Lurker signing in. Wow, it feels very… exciting to post
Now, my family was recently introduced to Amway. It sounded like a pyramid scheme at first but from what I can find, it’s not quite that… illegal. Still, sounds very suspicious (and I haven’t really been able to find a clear description of what participation in it would entail, either).
What is the Straight Dope on Amway?
Oh yes, in case it matters, I should mention I live in Estonia (Eastern Europe).
Amway, at least in the US, is not illegal. It is not a pure pyramid scheme, but is known as Multi-Level Marketing (MLM).
The general concept is that not only do you sell the products to your friends and neighbors, but you also try to recruit them to sell. The people you recruit work under you, and you get a percentage of everything they sell. Of course, those people are also recruiting people under them, and you get a percentage of that, as well.
This may be venturing out of GQ into IMHO, but if the products are as good as they claim, it seems that they could just market them in retail stores at a lower price because they would not have to pay 5 or 6 levels of commission on every item sold.
Amway is legal, at least the form we have in the US. However, it won’t deliver everything it promises. In order to make any serious money, you have to become a wholesaler to several retail dealers, who also hope to become wholesalers, and so on.
I don’t know the technical definition of a pyramid scheme. Amway does sell an actual product, and that sets it apart from some pyramid scams that sell only promises.
I am dismayed to find that Amway has made it to Estonia. As others have said, Amway is not quite a fraud–there’s an actual product being sold–but its promotion tends to be… economical… with the truth.
Years ago a co-worker invited me to a presentation. He had just left the company inder strained circumstances (politics between founders led to a split). He did not say what the presentation was, just that it was a ‘great business oppurtunity’. I, naively, thought that it was going tlo be about the new company he and the other former co-workers were founding.
We went to a hotel, and entered a conference room. No engineering positions in sight; it was all marketing blather about building enthusiasm and reducing critical thought. They showed us books illustrating the wonderful lifestyles we could have if we got enough people selling in our ‘downlines’. (Downlines were the chains of people we would recruit as salespeople, and who themselves would recruit more people.)
The rewards were all about getting mansions and fancy cars and RVs and such, but it all had a kind of Las Vegas glitz that was as much about appearance as about actual solid foundations of wealth.
My impression was that it was simply not possible to achieve great wealth, or even modest success, through selling the company’s products. You had to recruit people into your downline so that they would also sell, and in the process add to your take. And they had to do the same.
But the way my co-worker would not tell me what the ‘amazing business oppurtunity’ actually was before we went there left a bad taste in my mouth. It was like reading those ads stapled to telephone poles, the ads that say “Make [sub]up to[/sub] $3000 a week working at home!” and just give a phone number, but leave out what you would actually be doing and what you would have to invest in the process.
Amwy itself, as a company isn’t totally bad. Most of the problems are in the large groups (the biggest is headed by Dexter Yeager, with about 70% of the business going through his group last I heard). They do make some decent products, but the way it’s marketed leaves a lot to be desired.
Fastest way I know to alienate all your friends and relatives. My stepmother (Dad remarried in his late 50’s after my Mother died) was one of those who spent more than she made. IMHO Amway dealers are significantly below used car salespeople on the social ladder.
I can’t add much accept to say that I agree with A.R.Cane. We lost a pair of friends to a scheme like this. They need to get people to sign up under them and socially they didn’t know how to turn off the sales pitch and we stopped seeing them.
What do they sell, anyway? I gave a taxi ride home to a guy who tried to pitch the Amway spiel to me (“Think of the opportunities – you could sell to all your fares!”), and when he opened his garage door, it looked like it was stocked to the ceiling with boxes of washing powder, all labelled “AMWAY.” I didn’t bother asking.
Lousy tipper, too. Obviously raking it in.
Indeed, the operation is pretty shady and secretive. It took us a few weeks to find out that it was actually Amway we were dealing with.
By that do you mean that to make money, you have to recruit lots of sellers?
Some friends of the family seem pretty into this thing. I would like to stop them before it is too late (they’re just starting). What would be the best arguments with which to convince them? I fear the “promised goldmine” might cause them to see any claims to the contrary as false and misleading… especially due to the “some people might actually earn money” part, even though that “some” is very very very few clever/lucky ones.
Assuming someone joins and never buys or sells any products but just recruits 15 people. How much would he earn from his… was it called “downline”? Let’s assume all the lower-level people sell $50 worth of products per week on average.
I’d like to get some nice examples of approximately how much someone would earn/lose. I think this might help convince our friends to stay off the scheme.
The biggest problem with Amway/Quixtar is that they get their claws into you in the beginning with upfront costs (motivational stuff, seminars, that type of thing) and so your average person will try to move Heaven and Earth to at least get their money back. After all, how hard can it be, right? There are people making millions doing this.
It’s called throwing good money after bad, and it’s the same impulse that won’t let problem gamblers walk away from the craps table. They just know, deep down in their hearts, that the next toss will solve all their problems, even though every statistical analysis known to man virtually guarantees that it won’t.
That’s Amway. A fool’s bet. And woe betide anybody who says that in front of a true believer. They will lose their shirts before they will admit that they were fools. Just like alcoholics, drug addicts, and gamblers, they just know.
Yes, you make very little actually selling the product, compared w/ the potential of your “downline”.
If I remember correctly, and I’m pretty sure I do, you must buy a minimum amount of products each month to maintain your status as a rep. There are also promotional/motivational materials that you are pressured to buy.
It’s pretty hard to convince someone who has bought into the original sales pitch, they are given frequent motivational pep talks and if they mention that someone is trying to disuade them there are pitches to overcome that. You will be painted as a pessimist who’s trying to steal their dream.
They are very hardcore and very, very persuasive. It often takes years before people give up and even then they often feel like they failed because they didn’t believe strongly enough. As DrDeth said, it’s very much like a fundamentalist religion.
I’ve known two couples in my life who were into selling Amway, and they were all fundies. I tried to gently suggest to the last couple that Amway was almost a scam, but the wife got all shirty with me and seldom spoke to me afterwards.
I don’t think it’s realistic to assume an Amway distributor won’t buy any products. It probably is realistic to assume they won’t sell much, if any. But what’s really a stretch is assuming they’ll recruit 15 people, especially 15 people who will sell enough to generate any net income.
Here in the U.S., where Amway is pretty well known, just recruiting 3 people is a monumental challenge in most communities. It might be easier in an area where Amway is not well known - for a while. Eventually the word will spread that virtually no one makes any money doing this, and then it will be hard.
I’m sorry I can’t help with the figures you asked about, but I have observed people trying Amway and other MLM plans for decades now, and precious few - very, very, few - break even, much less profit from it. When you figure in the time, stress, alienated family, and lost friends, the miniscule chance of making some money is simply not worth it. Playing the lottery is a better bet.
Way back in the '70’s, Amway was somewhat legitamate- you actually made $4 by selling the products, which were pretty good.
My parents did it for a while and were never made to recruit anyone - more like Avon or somesuch.
Now it seems to be a cult type organization. My brother and his wife bumped into one of his old school chums who invited the pair of them to dinner with his wife. When Bro and SIL got there, it was an Amway recrutiment deal, and there was no food.
Last time I saw amway materials, it noted that on average, amway sales people made $240 a year. (or somewhere thereabouts). That’s NOT counting the promotional, motivational etc items you buy from your upline since those are not produced by Amway but rather by the sales group. That figure may have changed, but they are legally required to notate it.
I bought some products from a friend of mine who got involved with Amway a few years ago. I don’t know how well he did out of it. Personally, I thought that the stuff I bought from him (cleaning stuff, detergents) was way over-priced and not particularly effective.