Category Archives: Commentary

Amway critics lie. Again.

I’ve multiple times pointed out the lies of Amway critic “joecool”, who has been exposed creating false blogs and false identities simply to rubbish Amway. A reliable source contacted me a while back and told me that Anna Banana, aka Cheryl Rhodes, was doing much the same on her “Married to an Ambot” blog, and that many of the stories were plain made up, and many of the commentators were in fact Cheryl pretending to be a legitimate commentator.

Now she’s made it easy to show her dishonest activity. Earlier in the month she posted a blog “Worst Amway Distributor” and claimed –

Not too long ago I get an Amway employee working in the Alticor office in Grand Rapids Michigan end up at my blog after doing a Google search for “worst Amway distributor”.

I thought that was pretty bizarre, so I did that google search. There were ZERO results that referred to her blog except for that current post. (Virtually all the rest are her anti-amway zealot friends linking to that post.)

I tried searching with quotes, I tried searching without quotes. I tried it with all sorts of different search settings. I even tried Bing.

Until she wrote that blog post, google simply did not return her website as a result for that search. Clearly this search by this supposed “Amway employee” simply never could have happened as she states.

What’s the only conclusion? She made it up.

What else is she making up? My sources tell me an awful lot.

MLM has too many middlemen?

One of the claims of critics of the multi-level marketing model is that due to having paying the independent distributors, there’s too many “middlemen” to be able to distribute products efficiently, thus it forces the prices of MLM products to be too high. Well, if you’ve been paying attention to European news in the past week, there’s been a great example showing how MLM critics aren’t just ignorant of the MLM model – they’re ignorant of business models in general.

What’s happened is that it was discovered that some pre-packaged food products, such as lasagne, being sold in supermarkets around Europe contained horse meat instead of the advertised beef. Following the trail of blame shows just how many middlemen there are involved in “traditional” supply and distribution –

  1. The customers are upset at
  2. The supermarkets who are upset at
  3. Findus (brand) who blames their supplier

  4. Comigel (manufacturer) who blames their supplier

  5. Spanghero (meat processer) who blames their

  6. agent in Cyprus who blames their

  7. agent in the Netherlands who blames

  8. abattoirs in Romania who bought

  9. the horse meat off local farmers

So to get the product (meat) to the customers, there are at least 8 different middlemen, including at least 3 in the distribution chainIndeed there’s almost certainly more, such as transport companies, local wharehouses. advertising companies, legal and accounting firms and more. All of these get paid out the final price of the product as paid by the consumer.

How does it work in Amway? Well, back in the 1970s when the FTC investigated (and cleared) Amway, they found –

43. Currently about half of all Amway distributors were sponsored by a Direct Distributor or by a distributor sponsored by a Direct Distributor. More than 70% were within three positions of a Direct Distributor and 99% were within seven positions. (RX 423)

So for half of all distributors, it went –

  1. distributor
  2. direct distributor
  3. Amway (manufacturer)

So just 3 levels of “middlemen” for half of all transactions in the distribution chain, and only two when you consider the distributor as customer, which is a common scenario. That compares to 3+ levels in the distribution channel for the Findus product – and then you have 5 levels in the supply chain. How long is the supply chain for Nutrilite, Amway’s largest brand? Amway is the supplier, they own their own farms which supply their core ingredients. Yes there’ll be some suppliers for other ingredients, but it’s nowhere near the total of 8 levels in the supply and distribution chain for the lasagne.

MLM critics – not just ignorant about Amway and the MLM model.

Is India moving to ban all multilevel marketing?

The Hindu newspaper in India has today reported on some proposed new guidelines from the Indian Government for State legislation regarding the “Prize Chits & Money Circulation Schemes” (PCMCS). The PCMCS law is, to say the least, not clear and this lack of clarity has allowed pyramid and other scams to flourish in India.

Unfortunately, critics of the multilevel marketing business model have convinced some in India that it too should be made illegal. Incredibly, news articles even in reputable media talk about how pyramid schemes are banned around the world, and then go on to talk about companies like Amway as if they are pyramid schemes (and thus illegal everywhere). Amway is not banned anywhere. These draft guidelines would do so, however in India –

 5. No individual or Company or firm or business association, in any form, shall run a scheme that induces enrolment of new members by offering benefits or commission, by whatever name called, to upline members in the pyramid out of the action or performance like sale or purported sale of goods or services by the downline members.

This guideline, if implemented as law, clearly would ban all multilevel marketing in India, with an outright ban on earning commissions based on sales through agents you recruit and train. I’ve received a copy of the proposed guidelines as well as accompanying background notes and will be posting a series of articles over the next few days. In the meantime, if you’re involved with network marketing in India, you need to get in contact with your local political representatives and ensure they are aware of these guidelines and the damage they’ll do to Indian enterprise and India’s reputation.

Boycott Amway?

Most Americans will have been aware in recent days of protests against and support for the restaurant chain Chick-Fil-A after it’s COO came out against gay marriage. Well, today the controversy has spread to Amway, after gay rights activist Fred Karger of Rights Equal Rights discovered that Amway President Doug DeVos has donated $500,000 to the National Organization for Marriage (NOM), an organisation which has organised boycotts of companies that have indicated their support for gay marriage. He has now launched a movement to boycott Amway.

Now, some outlets are currently reporting that Amway made the donation. To be clear, it was not Amway, it was the Doug and Maria DeVos Foundation, which has no direct connection with Amway Corporation.

What’s my thoughts on this? Well, regularly followers would know that by American standards I’d be considered a “liberal”. I fully support equal rights for gay couples. I’m a former scientist and the science on homosexuality is clear. For the vast majority of people their sexuality is not a “lifestyle choice” and is not something that can be “cured” (or even should be). Homosexuality occurs throughout nature, not just in humans, it’s perfectly “natural”. I used to believe the battle over “gay marriage” was one of semantics that wasn’t worth fighting, let those who believe it has religious connotations have it, and set up equal rights through other arrangements. As I researched further I learned the long history of marriage, and it has very little to do with religion at all. It primarily originated with regard property rights, starting with who owned the females. It’s thankfully evolved a long way since then, but there are still many legal ramifications around property, and unmarried couples – whether gay or not – are discriminated against in many situations. I can see no logical reason why marriage should not be extended to gay couples and to not do so is clearly discrimination.

That’s my personal view, but I also understand other’s perspective on this. I support people’s right to their own opinion, and I support their right to express it. I also support people’s right to protest against companies or individuals who they believe are acting immorally, illegally, or in a discriminatory manner.

Where I think it gets difficult is where individuals support causes they believe in, but companies they are involved with, and others associated with them, take the brunt. Take Chick-Fil-A. Boycotting them doesn’t just damage the owners or COO, but also the individual restaurant owners along with, if a boycott is successful, staff, many of whom may not agree with the COO’s personal views.

I’m an Amway IBO, I absolutely disagree with Doug DeVos’s support for NOM. As an independent Amway business owner a boycott of Amway would mean a boycott of my business.

I can’t speak for Chick-Fil-A, but with Amway the vast majority of the money, indeed profit, from the sale of individual Amway products does not go to Amway, nor the DeVos family, it goes to Amway independent business owners, including people who support gay rights like myself.

So if you like Amway products (and they’re some of the best in the world) and are considering this boycott, ask your Amway rep if they support gay rights. If they don’t, then boycott them and find an Amway business owner that does support gay rights.

MonaVie vs Amway Redux

Back in 2007/2008 Amway in North America (then known as Quixtar) was involved in a deal of controversy after terminating several Diamonds associated with the organisation TEAM, led primarily by Orrin Woodward and Chris Brady. Eventually TEAM and many associated Diamonds joined another MLM company, MonaVie. There were then various legal battles between all parties over this, involving disputes of anti-Amway bloggers, stealing of corporate secrets, contract violations etc etc etc.

At the time these Diamonds were moving many in their groups to MonaVie, there were a lot of comments on this blog and elsewhere by people claiming that Amway was abandoning their distributors, changing polices, and would be opening stores, allowing their products to be sold in other retail outlets, and generally competing unfairly with the field. All of this was rubbish. What Amway has been doing around the world (though, ironically enough, not in the US) is opening up business centers to support the distributors. Some of these also act as retail outlets, but ultimately the PV and profit goes back to IBOs as usual. In my opinion these have been great innovations.

One place where Amway has been aggressively doing this is in India, with the opening of a large number of pickup locations where distributors can place orders and pickup products. It fits in well with the nature of India and seem to be working well. This week though, Times of India reports on a number of Diamonds who have stated they are leaving Amway, claiming rewards aren’t good enough and the company is focusing on showrooms and products instead of (believe it or not!) just recruiting people.  Comments left on that site, and also this site, have further claimed that Amway India was going to be selling products through retail outlets and were abandoning distributors.

It all sounds awfully familiar, and low and behold … some Amway Indian Diamonds , lead by Sajeev Nair, are now loudly promoting their  move to MonaVie India, just like TEAM did in North America.

This isn’t all that is familiar however. Back before the TEAM affiliated IBOs all left Amway (and there were reportedly hundreds of thousands), Amway was the subject of many complaints on the internet, people complaining of deceptive practices, hype, excessive pressure to spend money on “tools” etc etc. Since 2008 the emergence of new Amway critics on the internet has pretty much dried up. There’s a handful of diehard blogs (many run by the same person), but not really anything “new”. On the other hand, commentary from former distributors and others criticising MonaVie and MonaVie leaderslike Woodward for deceptive tactics has proliferated, with even a once anti-Amway blog like Amthrax now pretty much dedicated to anti-MonaVie commentary. Given Amway grew in sales last year by almost as much as MonaVie did total ($800M vs $854M) this can’t be attributed to MonaVie being more successful and attracting more attention. It appears that many of the tactics that helped contribute to these people getting kicked out of Amway were simply transferred to MonaVie, and the criticism has followed.

So how does this all connect to Amway India? Well, several times over the past months, a few visitors from India have left comments on The Truth About Amway regarding an Amway group called “Team One”, operating heavily in the Indian state of Kerala. The comments have complained about deceptive practices, excessive pressure to spend money on “tools” etc etc. All the same types of complaints we used to read about Amway North America, and which have diminished considerably since the TEAM dispute. I looked into Team One, and funnily enough it’s run by Sajeev Nair, the very same Double Diamond who says he’s now moving to MonaVie.

So, just like 2008 in North America, we have a large group of distributors, apparently the source of a number complaints, deciding to leave Amway for MonaVie and spreading a number of falsehoods about Amway as they go.

Amway North America suffered for a year or two from the TEAM exodus, but is now going from strength to strength (double digit growth in the past year) and is generating virtually no complaints about bad practices. Sajeev Nair – it may hurt for a bit, but I suspect Amway India won’t miss you. All the best with MonaVie.

Are you recruiting your competitors?

A supposed “criticism” of Amway, and indeed of multilevel marketing, that I’ve seen turn up regularly is the idea that it’s inherently flawed because “you are recruiting competitors”. For example, Robert T. Carroll, in his “Skeptic’s Dictionary” says –

Why, you might wonder would you recruit people to compete with you? For, isn’t that what you are doing when you recruit people to sell the same products you are selling? MLM magic will convince you that it is reasonable to recruit competitors because they won’t really be competitors since you will get a cut of their profits.

Australian MLM critic Peter Bowditch (ratbags.com.au) says for example regarding his own business compared with MLM –

I am a certified consultant and an authorised reseller for several software and hardware products. I can open a retail shop to sell these things, I can sell them on eBay, I can walk door-to-door around the neighbourhood, I can ask retailers to stock them and computer builders to include them as packages with their machines …I am not expected to find and recruit competitors for my business

Anti-Amway obsessive JoeCool comments on one of his (many) blogs –

 you are very strongly encouraged to RECRUIT YOUR OWN COMPETITION. If Amway were a business where the goal was to make money selling products, it is a suicidal business plan

So, what are they on about?

Well, the claim has some truth to it because when you sponsor someone in to your business, that person is indeed now a potential competitor for a retail customer. For any given customer, you’ll make more money if you sell to them personally than if your downline does.

One flaw in this “complaint” is that the same thing applies in traditional business as well. If you owned a small clothing store, every time you sell something, you get to keep all the profit. But what if you employ someone? In the clearest example, if you simply paid them on a commission basis, then they are a direct competitor to you on each retail sale. They get that commission instead of you. The same really applies even if they’re a salaried employee. The money your paying them could have stayed in your pocket if you hadn’t employed them and sold it yourself!

Or how about Coca-Cola? If you buy a coke from an official coca-cola vending machine then are you’re buying it direct from Coca-Cola. Yet you could also buy it from your local corner store. Every time Coca-Cola reps try to get a store to sell their products, they’re recruiting competitors!

Or let’s take Pete Bowditch’s own software example. As he mentioned, he could sell the software directly himself, or he could ask retailers to stock them. In other words – he could recruit a competitor! By having a reseller sell to a customer, that’s a potential retail sale he is missing out on.

Why does Coca-Cola recruit competitors? Why does a  small business owner recruit salespeople? Why does Bowditch suggest recruiting retailers?

No “MLM magic” is needed to answer that. It’s because you can make more money that way! By recruiting resellers, you can hopefully get much larger total sales volumes than by trying to do all the sales yourself. Yes, you’ll make less money per sale than if you did a sale personally, but you still get a percentage on the wholesale sale to your recruit, and you should be able to get a lot more sales for the same time invested. Asmaller percentage of a larger volume can easily be worth more than a larger percentage of a smaller volume. What’s more, the larger discount you get thanks to your recruit’s volume means you get an even bigger profit margin on your own retail sales!

Unless the marketplace for your products is saturated, and there is no room for expansion, recruiting other sales people to increase your sales volume is a smart and sensible way to increase your profitability.

The #1 problem with Amway and multilevel marketing

Amway has  a problem, a problem it shares with entire multi-level marketing industry. The result of this problem is that the vast majority of people who join Amway never make any significant money.  It’s a problem that leads to low average incomes. It’s a problem that leads to many people not renewing their memberships.

This very same problem occurs with all MLM companies. This same problem, at an industry level, also means that a large percentage, perhaps even the majority, of multilevel marketing companies are not good business opportunities and many are outright scams.

It’s a problem that, thanks to things like above, results in the multilevel marketing concept and companies like Amway having a poor reputation among many people.

What’s the #1 problem with Amway and multilevel marketing problem?

Low barriers to entry and low risk.

It’s (relatively*) easy and (relatively*) cheap to start up an MLM company. You don’t even have to pay much for marketing! You only pay your salespeople when they actually get results! So if you’re an entrepreneur who is low on cash, or got some product that can’t compete in the traditional marketplace, or even if you’ve got some scam in mind … then MLM is the strategy for you. Low risk, low cost, so if it doesn’t work out you live to fight another today.

It’s easy to startup as an agent for an MLM company. It usually only costs a few dollars, nobody checks up to see if you’re turning up for work, you can return stuff you don’t want or can’t sell. Nobody cares what degrees you have or your success or failures of the past. Why not give it a shot for a few weeks or months and see if it’s something for you? What have you got to lose? It’s just an opportunity, not a promise.

Low barriers to entry and low risk. Amway and multilevel marketing’s biggest problem – and it’s greatest strength.

* compared to traditional strategies!