Marketing Amway products - losers far out number gainers?

@cvrajan (354)
India
March 11, 2009 12:16pm CST
I am always skeptic about chain marketing businesses. Amway, which is an internationally renowned chain marketing firm is now quite active in India. Many people seem to get hooked to their high pitched person-to-person marketing strategies and end up buying the first pack of salable items at exorbitant price and run behind friends and relatives to sell them. I strongly doubt most of the people end up with unsold stock, get disillusioned and call it quits. My guess is about 80% of the people will fall into this category. I am afraid, only a cozy group of members get benefited by the money spent by this one-time gullible seller-members and it looks to be a downright unethical business model. Have any of you faced success through Amway? Have any of you burnt your fingers in this business line? What is your opinion about such marketing firms?
3 people like this
9 responses
@iakulchen (615)
• Singapore
12 Mar 09
The problem(and charm) of a MLM business is that in a sense, it's fully automatic. You start your business, grow it, and you don't have to bother about recruitment after a certain point. Your downlines will do it. You don't have to worry about who to promote. It's decided by sales volume. Which would be nice, except that... You don't have a "stop" mechanism for a MLM business. For any product that comes out into the market, there's a certain number of people who wil buy it. Now suppose you have 100,000 people who will buy it in a market. For the sake of simplicity, I'm going to assume that every salesman has more or less the same ability to sell a product. Now, in a normal company, if every salesman that the company employs is able to sell to 100 people (and are able to earn enough commission to make a living while doing so), eventually when you reach 1000 salesmen, any further recruitment is pointless both for the company and the salesmen. At this point the company will stop recruiting salesmen. (In reality it's more a disminishing returns rather than a flat rate, but I'm trying to keep it simple here) I'm going to call this point x. For MLM company, there is no "Stop". Any sales rep recruited after point x will not be able to make any money in the already saturated market. Does the sales rep know exactly when this point x will occur? No. Does his upline know? No. Does his upline's upline's know? No. Even the top management won't have any idea exactly when point x will occur, since the MLM practice of the sales rep buying the product first will still result in good sales volume for a while even after point x has been reached. And, since MLM by their very nature is designed to keep recruiting and recruiting and recruiting, it'll usually continue recruiting unitl way past point x. Which has lead to the misconception that only thoses at the top of an MLM recruitment chain earn. Which usually leads to them pointing to someone 3 levels down from them and saying "He/she joined later than me but is earning more than me now" It's not so much about who joined first. It's about whether you joined before point x. Anyone who joined after point x will be in the group of those who "end up withunsold stock, get disillusioned and call it quits". And the recruiting nature of an MLM will make this group of people the majority. It's not because an MLM is an unethical business. It's not because of an overpriced product. A perfectly fine product promoted via an MLM will also encounter the same problem. It's because an MLM has no "stop recruiting" button.
2 people like this
• Singapore
12 Mar 09
*should be able to sell to 100,000 people, not 100 people fixing the typo
2 people like this
@cvrajan (354)
• India
12 Mar 09
You have made a detailed and interesting analysis! But I am not sure of market saturation. The need for a toothpaste or a shampoo will keep growing in line with the growth of population. People will have to keep repeatedly buying them too. So, the market grows; it may also grow in hitherto unexplored areas. But you are right from the point that the salespersons may far outnumber this natural growth too. But whether, a new, virtually unbranded (and hence not-so-familiar)product, which is too pricey - disproportionately above the much touted merits (which are yet to be experienced by a new user), can continue to keep selling like a typical branded and familiar product is the question. I doubt very much whether a person who "is forced to buy" a Amway tooth paste or a liquid cleaner, due to compulsions of a friend or a relative, will keep on buying the product after the first time usage. That's why I feel Amway survives to benefit a few sitting pretty at the top at the cost of a majority of gullible one-time users and one time salesmen!
1 person likes this
• Singapore
12 Mar 09
Yes, it's true that population growth, company expanding into new markets etc does happen. In that case, what a normal company does is that it expands it's sales department and recruits an additonal x number of sales rep each year (for population growth), or it sets x number of sales rep to recruit. An MLM doesn't. It just keeps recruiting and recruiting. My point was that it wouldn't have mattered if the MLM wasn't selling a new, unbranded, pricey product. A new, unbranded, pricey product just pushes the point at which market saturation is reached forward. MLMs are built to overrecruit massively. It's an inherent flaw of their design. If a newly recruited sales rep of a MLM selling, say Coca-Cola, sold at the same prices at normal retail outlets were to buy a carton from the MLM to sell after the point of market staturation had been reached, he would find it next to impossible to sell to anyone. If he likes Coca-Cola, then he becomes a repeat sales customer. If he doesn't, then he becomes a "one-time user and one-time salesman" If it were a crappy, overpriced drink that he was selling for an MLM instead, then skip the "repeat customer f he likes it" part and jump directly to "one-time user and one-time salesman"
2 people like this
@kalav56 (11496)
• India
11 Mar 09
I have not got into business models as these. But I had an acquaintance/ friend who was an agent in Amway and she was a very decent girl . She was doing well but later I lost touch with her.There was another friend/schoolmate who I happened to see after some 36 years, in a gathering. We were all out of touch for such a long time and I found it very strange when she tried to display and sell her products. Such marketing firms, that sell products which are totally disproproprtionately priced in relation to the value gained by the customer,, naturally makes us sceptical. Thank God I would never fall for any such marketing strategies and I never get tempted. I believe in Brand but this must also have proper utility value .[not only snob-value]Of course, here I am talking as a customer and not as an agent who has burnt my fingers. No experience there!
2 people like this
@cvrajan (354)
• India
12 Mar 09
Trying to do business with old pals who meet after years and years is downright selfish and cheap behavior! During one of such meets, one of the erstwhile classmate of mine (an Engineer, mind you) who had never ever been friendly with most of the classmates during college days was present -- and his only purpose was to catch clients as an Insurance Agent! I could not understand why he ended up as an insurance agent. Though most of us did not show any interest towards him during the meeting, he made it a point to call almost all of us later trying to sell some insurance schemes. When I did not show interest, he narrated very pathetic personal calamities in his life that made him to take up this line of survival. I had to yield to him finally. It is really good that you never personally burnt your fingers in the Amway business.
1 person likes this
@kalav56 (11496)
• India
12 Mar 09
sob stories are one way of getting business I guess. If you have seen an old Tamil fim'Poojaikku vandha malar' the comedy sequence was by veteran comedians Nagesh and Manorama and here he was an insurance agent.It was hilarious and some of the dialogues were very witty.
1 person likes this
@zandi458 (28124)
• Malaysia
12 Mar 09
Amyway has long lost it's glory in my country where it used to be the longest leader in the network marketing. They used to have strong marketing strategies and it has become the household name for many many years but now it has taken a backstage and almost disappearing in in the market. I believe those who have started earlier gained when it was first launched that was in the 70's but consumers are more smarter now and moreover the market is saturated with many other products with competitive prices where Amway are lost when it comes to pricing. There is not much difference in quality but amway reach the target consumers because of their well trained salesman who can make amway products sound like magic with their sales techniques.
@cvrajan (354)
• India
12 Mar 09
As you rightly said, Amway seem to survive by the strength of some very well trained salesmen who catch hold of people to join the marketing stream. You have told about your country. In my country (India), it looks Amway is growing. We have such a big population here that they can go on exploiting people for any number of years! I will be really interested to know the status of Amway in the USA and other western countries!
1 person likes this
@comfort55 (1574)
• India
12 Mar 09
Well, once I and my husband also had been trapped by these Amway people. Though we didn't like the strategy, as we are not very social by nature, but we joined due to extreme financial crunch we were facing during that time. The more I was trying to get into it, I was reckoning that we are losing our self esteem, and finally we had to give up because we could not take any more insults.
2 people like this
@cvrajan (354)
• India
12 Mar 09
You are right. There are certain people who are good at sales, good at facing irate customers and can bear slammed doors. But not all.
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@di1159 (1580)
• United States
11 Mar 09
You are 100% right. I went to an Amway meeting several years ago as a favor to a friend who had joined and dragged me along. It felt like a cult. There all these meetings and people who claimed to have quit their day jobs and were making so much money with Amway products. Well, I didn't join, but I told my friend I'd buy some stuff from her. It was extremely expensive and had to be ordered. It took about a week fo get the products. I just thought that why in the world would anyone order toilet paper and wait a week for it? If you run out, you get in your car and go to the store. I didn't see how it would be a viable program. Needless to say, after a few months she quit too as she had spent a lot more than she earned.
2 people like this
@cvrajan (354)
• India
12 Mar 09
Yes! You are right about the cult type of thing. I think they recruit honey- tongued and very professional "idea sellers" to catch hold of gullible persons and hoodwink them into believing "rags to riches stories" with a lure of making money sooner or later without doing anything! One of my erstwhile colleagues, who got hooked to Amway, later turned to become one of their successful "counselors". One day he came to me saying he wanted to talk about "life and what it holds for the future". He said his intent was to make a new revelation about my life to ME! He never talked about Amway products, but talked about my goals and aspirations for life, the need for financial security for the future in these troubled times, the duty as a parent for building a strong financial security for my children etc. I was fortunately smart enough to derail him in all his attempts to corner me into "believing in what he believed". Ultimately, he left my place with disappointment writ large on his face!
1 person likes this
@maria_k (925)
• United States
11 Mar 09
As a beginner in network marketing you should enter in a program that does not require you to buy anything . It does take time to build your clientele, but once built. The incone is there for you month after month. I am a network marketing and my plan does not require people buy anything or spend any money to join.
@cvrajan (354)
• India
12 Mar 09
Are there REALLY such network marketing lines?
1 person likes this
• Chennai, India
11 Mar 09
I too am skeptic about those chain marketing business (they call it 'Multi Level Marketing'). And I suppose, only those products which may not sell in conventional marketing, come into MLM. I earlier tried one MLM, which was having very worst business plan than AmWay. (At least Amway are having money back policy, if returned within specified period) And these MLMs damage our relationship with friends and relatives. I have another doubt, why almost all the products which come into MLM are overpriced always? At least my products are still working. Thank God. I won't scam anyone.
1 person likes this
@cvrajan (354)
• India
12 Mar 09
You are right. I start running at the site of any friend or relative who comes with an Amway product! Regarding overpricing, I think, it could be like a typical American thinking: "something pricey must be premium". Or, the very model of MLM is built on getting the maximum money right from the gullible first time "salesman"!
1 person likes this
@tops76 (289)
• India
12 Mar 09
I am agree with you and your opinion about this internationally renounced firm Amway and its Products. About people or I can say Amway Distributors its true the losers percentage is high... its limited to some with strong grounds (economically, personally, socially, locally....). This is one face of a coin. Why not we should look at it with different perspective..... Personally, when I was a Graduate Student, this Business Opportunity was told to me by a friend of mine... I even have attended Business Seminars associated with this on couple of occasions... but refused to join this as I was thinking at that time that this is not for me/not suitable for the person like me.... things have changed after that... today I am in an better position financially without this business..... but something I managed to get out of this "public speaking", I use to deliver Business Plan to future prospects on my friends behalf and this enhanced my personality in a much bigger way that I could have got in formal educational system.... I am still out of this Business and have no desire to join this in future either.
1 person likes this
• India
16 May 09
First of all I am not a Amway business owner but I use their products and this are really good even though its price are very high but their quality is world class and why should we think they will give their best thing to you in no cost they have right to sell them in high price. and my one frien earn 40 to 50,000 per month it is all about hard work.