Amway Pyramid Scheme: Is Amway Global a Scam Scheme?
The Amway pyramid scheme is one of the most talked about work from home opportunities.
It is one of the biggest and the oldest network marketing companies globally.
Almost every single person you know has had some experience with this firm.
They were either recruited or requested.
But, is Amway really a profitable proposition?
Can you at all hope to get any money from this MLM?
They now have spread almost in every corner of the world.
You even have Amway ads going up in specific regions.
But is there any way of understanding if this MLM really means business?
One of the biggest problems with pyramid scheme is the lack of a product.
For all of these well known multi-level marketing firms, that&8217;s not an issue.
Amway has a commendable range of products.
Amway customers from the world over use these products and benefit from it.
But, the fact remains that it is a multi-level marketing company.
A generic study of MLMs would indicate it is best to maintain a safe distance.
But, you can argue that this company has been in business for more than 50 years.
Surely investors see value in it to continue their association.
That could make you probe further.
It would be interesting to identify the demographic trends for its recruits.
Do you have many long-time associates?
Most importantly, you need to study the compensation plan carefully.
That alone can highlight important details about how to make money.
But first, let us understand the business basics to track down the revenue flow.
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Amway Pyramid Scheme: The Inside Story
The name Amway stands for American Way.
It specializes in multi-level marketing and sells health and beauty products.
They also have a wide range of home care alternatives.
The company was founded in 1959.
Its founders were initially distributors for another health major, Nutrilite.
They built Amway to bring in a more stable variant to the whole distributing network.
By 1972, they grew such a vast network; they took over Nutrilite.
After that, they started expanding operations from the 1970s.
Within the next two decades, they had a presence in almost every continent.
From South America to Asia, Africa to Scandinavia, they spread their operation almost everywhere.
They even spread out in less-talked about markets like Russia and Vietnam.
Along with the business expansion, they also expanded their product range.
Their offerings include cosmetics, homecare and many others.
As of now, they have a total 450 products.
They have manufacturing units in US, India and China.
Apart from that, you have Nutrilite farms in Brazil, Mexico and US.
It is needless to mention that this aggressive expansion also enhanced the revenue flow.
As per 2015 data, they recorded $9.5 billion sales along with holding firm, Alticor.
It currently has the highest revenue flow in the MLM space.
Viable Product offerings in Amway Pyramid Scheme
So, a fundamental concern gets addressed.
Unlike many other illegal schemes, the Amway pyramid scheme has genuine products.
The revenue data also highlights strong demand for these products.
The company has a strong range of products as well.
You can understand that they have a reasonable brand loyalty too.
The company has a strong line of customers globally.
Therefore, at least a percentage of the sale is from product sales.
This is very important when you are assessing the mettle of a pyramid scam.
After all, a scam could not be operational in over 100 countries for 50 years now.
I am not talking of sheer size, but also the operational matrix.
Without a reasonable product mix, it is difficult to maintain this kind of traffic.
Therefore, it goes without saying that Amway sure has a reasonable offering.
In fact in the MLM space, they have one of the biggest range of products.
They are not just beauty and wellness specialists.
Their products cater to a wide range of genres.
Even in terms of pricing, Amway is not terribly expensive.
Though they have a slightly premium billing rate, it is still within affordable range.
Like all legitimate MLM&8217;s, they have a clear pricing and discount offers.
The Amway Pyramid Scheme Compensation Plan
So, the next point to ponder is the compensation plan.
How well does Amway compensate its distributors?
I am sure you are wondering if it a profitable deal.
So how do you join this MLM?
First and foremost, you will have to get registered.
You can register by paying $62.
You also have an option of paying $83.99 and get some products and samples too.
With this step, you become an Amway IBO.
You join the compensation chain.
The next step is getting to know your sponsor.
The sponsor helps you learn the rope of the game.
They help you with the overall training process.
You earn money in two ways.
First and foremost, you get a share of commission from product sale.
The other commission is from recruiting people.
You can interact with potential recruits in social gatherings, online and even call them home.
Essentially people who are looking for additional income join Amway.
But you must remember there is no autopilot mode in this.
You become an active member after attending their training session.
After this, you have to sell your product aggressively.
But more than that, you need to watch out for potential distributors.
The more you can convince to join; the better is the returns.
But staying active Amway members mean you have to continue investing small sum.
So, here you need to put in money to recover some earnings.
You need to direct your consumers to the right offer.
You have to make sure that you can direct maximum traffic towards it.
Do You Make Money In Amway Pyramid Scheme?
Now that you are an active Amway distributor, do you start making money?
Well, this is where start getting a bit sketchy.
If you check the latest income statement, the consultants earn well below average.
In fact, they also need to spend a certain amount to keep their membership active.
A back of the hand calculation indicates that earnings could be negative too.
One of the standard lines given to distributors is about saving household expenses.
You have to generate at least 100 PV or points on your own
After this, there needs to be 50 PV from customers
Amway will then pay you on the basis of this PV or points that you accumulate.
1 PV is not equal to $1.
You get different rates for different products.
For Nutrilite & cosmetics, you get $2.50 per point.
But for others like LOC and S8, you have to spend over $10, to earn less than 1 PV
In some cases after spending $11, you get 0.7 points
So, to get 100 points, you spend over $500.
The shipping charges too are quite huge.
They also take up huge chunks of your earnings.
Therefore, you can well understand that there is no parity in cost structure.
So, to actually make money, you will need to sponsor a few people.
Just like in many other MLMs, you make money from the proceeds of their sale.
So even in this case, recruits are the ones who drive earnings.
How Do You Get Residual Income?
So, if you want to make real money from Amway pyramid scheme, you need to sponsor.
This means you will have to be a suave marketer.
You don&8217;t just sell the product, but the concept too.
You have to convince potential recruits of the viability of the plan.
Remember, only if you can convince them, you can hope to get some real earnings.
So who are the first targets?
Well, you inevitably contact your friends and family to join.
You convince them to become active members like you.
But the sad part is you exhaust this list very soon.
The warm circle saturates rather fast.
Remember, when you are contacting friends and family, they are doing the same.
Recruiting complete strangers is fairly more difficult.
You can approach potential recruits almost anywhere.
You can try talking to them in a coffee shop or cinema.
The difficult part is convincing them.
Most of these people may sit through your chat.
They may even promise to get back.
But they are sure to search details online, and there you lose a potential team member.
However, when you manage to contact a few, you can earn from their sale proceeds.
The MiddleMan Continues
Another worrying issue with the Amway pyramid scheme is the business fundamentals.
It is known as the world&8217;s largest direct selling MLM.
But the fact is, the middleman continues to thrive.
You become the middleman taking products to the customers.
But the sad part is you do not get the benefit that they enjoy in actual markets.
The middleman invariably buys at a significant discount.
This is because they are buying in bulk and from the manufacturer.
You are buying from the manufacturer as well.
But on the contrary, you are paying a good 25-30% premium.
This is the part of your spending that gets distributed as commission.
So how is it direct selling?
The company sells you and forgets about it.
You have to think about storing, arranging for storage area and the like.
You don&8217;t even get the price advantage.
So, what could be the incentive of buying the product?
Why Are People Still Unsure About Amway Pyramid Scheme?
Perhaps, this is the reason that people are still unsure of Amway.
Despite 50 years and 100 countries, doubts continue.
Statistics indicate that a minuscule part of Amway pyramid scheme make money.
Most end up paying more than earning.
That I feel is the biggest problem with this pyramid scheme.
The earnings projections are quite unrealistic.
You sure are in the business of selling dreams.
But the reality is that there is no scope of converting them.
You join with the promise of a simple business idea.
You have hopes of making tons of money.
But the fact is only those at the top benefit.
In fact, most of Amway&8217;s earnings are from selling motivational literature.
The new recruits are supposed to buy a host of stuff.
They need to buy manuals, tickets to the seminar, guides, etc.
They attend these in hope to get trained in selling products.
However, selling needs strong interpersonal skills.
You could even take years to master it.
If it was so simple, would people spend millions in management classes?
Motivational Material Is the Big Money Spinner
If you pay attention, you will realize the real money spinner is something else.
It is not the products or the recruits.
On the contrary, it is all the motivational materials that you sell to new joiners.
People buy these in the hope to get to the top.
They are still uninitiated, want to make a mark and are keen on profiting.
Imagine Amway has over 3 million members and at least a copy was sold to every member.
As juniors in the chain, you could be even pressured to buy these CDs.
The internet is full of reviews of many new joiners who felt compelled to buy these.
Needless to mention, the seniors sure had an interest in these.
The more the juniors bought there, the better they earned.
In many ways, this is the key revenue generator.
While you cannot deny that Amway is generating money, it is mostly within.
The biggest spenders are the distributors who join the organization.
They register in the hope of earning money.
But they end up spending more than they imagined.
So, you can easily say joining Amway is not difficult.
It has a legitimate revenue stream.
But, it is very difficult for it to yield return.
Positivity Does Not Pay
Now we discuss this actual money spinner for Amway pyramid scheme.
It is the positive motivational literature and CD.
Well, a positive approach is surely good.
But, do not think that you can earn money from this positivity.
Earning is still directly proportional to the effort that you put in.
The moment you read or hear about a simple formula, be warned.
There is nothing in the world called free lunch.
So Amway&8217;s motivational materials are selling an unrealistic dream.
Almost every meeting and every member at the meetings are very positive.
They sing praises about the magic of this motivational stuff.
But the fact is if positivity and motivation pay, let&8217;s go to a spiritual leader.
Why would you spend money, join Amway to get spiritual knowledge?
The whole Amway eco-system is based on the positive element.
There is so much stress on maintaining a positive approach.
However, this alone can&8217;t yield any fruit to you in terms of earnings.
All the positive chat does not automatically transform into earnings.
This is exactly why a very small percentage of the Amway family make any money.
Selling Is a Specialized Skill
That apart, you must also understand that selling is not everyone&8217;s forte.
There are some who are born with this talent.
There are many who just can&8217;t handle the stress.
So, the sheer motivational material cannot translate into sales and earnings.
Also, if you want to master the skill of marketing, you can do a free online course.
The question is why would you want to buy CDs and literature every once in a while.
While I reiterate that they are a legitimate MLM, earning money is not that simple.
Not a Reliable Passive Income Source
The company will make you believe that you can earn tons of money.
The reality is quite far from the truth.
You can hardly make money from Amway.
Rather you need to spend to remain active.
So, this cannot be a dependable source of income.
Actually, this is no source of income at all.
It needs years of work and investment to reap even the smallest benefit.
So, you cannot depend on this to help you earn additional amount.
On the contrary, you need to be careful about how much you can spend on your own.
Amway Is Legitimate
According to what I explained above, you can easily conclude that the Amway pyramid scheme is legitimate.
But, it cannot be a great way to earn money.
Whether you are considering passive or active income sources, this falls into neither category.
You are promoting a brand and paying to do so.
There are very few people who actually make money from Amway.
They are generally on the top.
They too more than product sales, it is literature sale that triggers profit.
So, it is best to explore some other online option to make money.