Amway/Quixtar/Systems – things are getting interesting

As I mentioned last week, I've been receiving some interesting correspondence from someone going by the name of "system balance", more on that later today. In other developments though, a poster by the name of n21guy has started contributing to the forums both here on The Truth About Amway and Quixtar and also on the Amway Media Blog. The poster has a confirmed email address with Network TwentyOne the corporation, ie he is not an IBO, but a representative of the system company.

This is a very important development. It's taken years for Amway/Quixtar to start opening up on the 'net and talking to the rank-and-file IBO, it appears that one system company is dipping it's toes in the water as well. I strongly encourage IBOs to engage in the conversation.

N21guy's first post here was a request for me not to post the first letter from Jim Dornan, a letter which caused a bit of a dispute with Amway. I honoured that request as I believe that the "owners" of private correspondence such as that have that right. N21guy's second post was a response to another uses comments on How can critics, with a straight face, claim loss? The post gave some interesting insight into Network 21's refund policy.

Now n21guy has surfaced on the Amway Media Blog, where IBOs both for and against "the systems" have been engaging in spirited debate. He responded to a comment from "Tex" about whether dropping prices would increase participation and success rates. N21guy claimed that price controls in India did not have that affect and gave some statistics on N21's success around the world.

Amway seemed a little surprised by n21guys posting. Posts there are moderated, but in my experience they normally get "approved" pretty quick. From my monitoring of the comments, it looks if it took at least 8 hours before n21guy's comments were approved and appeared. The blog admins admitted they first checked out whether the poster was "real" or not and included some responses from Amway legal. One part of their response I thought was very provocative. In response to n21guys claims that Network TwentyOne's offerings in India had suffered because of price controls, they stated –

The pricing in the BSM policies reflect market based pricing. If the products/meetings are now sub-standard in is because N21 insists on maintaining its high margins and reducing product/training quality.

Interesting indeed. I wonder what Network 21's margins are? Are they high? For that matter, what are Amway's margins? As both are private companies they're under no obligation to reveal this information, and they don't. Now, according to a tools rebate schedule for the Yager IDA organization in Australia, a $7 tape wholesales to IBOs for $4 (ie after maximum rebate). So the Yager system company pays for production and duplication, and one assumes, makes a profit, from this $4. A 2% profit margin would leave $2.6 per tape to cover all of this. Is that enough? I don't know. Is it similar to N21? I don't know that either. This article says the profit margins for the recording industry is around 12-15%. This report gives the profit margins of the education industry at typically around 15-2%. This article gives margins for the events industry of around 23%-28%. So it would appear that a profit margin of around 2% would be a reasonable one for a company like Network 21, which is essentially in the education/recording/events industries.

What about Amway? Well, Amway Malaysia reports an overall before tax profit of around 16% of revenues. i would assume however that Amway Corporation back in Michigan is also recieving a profit on sales to Amway Malaysia, so 16% is just the minimum we can safely state as Amway's margins

I've asked about Amway's and N21's profit margins on the Amway Media Blog, but to be perfectly honest I don't expect either will answer.

In the meantime, I encourage everyone to get on the forums and the corporate blogs and ask questions. We are in a new era – this level of corporate communication is virtually unheard of in any industry. Let's take advantage of it and build a better business opportunity for all of us.

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