If they tell you how easy it is to make money and give you some figures, ask them to factor all of the costs into the equation.
- Ask how many people are making the really big bucks. If they give an honest answer, then ask them why most people don’t actually make money.
- Ask them what your specific chances are of making real money. Unfortunately, the simple truth is that 99% of IBOs will not succeed.
When it comes down to it, most of the time a presenter will never mention the total cost and time involved in producing income through Amway, or if they do, their answers will be very misleading. You’ll often hear statements like, "If you work hard, you will succeed," or, "The people who don’t make money don’t work hard enough." In reality, this is just shifting the blame, because the company’s statistics often tell a very different story. Caveat emptor.
3 out 3 people found this review helpful
An Honest Amway Review
Amway has great products, however, building an Amway business is very difficult due to the fact that it has a punishing compensation plan. It also has deep market penetration, meaning that most adults know of it and many have had a negative experience in many instances. This requires more touches with the same individual to get them into the business than if you were building a relatively new company for example. For my full Amway review visit http://www.jasonleehq.com/amway-review/
Bottom Line: No, I would not recommend this to a friend
6 out 6 people found this review helpful
Why It May Not Be Worth Joining Amway
Below I've listed a sequence of pros and cons with regards to running an Amway business.
Economical to begin. An Amway IBO subscription is just ~$60 annually.
Exceptional products. Amway has put a massive amount of cash right into study as well as advancement, improving their brand products over the last 50+ years. Their energy drink Xs Power is the best energy beverage I've ever tasted.
Group distribution. Amway will deliver bulk orders to where their Platinum level representatives are (or greater) completely free. This encourages all representatives to maintain relationships with their clients. At one factor clients were able to receive free shipping by getting on their own if they exceeded a certain dollar quantity, but this is no more the case as a result of policy changes.
Lengthy consumer lifetime as well as good retail profit. Amway actually has several of the best offline training out there. They've basically understood it because that's all they do. Because of this concentration, reps that stick around have the tendency to get excellent at constructing relationships with their consumers which prolongs the length of time a provided individual will certainly purchase the item. I directly know tons of people who are in their 60s and also 70s that have purchased Amway detergent for 30+ years and also advocate it.
Outstanding offline training assistance. The training platforms are typically excellent at supplying training to their team members. They are always available and also going to help with anything pertaining to guerrilla marketing because that is just what they instruct.
Structure MLM groups that last is extremely hard in North America (particularly U.S.A). This could appear a little bit severe, but I have actually not viewed Amway breakdown a solitary Diamond in the good-ole UNITED STATE in 2 years. The factor teams are hard to keep with each other, despite having the advertising of events, is due to the fact that building a company totally offline is not appealing to lots of people in this country. And as long as leaders may whine that the internet has destroyed this sector in some circles, it does not transform the fact that the marketplace is a company each one of its very own; it's not up to us to identify just what's ideal for the marketplace, it's our duty to discover how they want to be marketed to and after that comply with that wish. Structure entirely offline acquires tiring and also the vast majority of people just do not want to burn the rubber off the tires more. In addition there are a lot of companies that have actually embraced the internet, as well as considering that lots of people visit the internet for information it is simple for Amway reps to get inhibited and also check out other options when they find out a business could be built online.
The settlement plan layout needs a bunch of effort and time. If you truly would like to be profitable in Amway you basically need to construct 6 legs simultaneously (called "going Eagle").
The compensation plan is called a "stairstep breakaway," which calls for business rep to efficiently rebuild a leg once it has actually reached exactly what's called Platinum status (7500 factors). Generally, legs break short when they qualify as well as the payments develop into 4 % aristocracies instead of commissioned payments. I asked a former Amway emerald when just what it was like having his initial leg break-off and his reply was: "it's terrible, you truly recognize the best ways to ask unpleasant concerns do not you." He took place to clarify his compensations stopped by at least 80 % when they developed into "nobilities." It should be kept in mind that the royalties technically vanish if the quantity in the leg drops below 7500 factors, so it's not actually a "long-term" aristocracy unless you maintain your quantity.
Qualifying for compensations needs more quantity compared to the majority of various other companies, this keeps new suppliers at a loss for a longer period of time. In order to qualify for a paycheck a rep have to do 100PV per month. This would not be such a large deal if the average factor wasn't somewhere around $3.00. This implies new distributors have to move $300.00 a month in quantity to get paid. Typically, most other business can be found in someplace around $1.10 to $1.50 per factor, meaning the brand-new rep would only need to move $110.00 to $150.00 or so per month to qualify.
Internet marketing is not taught, and sometimes in Amway's past history has actually been restricted. Plans and treatments transform in time so make sure you check out the advertising and marketing area of Amway's plans and also procedures to establish whether you can market online.
Amway has been around for 50+ years which has actually resulted in market saturation in most of North America. Throughout this duration it obtained a negative reputation that lasted the lion's share of 2 decades. This resulted in the need to rebrand Amway as Quixtar (throughout the 90s). The baby boomer generation is very familiar with this and several will be fast to discourage their more youthful relative from doing Amway. If you are considering signing up with Amway as well as think this could be imprecise, simply ask an individual in your household in their 50s, 60s, or 70s whether or not they think you will certainly generate cash with Amway, and also why.
Below's just what you can expect after joining Amway.
The largest training system in Amway at the time of releasing this short article is WWDB (WorldWide Dreambuilders, officially Globe Wide Group). Although there are numerous training platforms inside Amway, WWDB occurs to be the biggest so I will simply focus on their process with us. The expense incurred by partnering with any type of Amway training platform will be relatively the very same.
The costs for running your Amway company when partnered with WWDB are as adheres to:
$100-$150 each for each and every quarterly seminar generally. This does not include the cost of the hotel, meals, gas, etc. Seminars range from $75 to $450 so I used $150 as a rough number.
~$60 paid to Amway once for an IBO subscription.
$300 plus bucks each month or more to "make the very first circle work." This must contain consumer volume (50 PV) and also individual quantity.
$37 each month for Communikate (also called Kate) to communicate with the training company
$50 each month to be on standing order for CDs and rally tapes
Completely, the ordinary expense on a month-to-month basis to run your Amway business making use of the WWDB training platform is somewhere around $500.00.
Given that Amway pays their distributors based on percent payments of company volume (sales bucks) relocated, this indicates a representative would need to offer somewhere around $4500 to $5000 per month to customers as well as his group just to break even.
The photo here offered by MLM Success Secrets shows just what an IBO earns if they move 700PV in a month.
Increasing this amount won't acquire you rather out of the red.
It must likewise be noted that there are not presently any sort of training platforms inside Amway that offer associate commissions for referring brand-new members.
This indicates that in order to turn a profit a new participant should depend exclusively on the income made using Amway's payment plan.
I will additionally mention that the last top earner (efficiently top income earner) in WWDB that got their start in North America apparently involved the exact same conclusion I've come to: the United States is too saturated as a market as well as absorbed with online marketing to ever offer an offline Amway rep a sporting chance.
This specific couple made a decision after reaching platinum condition (~ 40-50k a year) to move right into a new market Amway had actually just opened in order to burst out as well as come to be top earners.
Where did they relocate you might ask?
Although it's inexpensive to start an Amway company, the cost in maintaining it is relatively high on a monthly basis relative to various other business in the multi level marketing specific niche due to the poor point to buck ratio. Expect to be at a loss for quite a long time as a result of this fact.
As a totally offline network marketing business, Amway could be successful from a retail sales point of view, however, the genuine money and also leverage comes from developing groups of leaders, not slinging product.
The comp plan is really challenging to build as well and calls for a good deal of time as well as effort as a result of the stair-step breakaway design.
Although the business has actually been around for a fantastic length of time, the negative rep through the years has actually resulted in Amway being labeled as a "pyramid scheme." This develops a good deal of resistance with new prospective customers as a result of adverse outside influences beyond the representative's control.
Bottom Line: No, I would not recommend this to a friend