AMWAY MYTH: Amway business vs Tools business – a conflict of interest?

Most, perhaps all, large and long-term Amway/Quixtar businesses use some kind of Business Support Material (BSM or "tools") to help train and motivate their groups. Just like in pretty much any other business, the more of a particular product you buy, the cheaper you get each "unit". So an IBO who purchases 1 CDs from a BSM company will typically get a cheaper per-CD rate than another IBO who purchases 1 CDs or 1 CDs.

Whenever you get volume discounting, you also of course get potential for profit. So if you buy 1 CDs and then on-sell them in ten lots of 1, you might make a profit. It's essentially how Amway works, it's essentially how most product distribution businesses work.

This has however caused some controversy within the Amway/Quixtar business and some critics claim that this causes a conflict of interest – the upline becomes more interested in selling the tools to their downline rather than actually helping their downline build a profitable Amway/Quixtar business. On the surface this looks like a reasonable concern – there is however a major flaw in this thinking that can be addressed by answering two simple questions –

Q: How do I increase my profit from Amway?

A: Build a larger Amway business

Q: How do I increase my profit from BSM?

A: Build a larger Amway business

Even in the extreme case of a person who was solely interested in generating profit from BSM sales, it's quite obvious they would be motivated to provide the best tools possible for helping an IBO build a large and profitable Amway business. The more successful the IBO using the tools are, the more potential customers of the BSM there will be.

There is no conflict of interest between building an Amway business and profiting from the sale of BSM.

Now, that's not to say problems can't arise. I have for example heard that some BSM companies base their discounts on Amway pin level rather than on the actual volume of tools purchased – and what's more, that discount remains even if you no longer qualify for that Amway business. In other words, Amway income and rebate percentages could drop, but the BSM rebate percentages doesn't, meaning the "tools income" would become a proportionately higher percentage of total income. In such cases, with the customer base shrinking, I'm sure there could be a temptation to try to push tool sales on to your existing "customers". Of course, this is quite obviously not smart business – you'd be much better addressing the reasons for the Amway business shrinking and increasing profits from all areas. Still, I could certainly imagine this scenario.

In my opinion, calculating BSM discounts on "ever qualified" pin level rather than actual volume purchased is a corruption of basic economic principles, and I'd hope that any BSM companies operating on that basis would reevaluate their operations.

Even in this scenario though, it's not a conflict of interest, it's just dumb business.

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20 thoughts on “AMWAY MYTH: Amway business vs Tools business – a conflict of interest?”

  1. Bom ,não sei o que seria dos seminarios ou congressos de direito ,medicina e outros se as pessoas que participam não pagassem por suas despessas ,como hotel,viagem,alimentação, transporte etc,incluindo os ingressos,se na faculdade não fossem pagos os livros,as mensalidades,o material didatico e as aulas,portanto se queremos adiquirir capacidade de fazer algo ,temos que aprender antes,um professor não da aulas de graça,ele tem sua vida para sustentar,e todos temos que entender que pagamos o preço mais baixo ao nos capacitarmos,pois é isto que nos leva ao sucesso,o fracasso custa mais caro,muito mais.Aprendemos dos campeões,é como Pelé e Marodona,Zico e Platini,nos ensinando a jogar futebol,isto não tem preço.

  2. IMPORTANT NOTE: All of the amount of money I have been talking about was actually Euro not US Dollars, sory about this. (so it is actually more in us dollars.

    PS: If my english is not perfect is because I’m from Europe and not a native speaker of english

  3. Hy all,

    I’m an IBO for a couple of years now. I sponsered a few people but they havent’t done much either. Yes you have to be active in this business to make some cash. I’ve been “on the tools” for a couple of month twice, but always quit before going in to money problem because of that. And I want to make money with this business not get in to finacial problems.
    the tools help but it is possible to get in to financial problems if you buy the tools on a constant basis. If you don’t make money from the business and keep buy the tickets and the cd’s yes you will get in trouble. There is no doubt in my mind.
    A sound advice would be: sell some products to customers and use the profit to buy the books, CD’s or tickets. If you don’t make the sales just don’t buy them. This will keep you afloat.
    Now when you listen the cd’s you will be told in order to make it the business you have to buy more cd’s and stay with the program. Just ignore that. The organization I work with keeps pushing for the cd’s and events. My upline does it to. He told me: “you need to buy a ticket to a conference that is in four month time to be able to work with you. That way I know you are in the sistem”. I just didn’t I don’t have the money and I won’t borrow to go there. If I make the sales I will buy the ticket if not I won’t go. It is that simple.
    Now a bit about That meeting. It is a regional meeting in a hall that can acomodate around 20000 people. I did the math just the other day: They will sell out the tickets to the function wich will total a wopping 1,7 milion dollars in tickets alone. The question is how much does it cost to rent a hall that big? 1 or 200000 dolars thne there are the acomodation for the big shots lets say another 100000 dollars (which is a lot) that leaves them with at least 1,4 milion dollars in pure profit. And there is no money out of this? Don’t get me wrong but I won’t belive it any more. There are a lot of money out of books and Cd’s.
    Lets look at another point: If the Diamonds and above don’t get a cut from this why they promote it? Where all these money go to?
    The world today has changed it is high-tech. We could download the messges with ease this way. Would I pay to support the website opperations if they did it? Yes I would. But not more than $5 a month I think that would be enough. Even make a proffit 🙂
    Another point is that my upline charges me 5% more vor every CD or book. He sais it is to pay for transportation and he is beeing charged the same amount. It just doesnt add up when you think about it being charged a percentage or the total order. And when you think about it my upline is just 18% his not even direct. What happens if he gets a Diamond? What will be his price tag by then? just some thoughts …
    So cd’s and books are really the business not the amway products.
    Another point: With 3 large conferences a year in one country each at 1,4 milions net, then add up some 40+ countries they opperate and you get the minimum amount of money beeing made out of this (minimum because I can’t really know the amount of CD’s that are sold. So yeah I do have something against buying books and cd’s when I add up these numbers. Beucase you have to be blind not to see that is the main source of income for most of them.
    If you want to help me build this business then really do it at cost value. And I will pay for that cost value because I undertand economics and it seems only fair, just don’t lie to my face.
    I just started to look up over the internet to find free training courses for MLM and start something really good and really train people to do it the right way, and give these out for free. If anyone is intereted in joining me please feel free to contact me at: elvisalpha1 [at]yahoo.com
    Thanks for taking the time in reading this.

    1. Daniel,
      With respect do you really think that the only expense involved in setting up a major conference in a huge venue is the venue rental? What about staffing? What about insurance? What about marketing expenses, even things as small as printing tickets? What about multimedia expenses? How about the speakers, what are they paid and what are their expenses? In a few weeks multiple Olympic Gold Medallist Keiren Perkins will be speaking to IBOs at an event like this in Australia. I’m 100% certain he’s not doing it for free! Just recently I was at a similar seminar in Europe with guest speakers from South Africa. Conference organisers would have naturally had to pay for their flights and accomdation as well as a per diem.

      That’s not to mention all the ancillary expenses of running a business, from the day to day admin expenses, staffing costs, accounting and legal expenses, office rentals etc etc etc etc etc etc.

      And finally of course – why on earth wouldn’t people taking the risk of holding such an event deserve to profit??

  4. I just find it interesting how people in amway motivate one another through lies and deception. I am a current IBO and have been for about 3 months. I attended several meeting and just got tired of the meetings. Meetings are always repetative with the same information over and over. If you attend a meeting I can tell you the meeting agenda. Breifly talk about a product then introduce the speaker. Speaker just talks and talks about what they did in the business. Then they present the new diamonds and so forth. At first I thought this would be a good opportunity to join in ecommerce. Except that after trying the product I could not proceed. Most people that tried the energy drinks found no satisfaction in the drinks compared to rockstar or red bull. The energy bars for crying out loud they taste awful. I tried some of their products and at first I wondered why there prices even with my IBO discount were higher than at the regular store. But I bought some stuff only to find out the qaulity was not that great for the price paid. The diapers I bought for my kid gave her a terrible rash, I guess they can’t compete against Huggies or Pampers in the regular market that is why they go to independent sales people. Over all I just wonder why amway does not sell in the regular market and the answer is because they can not compete against the better products. That is what i figured out not because they care to share a piece of the profits.

    1. I find it interesting that YOU are a “person in Amway” and at the same time you claim “people in Amway” lie and deceive. Do you lie and deceive? I don’t, and I’m frankly offended you accuse me of doing it. To be perfectly honest I actually question whether your post is even a legitimate one. Complaining about “amway diapers” is a standard tactic of anti-Amway folk, including the TEAM people who all got kicked out of Amway for unethical business practices. Why is it a red flag? Amway doesn’t make diapers. Amway North America has a brand available in their catalogue, Kozy Kids, but it’s not made by Amway, and even then independent reports speak highly of them. You then compare unhealthy highly caffeinated, sugar filled energy drinks like Rockstar and Red Bull with low-calories, low caffeine energy healthy drinks with XS Energy drinks. An independent study of caffeinated energy drinks in Australia found that many of them had levels so high as to be illegal! Despite this, XS Energy receives many positive reviews. As for the energy bars, independent reviews of the taste that I’ve read are pretty much universally positive.

      Throw in the fact you claim to be able to tell me the precise agenda of all Amway meetings – yet I’ve been to many and have never been to one with that schedule, makes me really question your agenda on this post. Are you really a legitimate IBO? Have you really only tried 3 Amway products and one non-Amway product from the 400+ Amway manufactured products and the thousands of 3rd party products?

      Maybe your legitimate, heck there’s no diaper brand in the world that wouldn’t have a problem with some babies skin somewhere, and tastes differ so maybe you don’t like the energy bars. Heck, I think Red Bull is one of the worst tasting liquids in the world, but I know others love it. But your opening sentence was to accuse millions of Amway IBOs (which ironically includes yourself!) of lies and deception. Is that really a way to join a conversation?

      If you are a legitimate IBO, I suggest instead you find some products you DO like, and you market them. Nutrilite and Artistry are some of the best selling brands in the world and have won many consumer awards. I’m sure you can find a legitimate business in their somewhere.

    2. This shows how two people can see and experience things differently. We have five kids. The youngest is still in diapers. We experimented with Pampers, Huggies, Costco (Kirkland), and Kozy Kids. Prior to Amway, our best experience was with Costco. Once we switched to Kozy Kids we only went back once when I forgot to order and we were so disappointed with the Costco diaper compared to the Kozy Kids that we didn’t finish the box. We put Kozy Kids at the top for durability and hygiene.
      The comparisons on Energy drinks drew a laugh from my wife. We both work out regulary and in the two gyms we frequent, our XS brand has replaced nearly all competitors. We never approached anyone to sell it. It started with a couple people asking what it was. We gave them a sample and most became converts. In many cases, the absence of sugar and carbs was a big feature with people on carb restricted diets. But the biggest factor was always taste. Additional sales were from customers bringing new people over based on their experience. It’s a shame it isn’t working out for you. But if you’re convinced over the counter is a superior product then shop away. You don’t fit our customer profile. It’s like someone going to an exclusive restaurant looking for a Big Mac than leaving because the meals are “overpriced” and not as good as the mass market version.

  5. My upline put people in the wrong line to build up other lines, thus we were robbed of downline. By the time we found out about it, it was too late they had joined and under another of our uplines group and we missed out. This happend twice that we knew of. We tried going to a lawyer but they didn’t understand the business. Our downline were affected by this, they should have had these people in their downline and they lost faith and gave up the business.
    Then there was the “handling fee” our upline tried to deduct from our bonus, back in the days when bonus payments came from your upline, as some people in our downline picked up products from them each week as they were closer. Ofcourse they were also their downline too & we were always there to help…
    Then we have the phone calls from our upline dircet who told me he wanted to have sex with me. He was soon found out to be doing it to a number of his downline. He was a husband and father of 3 kids at the time. He left quickly after this came out. His wife stayed with him, amazingly, but apparently he’d been accussed of sexual harrasment in his job before, so I guess she was used to it.
    All the normal stuff, forced to buy large ticket items & products if we wanted upline help in building our business, told endlessly to “serve” our upline. They expected to be treated like Royalty. Our upline direct also would call “chasing extra points” and we’d be talked into putting in extra orders. If it wasn’t enough they’d sound annoyed. They went direct by putting orders from two months into one month. It goes on and on.

    1. wow …. sounds like you had an awful upline. Terrible story .. though I’d dispute the “all the normal stuff” claim. That’s not normal. It may be normal for people with poor experiences, but it’s certainly not normal for many of us. I assume you reported all of this to Amway. What was their response?

  6. Reading through the comments (especially the negative ones), I would like to point out some things.

    First Amway is not the only MLM or Network Marketing company out there. There are literally hundreds and most based on the Amway model.

    Second, Avon a “respected” company runs the same model and basically the same type of compensation. The problem with Avon, as my daughter found out is that your customer may order a certain product only to find out that it is on back order and then after several campaigns that the product is no longer available. This is very embarrasing to Avon distributors.

    I have been in Amway twice before since 1979, the products are among the finest the support is second to none (provided you are in the right group). Why did I quit? It just wasnt the right time for me. Why am I coming back, because now is the right time.

    Lastly, while it may be true that a large number of IBOs do not renew, look at businesses in general. The failure rate of startup businesses is close to 95% within the first 2 years. The success rate of “franchises” is 98% over the same period of time. While technically Amway is not a franchiser, it shares many of the same benefits of franchises.

  7. # cris
    Nov 5th, 2008 at 03:27

    Why isnt all this material for free??
    # 2 ibofightback
    Nov 5th, 2008 at 16:02

    Why isn’t everything free? Someone has to pay for it.
    # 3 Chris
    Jan 22nd, 2009 at 17:39

    People ask why the “tools” aren’t for free. In reality, anyone who is part of any type of profession knows there is cost for training. Weather the company picks up the bill or the employee. I am in a specific career where training is equal to your success, and I’m not talking about my Amway business. One class taught by the top people in my profession cost up to $300. for a two day class, paid by the employee. Yes you can not take the class, but performance is obvious between those who have trained and those who have not. We also receive a pay incentive for continuous training and “ranks” we receive by the amount of training we complete.

    * Luna
    well to help answer the first two. Well when you go to school your books aren’t free are they… no. It is an investment in your future in that field.. if you feel for some reason your collge educations wasn’t all its cracked up to be and your not where you want to be in life i highly recommend demand a refund!
    and for Chris thank you very much for your input but i just wanted to point something out.. not that you g in your example by any means but many people t seem to get it.. the definition of an IBO.. is an Independent Business Owner… not employee.. you own your own business who else is responsible for investing it its growth and success… Amway is a corporation.. the tools do not come from amway.. two completely separate entity.. you are referring to the tools of mind set training that comes from particular teams… not all teams operate the same… im very fortunate to be part of a wonderful team and yes im sure there are some bad seeds out there.. but thats in everything…and folks do your home work. dont let other peoples failures determine your success.. free free to contact me with any questions you might have only if you serious are considering the opportunity.. im not trying to requite just simple help give a better understanding to some of the commonly misunderstood concerning amway.. jonathan@hotshotzent.com

  8. Well, i WAS an AMWAY distributor for last 6yrs and just happy to quit last week. Here is what my honest opinion about the business. This is a very *good* business provided you *know* the small print. If you dont do this right, you will waste LOT of your money and LOT of your time. You get suckered into the “system” and it goes downhill from there. This is not a get rich quick scheme and like any other business you need to use your common sense. I spent close to 45-50 thousand dollars in last 6yrs and i dont blame anyone except me. There are many Amway “dreamers” who think they are going to make it just because they attend meetings and buy the products. It takes 5days/week for atleast 2-5yrs to get to a good level. That is the reason why 98% of the people *fail* in the business like me. If you are not serious, save yourself some heartache and money and do your job like rest majority working class and you will not be labeled as *loser/quitter* by *system*. If you want more details you can reach me at ravikanth_b@hotmail.com. By the way i was fake 2500PV 🙂
    My upline change the tune on me as soon as told them that I quit. I was blamed for my downline behavior, i was blamed for not being straight forward about building busiess, even though i told them i will be inactive/quit the business (most people i know just quit, not a word said or asked), i was blamed for *un-doing* what my wife was *doing/did*. Finally i became a loser (nobody said that though. But you hear plenty from functions and it is understood). I might rejoin this business or may be not, until the bitter experience goes away, but I would know how NOT to be stupid while building this. I will hunt for my own LOS and *qualify* my sponser to work with(if at all). By the way i was sponsored by my close relative who is a platinum and he sponsored by a now diamond. See the irony.

    -Ravi

    1. You’ve hit the nail on the head with regards to one of the biggest weaknesses of the business – what happens if you join a group you just don’t fit in with, and they don’t respect you and you don’t respect them? Virtually a recipe for failure in any endeavour. The whole “loser/quitter” thing that some systems seem to get into is just dumb in my opinion. An awful lot of folk who succeed in Amway do so on the 2nd, 3rd, or even more attempt. Who is going to want to come back into an environment that they left with enmity and a lack of respect? I stopped being active nearly a decade ago for personal reasons, and my upline and system have been nothing but supportive. Now that my circumstances have changed they’re starting to get a return on that. If they’d been disrepectful I’d probably never have been “back”, let alone running sites like this one!

  9. Here’s my gripe with these “Tools.” Basically your success depends on being “trained.” In turn you’ll seek out six individuals which will follow “the plan.” They buy the overpriced products and pay for the grossly overpriced “Tools and functions required for success.” And these six individuals seek out six other individuals themselves and the cycle continues of selling more “Tools and functions” so that the people at the top can grow richer and richer leeching off the hopes and dreams of the poor folks at the bottom. People who make money in “The Business” make money selling their idea’s, Their “tools” and not the actual products.

    Legally speaking this business is not a scam. But I find it extremely unethical, due to the deception. I truly feel bad for those that are unable to open their eyes too these truths because Amway has such a control over their information and thoughts.

    “The Power of Submission” Eh?

    1. Michael, the problem with your post is you don’t know what you don’t know. Take for example the last line “the power of submission” eh? “Eh” is correct – I’ve never heard the term in relation to Amway *except from Amway critics like yourself*. I’ve encountered it enough to know that’s something “taught” by some groups, but that’s nothing to do with Amway – it’s those groups.

      Secondly you make baseless claims. You say it’s about people buying “overpriced products”, yet even a casual comparison of the main product ranges with their competitors show they are competitively priced. When someone makes that claim it tells me one thing – they were never taught, or never bothered to learn, about what differentiates the products and in what market category their designed to compete. If you go around trying to sell the best high tech lightest road bikes to folk who want a city bike to ride to college on – they’ll tell you your products are too expensive too! The problem wasn’t the products, the problems was who you are trying to sell them too (and that includes downline).

      Finally you say “people who make money” are the ones selling the tools, not the products. Amway is required by law to provide the average incomes of folk who qualify at various levels. Diamond and above is around $150.000/yr -> and that is entirely from product sales. Founders EDC and above averages well over a million a year, again entirely from product sales. Review the Amagrams on Amway Wiki, there’s plenty of folk qualifying at those levels. No matter what your opinion on secondary income sources, it’s patently false to claim there’s no money just from the Amway side of the business.

  10. People ask why the “tools” aren’t for free. In reality, anyone who is part of any type of profession knows there is cost for training. Weather the company picks up the bill or the employee. I am in a specific career where training is equal to your success, and I’m not talking about my Amway business. One class taught by the top people in my profession cost up to $300. for a two day class, paid by the employee. Yes you can not take the class, but performance is obvious between those who have trained and those who have not. We also receive a pay incentive for continous training and “ranks” we receive by the amount of training we complete.

    1. A lot of the audio materials are recorded from seminars or other functions. Which, as you state below, are run at a profit because the people taking the risk deserve to make a profit. Fair enough. Now how much does it cost to take a 45 minute (or whatever) recording and convert it to an mp3 file? Nothing. The software is free, it only takes time.

      Of course, everyone knows that time is money. But if the point of all the materials is to build a bigger Amway business, why don’t they donate their time and give away the audio recordings for free? More people listening means they grow a bigger business which means they make more money, right? According to your logic, the increase in business should more than justify the investment of time to put them online as an mp3 file.

      Regarding books and functions, those should not be free. Books are physical items that cost money and a reasonable profit is not unexpected. And events where a facility needs to be rented out… absolutely… people should chip in and cover the costs plus a reasonable profit margin.

      But until they release the audio recordings at no charge (in order to build a bigger Amway business, right?) I can only conclude that their motivation is the profit from selling the media downline.

      1. Nick, you seem to be quite accepting of the idea of free enterprise, so I’m a little confused as to why you think my competitors in the Amway business should be giving me their intellectual property on audio for free?

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