For me, the Amway/Quixtar business is a fascinating combination of economics, misinformation, and group psychology that form America's most popular commercial cult. The book about Amway titled the "cult of free enterprise" is justly named so.
The heart of the Amway/Quixtar debate lies with motivational tapes, books and seminars sold by the top distributors. After a little study of the business, it is apparent the real reason to be in Quixtar is not to sell Amway products but to sell the more profitable motivational materials (tools).
Except Scott, if you look at the figures this claim doesn't stack up to the evidence on your own site. The IDA/Yager tool rebate schedule you publish on your own site says that the percentage of each tool dollar that gets spent ranges from 3% to 42.85%. You calculate that Quixtar pays out 3.4% in 25
A superficial look makes it seem the tools are more profitable. The problem is you too often look at things superficially. If we look at the WWDB and Network TwentyOne statistics, in a healthy growing Amway or Quixtar business, no more than around 3% of IBOs have any expenses at all.
Quixtar is the reincarnation of Amway North American. Many of the inefficient and time consuming distribution and payment methods from Amway have been eliminated with Quixtar. However, the prospecting methods and information control are all still very much Amway. Prospects are still presented an over simplified business plan where they can easily earn thousands of dollars per month working just 8-12 hours per week by just teaching others how to shop for themselves at Quixtar. Talking to prospects about "selling" is usually taboo in the business.
The typical Amway/Quixtar dream is to "retire" from a day job with unlimited time and financial freedom. For those wanting to achieve this dream with the "2-5 year plan", the business becomes a way of life consuming every spare moment of time, and their complete mental attention. Unfortunately the 2-5 year plan is nothing more than an elusive dream and most participants will lose time with their families, and thousands of dollars a year. For many, the Amway dream turns into a personal financial nightmare as distributors spend thousands of dollars on their upline's optional but necessary support system of motivational conferences and tapes.
The general public does not take time to understand the poor overall economics of Quixtar's "buy from your self" product merchandising plan. Federal Trade Commission pyramiding regulations require companies like Amway/Quixtar and their Lines of Affiliation to sell a majority of their volume to non-distributors to avoid being an illegal pyramid scheme. In reality most distributors have no customers besides themselves. An active Quixtar distributor could spend a couple of thousand dollars and hundreds of hours per year to promote a business model that has just a few thousand dollars of sales, with most sales to the distributor himself. When you add up the actual cost of time used to promote this scheme and compare it to the volume of product sold, it is has to be the world's least efficient product marketing method. Distributors are taught "If the dream is big enough, the facts don't count". The facts make little difference to most distributors since they are taught to believe their dream is possible for anyone willing to just work hard enough and recruit enough people to the pyramid.
Because of the complexity of the Quixtar pyramided compensation plan and distributor's lack of knowledge of how it works, high level distributors use the "carrot on the stick" approach to get their downlines to voluntarily work for below minimum wages recruiting others to the scheme in exchange for hoping to one day make the big money themselves. The six figure income is just around the corner for the little guy and all he has to do is work just a little harder and show a few more plans to become "financially free". Most distributors don't know the average qualifying diamond only grosses $15,/year from Quixtar and not the millions implied from their speeches, and that is before their business expenses are subtracted. The millions of course come from their motivational systems where they help many of their downlines to lose thousands of dollars per year.
Quixtar releases very few income statistics about the business. Rightly so, since it would be embarrassing for Quixtar to publish the facts that contradict the popular income myths and exaggerations circulating in the various lines of sponsorship. What little Quixtar does publish is that the average distributor earning a bonus made $78/month, before expenses. Even if the typical active Quixtar distributor spent just 1 hours per week working his business, he would earn just $1.9/hour for his effort before expenses are included, or $,95/hour for couples. The typical system related expenses can range from $175 – $25/month and this does not include product purchases. More over, most distributors will not even earn enough from Quixtar to pay their mileage deductions for their cars. No doubt the vast majority of distributors are losing money in the business. Only by retailing products efficiently to customers or by creating their own army of undercompensated, money losing distributors will a distributor manage to make an efficient wage.
One must turn outside the world of business – to religion and
politics – to find people who work as hard for as little
financial reward as most Amway people do. Forbes Magazine
Because the Quixtar prices are so high, it is difficult to get retail customers, so distributors end up buying most of the products. It is their duty as a Quixtar business owner. Quixtar's 66% first year drop out rate and IBOs low average personal consumption only proves that the typical family cannot find much value shopping at Quixtar even with the "wholesale" prices.
I like to call the Amway / Quixtar business "Americas most respected fraudulent marketing scheme". This is because the vast majority of people see Amway as an American free enterprise success story, but few people know about the scheme's dark secrets. The vast majority of the public, politicians, Amway/Quixtar's suppliers and Partner Stores, have no idea of the 2 year systematic fraud and collusion between the Amway Corporation and the king pin distributors of the IBOA. This has resulted in hundreds of millions, if not billions, of dollars in losses from innocent, hardworking people from their "free enterprise" business opportunity based upon false information, exaggerations, lies and popular myths.
"Recruits are brainwashed into spending a fortune on peripherals while consuming Amway products. They either lose their shirts or begin making money by getting enough people underneath to do the same." Don Gregory speechwriter for Co-founder Jay Van Andel Forbes March 25, 1985
The business has strayed far afield from the original intentions of its founders as being a way for the little guy to make a little extra money by retailing products. Instead, it has turned into a symbiotic relationship between the corporation and a few king pin distributors supporting each others interests to take the little guy's money with cult tactic training materials and overpriced products.
The relationship between the corporation and its top king pin distributors is unique. The Corporation could not survive without the misinformation and false income claims spread by the kingpin's systems introducing people to Amway/Quixtar products business. At the same time, the king pin's motivation businesses could not survive without the legitimacy, political and legal support provided by the billion dollar Alticor/Quixtar/Amway Corporations.
"I was taught and therefore taught that the system was put in place to assist people in building their "Amway" business. This is as far from the truth today as you can get as when you are making 8% of your income off of the system, it is totally reversed, Amway is in place so people can sell their system!" Dan Lorencz: Former Diamond Direct Distributor
Other Lorenzo Quotes
Distributors advertise a jackpot payoff of time and financial independence just by building communities of Quixtar consumers. However, the financially independent multi-millionaires are really the kingpin distributors bilking their downline with high pressure sales techniques for their tape and seminar systems. These systems are technically illegal pyramid schemes since they sell most of their products within their own groups who hope to one day make money from these materials as well.
The tapes and seminars, otherwise know as "tools", brainwash distributors as to why the tapes and seminars are so "valuable", and why a distributor's success hinges on continuing to consume them. You should also get your downlines to consume them so that your success is further assured.