Probably the last major “unresolved” issue in the public arena with regards Amway is the “tools” or Business Support Materials (BSM), and in particular controversy over profits earned from BSM by “higher pins”. If you spend even a small amount of time on the internet researching Amway you’ll find many claims that “the real money” in the Amway business isn’t in promoting Amway products, but in promoting BSM, and some claim that Diamonds and above typically earn in excess of 90% of their income from their BSM side businesses. In the last few days, following the release of Amway’s 2008 sales data I’ve even seen quite a few comments on newspaper websites and other sites claiming the majority of Amway’s $8.2billion in sales was not from sale of Amway products, but from the sale of “motivational materials”. Continue reading
My last post about Amway Global Accreditation and Bob McEwen’s speech at Yager Internet’s conference has sparked a great deal of discussion, both on the comments here, on Amway Talk, and elsewhere. Of interest was two quite contrasting camps – a significant number of folk were supportive of my comments and expressed dismay at this type of talk occuring at Amway seminars. Numerous Amway critics, many of whom previously associated with the Yager system and it’s offshoots, also commented that political and religious evangelism was one of the aspects of their Amway experience they found most off-putting. A number of current IBOs, including self-identified “conservatives” also expressed their discomfort at these types of talks and their belief they had no place in Amway-related meetings.
Following on from the launch of IBO organization Network TwentyOne’s official N21Corp YouTube Channel, Leadership Team Development (LTD) lead by Double Diamonds Larry & Pam Winters and Joe & Marybeth Markiewicz has now done the same, with LTDTV.
There’s five videos up at the moment, including one I’ve highlighted below of Larry Winters giving a tour of LTD’s headquarters. Apart from the offices themselves you’ll also note numerous staff members and equipment. I have no experience or knowledge of how the LTD organization operates, but there’s one question I ask you to consider. When you see Amway/Quixtar critics on the internet making their various calculations of how much “tool profit” folk are supposedly making, how often do you see them include even part of the kind of expenses you can see in this video?
Answer: they don’t. Anyone with any traditional business experience at all knows that the cost of raw materials and basic production (for example CD duplication) is a usually a relatively minor part of the expenses involved in the production, manufacture, and distribution of a product. The various BSM companies are no different to other companies – they have numerous expenses. “Critics” analyses are naive to the extreme.
Here’s Larry Winters at the LTD offices –
I’ve now received confirmed news from multiple sources that Canadian Crown Ambassadors Jim & Sharon Janz and their downline, Crown Ambassadors Bob & Joyce Schmidt, as well as at least one other Diamond have moved their organisations from Jim & Margee Floor’s International Network Associates (INA) to Jim & Nancy Dornan’s Network TwentyOne. The move from INA is apparently amicable and with Jim Floor’s best wishes.
This follows the merger of International Connection into Network TwentyOne back in September and is probably just the start of more mergers between now and Quixtar’s August 28 deadline for BSM companies to become accredited or risk their affiliated IBOs not receiving the discretionary QBI bonuses.
While hugely successful in international Amway markets, Network TwentyOne has been a relatively small player in the North American market. These mergers and the development of “second generation” leaders in North America (such as Jim & Nancy Dornan’s son and daughter-in-law, Emerald’s David & Jules Dornan and Crowns Bob & Terry Andrews’ son and daughter-in-law Cale & Aura Andrews) indicates that Network TwentyOne North America is headed for some exciting times.
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On numerous places on the internet, including the forums on this website, the following letter from Amway UK and Ireland to Amway IBOs has been published –
Letter: from Ben Woodward Branch Manager Amway UK UK/ROI IBO Communication
May 4, 2007
To: UK/ROI IBO Leader
From: Ben Woodward, Branch Manager, Amway UK
RE: Significant change to Amway’s mode of operations in UK/Republic of Ireland.
This letter is to inform you of significant changes to the way Amway will conduct its business in the UK and Republic of Ireland. These changes are effective immediately. While these changes may cause short-term challenges for some of our IBOs, we strongly believe the changes will make our long-term business in the UK/RoI stronger.
Effective Immediately: 4 May 2007.
Amway will prohibit the production, sale or promotion of BSM that are not authorized and distributed by Amway; this includes websites. This includes any BSM (books, tapes, meetings, CD’s, websites) that have been already been approved by Amway UK/RoI. They are now considered unauthorized for use.
All meetings for which an entry fee is charged are suspended until Amway has approved, in writing, the meeting and its content; Amway has imposed a moratorium on sponsoring new IBOs for at least 60 days and until current IBOs are re-trained and re-qualified; We are evaluating all costs associated with joining Amway;
We are also sanctioning a number of IBOs based on contract violations that have come to our attention.
Failure to comply with the above mentioned points 1 to 3 will lead to a suspension and/or termination of the respective IBO contract. Please also note that Amway is in no way limited to these sanctions, but can impose further corrective or punitive measures.
In addition, the company is announcing a thorough review of its business practices globally with the goal of ensuring a consistent, rigorously enforced set of rules and regulations governs its relationships with IBOs and consumers.
That global audit has begun, and we expect it to be completed in June, and will share the results with you later this summer.
These are important steps, but in some ways, they are not surprising ones. Many of you know that for the past 1 years, Amway has been moving to exert more control over the way we do business globally.
In newer markets that has meant, for example, outright bans or tight restrictions on the sale of non-company BSMs and the requirement of a more consistent, approved messaging and branding by IBOs about the Amway business opportunity.
While most changes in other markets have been carried out gradually around the world according to our timetable, we need to move more quickly here. This is in response to serious concerns raised about Amway by the Department of Trade and Industry (DTI) following the receipt of complaints about BSMs and misrepresentation of the business to prospective IBOs.
At this time, we can not specify when sponsoring will be allowed to resume. We will continue to communicate with key international and local IBO leadership to update them on developments of a new operational mode in UK and Republic of Ireland.
For example, if any IBO has a planned meeting for which tickets have been sold (that is required to be cancelled and ticket purchases refunded), or they have unsold inventory of BSM, or have unsold Starter kits, or have completed applications not yet submitted to Amway, they may contact the dedicated enquiry telephone number – 198-62940 (press option 4).
In the following weeks, we will seek to meet with you personally to discuss the implications of this policy change and respond to any questions you may have. Meanwhile, please feel free to call me at 198-62944.
Amway has been in the UK/RoI for more than 30 years, and today is a strong, growing £13 million business with more than 100 staff and 30,000 IBOs. We are entering into a challenging period of time.
But we believe in this business, we believe in our values and we believe in our IBOs. We are committed to making the changes we need to make in order to ensure the continued growth and success of Amway in the UK/RoI.
I have refrained from commenting on the email until I had confirmation it was authentic, I now have that confirmation and a little more information. The situation with the Department of Trade and Industry is a real issue, and leaders have been aware of it for some months. As has been the case in other markets, some IBOs, and indeed some “systems” have not operated in what I would consider a professional manner. I’ve had reports in the past, for example, of Amway UK and Ireland IBOs being taught by their group to invite friends around for dinner, then at the end of the dinner, bring out the whiteboard! Such deceptive techniques are explicitly against Amway rules and highly unprofessional.
Additionally, Amway Europe has had in place for some time rules limiting the amount of BSM IBOs may purchase in the first 3 months in the business. It’s my understanding these rules have been ignored by some groups.
An IBO with business in the UK I have been in contact with has clarified the following –
- Sponsoring is postponed
- BSM sale is stopped until it is (re)-approved.
- Meetings with an entry-fee need written approval.
- The business has not stopped, the sale of products have not been banned!
- The income opportunity is not closed
- Meetings are not banned
He goes on to point out –
This is not unique to the UK. It works fine in many countries (including China and Russia) where similar regulations have been in place from the opening of the business due to local government regulations. Those markets are not sleeping… The IBO organisations I know of are not planning to sue Amway, they are cooperating with Amway to get the DTI issues cleared properly.
I’ll have more information as it comes to hand, but as it is a public holiday in the UK today, this may take a little while. It appears that what has happened is that the Quixtar Accreditation approach has been made compulsory and implemented immediately by Amway UK and Ireland in response to concerns expressed by the UK Deparment of Trade and Industry. Such “shock therapy” is what many critics have been calling for, whereas Amway and Quixtar has tended to take a more “softly, softly” approach to implementing change. The UK market is a potential sleeping giant for Amway, with very little market penetration, which hasn’t been helped by the deceptive practices and over-selling of some IBOs. It will be interesting to see the effect of these changes.
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