The Real Amway Global Transformation

In his seminal work Good to Great: Why Some Companies Make the Leap… and Others Don’t, Jim Collins reports on some of the research he and his colleagues have done in to what transforms good companies in to great companies. One of the central tenets of the book his the “hedgehog concept”, based upon an ancient Greek parable:

The fox knows many things, but the hedgehog knows one big thing.

As he explains on his website, jimcollins.com -

The Hedgehog Concept is a simple, crystalline concept that flows from deep understanding about the intersection of the following three circles:

  1. What you can be the best in the world at (and, equally important, what you cannot be the best in the world at). This discerning standard goes far beyond core competence. Just because you possess a core competence doesn’t necessarily mean you can be the best in the world at it. Conversely, what you can be the best at might not even be something in which you are currently engaged.
  2. What drives your economic engine. All the good-to-great companies attained piercing insight into how to most effectively generate sustained and robust cash flow and profitability. In particular, they discovered the single denominator—profit per x—that had the greatest impact on their economics. (It would be cash flow per x in the social sector.)
  3. What you are deeply passionate about. The good-to-great companies focused on those activities that ignited their passion. The idea here is not to stimulate passion but to discover what makes you passionate.

Internet discussion about Amway Global’s transformation have tended to center around issues such as client retailing vs a personal consumption model, or accreditation and better monitoring of the training of Amway Business Owners, and of course the name change from Quixtar to Amway Global in the North American market. A review of the Hedgehog Concept reveals that they are just part of the story – means to an end. Let’s look at the three circles -

What drives Amway’s economic engine? Clearly it is the Nutrilite and Artistry brands. Nutrilite recently broke $3billion in sales in just one 12 month period.

What can Amway be the best in the world at? Health & Beauty products. Indeed, in my opinion – they already are. Nutrilite is clearly the most successful nutritional brand in the world, and Artistry is well on the way to taking that position in prestige cosmetics and skin care. If one thoroughly researches the brands and the science behind them, you can only be impressed.

What is Amway deeply passionate about? I cannot speak for Amway’s owners, or Amway management and staff, but for myself, when I talk to people about Amway, I don’t only get passionate about the business opportunity and what it can offer, I am extremely passionate about Nutrilite.

Amway has all the seeds in place to transform from a good company, indeed a great company in the Direct Selling industry, into a truly great company in the much larger and more competitive Health & Beauty industry. In my opinion, this is what the Amway Global transformation is about – turning Amway into the clear and acknowledged world leader in Health & Beauty.

As an addendum to this discussion, a few words on the what Amway is currently best known for in many markets – cleaning products. SA8 and LOC are Amway’s oldest products, and still some of the best on the market. Many “old timers” in the business, and folk like myself who have been using Amway products since we were children, have been more than a little concerned that Amway has been moving these products to one side, perhaps with a view to eventually discontinuing them. On this, I’d like to plead their case to Amway: If one understands SA8 and LOC – they fit extremely well into the Health category! While organic cleaning products such as LOC clearly have health benefits over their more caustic competitors,  SA8 has an even clearer health roll – there is a body of research that indicates that aborption of soap residuals into the skin may have significant influence on health, increasing risk of allergies and other problems. I don’t know if I’ve ever seen Amway promote the health benefits of these products. Perhaps they should?

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42 thoughts on “The Real Amway Global Transformation”

  1. go and get a life and get laid by your wife rather than fighting over a business model that in the end will take over your life!

  2. Jeff,

    Our LOS has also been promoting Ditto but I haven’t really gotten into the habit of promoting it to clients and new IBO’s yet. Would you mind sharing how you’re doing it?

    Thanks!

  3. Jeff,

    DITTO rocks, and I don’t think most IBOs have harnessed the power and potential of it.

    And because of this, they haven’t worked with it enough, learned how to promote and implement it, and so most IBOs are not educated in how to use this tool. They don’t know the “why”.

    They have not yet figured out how to “sell” this concept–meaning they only see it as how it benefits them, rather than understanding how it benefits their IBOs and their Customers.

    All of this is just my opinion. :)

  4. Ahh, not just being thick, but displaying the American ignorance ;)

    OK, I just wanted to drive that point because I though it would be helpful to someone as my LOS also teaches ditto as the default. I was not looking to be annoying.

    Thanks for the great forum here, IBOFB.

  5. Jeff, we don’t have ditto in our market, but in markets were it does exist it’s just kind of obvious isn’t it? Our LOS teaches to pretty much use ditto as the default for setting up all customers and downline orders (teaching them how to change it of course)

  6. Bridget, well said. It’s so true that a few hundred bucks gets people engaged in really running a business right away and it increases their belief to a point where they can maybe make a few thousand.

    But I’m still no seeing anyone talk about getting their customers on Ditto. Am I being thick or is this an indication that no one else is using Ditto?

  7. To clarify, BFY (buy from yourself) is not a problem in itself. It becomes a problem when it is perverted–just like anything that starts out good, if it gets tweaked just a little bit in the wrong direction, you start to go down an ugly path.

    It’s “Buy From Yourself And Teach Others To Do The Same”. When you have THAT as your business model, then what you are selling is a concept, a business model, in which there is zero profitability for an IBOship unless that IBOship is attached to other IBOships.

    You have a bunch of self-consuming “IBOs”, the majority having absolutely zero intention of making money with the Amway biz, but signed up as an IBO ‘cause that’s what was offered to them in order to just buy products.

    And then you have a bunch of IBOs who are interested in making money, but are taught to sign everyone up as IBOs. Therefore, they kiss that retail mark-up goodbye and have to rely solely on the PV/BV income. And this is just not enough money for the brand new IBO.

    So you have people not making money soon enough and therefore the retention rate suffers.

    Or you have IBOs sticking around for years and years not making the money that they could make, if you helped them by managing expectations and helping them make a few hundred dollars that they could put in their pockets rather than the solemotivation of you helping them retail being to put that money toward a function or a CD.

    If we all focused on helping people make just a few hundred bucks now, it really is a lot less effort and a lot less painful and a lot more effective than trying to sell them on the idea of making a few hundred thousand dollars five years from now.

    But the first, how about the current IBOs make their First Circle work so that they can have some credibility?

    I don’t think IBOs realize just how much credibility they could have with their friends, family, acquaintances if they themselves were making (net profit—after expenses) a mere few hundred bucks a month.

    This point is what made me figure out, and why I continue to figure out the most effective ways to retail. It’s THAT important.

    :)

  8. The best way to create volume is to approach people with the product, instead of the business opportunity. If they like the products, and become a regular customer, then business can be introduced to them, if they want.

    In our case we tried creating customer out of people who didn’t wanted to join the business, but once they said no for business, they even refused to look at the products.

    Classic example is my wife’s friend, she is a house wife and wanted to do something on the side but her husband did not allow her to do that, and not only that he also told her not to buy products as he felt that we may try to lure them into business, if they will start using the products. Instead he agreed for her to do Tupperware business (which failed eventually), but the main point is that people have this mind set about amway that they don’t even want to try the products and it is becoming harder to even convince them to try out the products.

    No doubt, that products are great and we love them, but selling them is a big, big issue. I have not totally given up, we are trying and we will create customers eventually, but just that it is not as easy as it should have been, with the quality of the products that we have.

  9. Yeah, that’s the idea. A lot more people want to buy iPods than sell them. So I’m finding my iPod buyer equivalents, knowing that eventually one or two will ask me, “I love this product. So how do I do this?” Those are the motivated types that I want to sponsor and work with. I also build a relationship with my customers and listen for opportunities to present the business, or ask if they know anyone looking for a part-time income…that’s the next step. Many ways to do it, and it’s downright fun compared to my primary occupation.

    To be honest, it’s difficult for me to talk to people. Yet, in the corporate world, I enjoy leading project teams, running meetings and teaching seminars. So I know I can do this business…I just have to build my self-confidence and skills. So I’m starting with customers before actively recruiting. Guess my style is to work in the mailroom before becoming an executive!

  10. Wow. This is a great discussion.

    First things first before I jump in the fray, IBOFB, that was an excellent post and quite frankly an analysis I hadn’t thought of before. Thanks.

    I am very surprised to see in this discussion no mention at all of the residual possibilities of our business. I am not a fan of the old school ‘BFY’ model either, but I think a reflex 180 degree reaction to this is a mistake IMHO. Let me know if I’m misreading what’s being said.

    We teach IBOs to absolutely buy from themselves while simultaneously developing a strong retail business by focusing on one or two of the most profitable or easiest lines to market. Not only do we teach this but we handhold them thru the first couple of sales, and teach constantly the benefits of “free products”, in other words 10 customers buying x = your x is paid for by them.

    We focus heavily on recruiting as well, especially in this economic climate.

    But the thing that surprises me most is that no one here is talking about Ditto. It makes our business unique that we can set up small lines of residual income when we sell people consumable products that they love, and then make reordering convenient for them, so that they have one less thing to worry about. It earns them time back in their busy, stressed out lives and creates powerful bases of repeat income for business owners. Additionally, one of the biggest reasons I have observed that former IBOs stop ordering is because they are embarrassed that they “quit” and don’t want to contact the people they worked with, even though they still love the product. Of people who decide not to renew, we are noticing fairly high numbers of them keeping their Dittos.

    My two cents in case its helpful to anyone.

  11. Imagine how many less people you need to replace in your network if everyone is running 500 PV in RETAIL (not personal use or ibo-cost customers)and making money.

    Profitable IBOs are happy IBOs. :)

  12. I agree with a large first circle. Ours is also around 600-800 points. We are trying to get to 1000 personal. I think that is a great start and can be duplicated at least to the 500pv level. Imagine how many LESS people you need in your network if everyone figures out 500 points. Or more importantly you help them figure it out.

  13. jr_brady,

    Wow, I think that’s awesome that you have those retail clients. I also have a pretty solid retail business that averages 500-600pv/month. I know this is a little bit of cross-lining but I would recommend that you don’t overlook showing the plan. You never know when someone you look at initially as a customer will want to get involved as an IBO.
    Anyway, don’t want to get too involved with that and I hope you don’t mind a little bit of advice from me. :)

  14. Thanks for the info and clarification. This isn’t a big issue for me other than wanting a deeper understanding of the issues being discussed…I’m one of those detail types. That, and validating my current approach to this business, which is marketing products instead of recruiting. I’m not against recruiting. I want to develop a customer empire first.

    So far I have 30 retail customers, and about half place repeat orders. That’s from a few months of part-time effort marketing only SA8 and LOC in my business networking group. And I’m just getting started!

    I have to say that the Amway cleaning products are excellent. They are good value for the money, clean amazingly well and are earth-friendly. Those things are important to me, and I just talk about my own experience using the products. People really respond to that. I am very excited about the potential to grow this business when I go full-time.

  15. I think you are taking the BFY model out of context. Well, at least as it stands today. There is a lot of great talk and promotion for having a “balanced” business. This includes both the “BFY” model as well as the first circle initiative (which includes customer retail sales).

    The big problem with the BFY model, or current misconception, is that people (outsiders) equate this to buying your pin level. You know, the whole “bury it in the backyard” nonsense.

    Today, I believe, most groups are teach BFY, but what you REALLY use. Have common sense and have some customers. Our business plan which is still the 6-4-2, includes customer sales and we promote it as such. Makes for a lot more profit upfront than the old version! Excited about that.

  16. I’m interested to know how you guys are showing the plan. I am using a 5-5-5 model. I explain the fact that you can become a IBO and we help you share this business with others.I then explain that as we promote this business we will find people who like to shop online and would like to purchase our exclusive line of products, like Nutrilite,Artisty, XS and SA8 etc.. I show them a model where sign up 5 customers who each purchase $30 a month on average. And the great thing is whether they purchase today tommorow or next year you get credit for the sale. 5×30= $150 and you profit around $40. I then explain that everything you purchase counts as volume and thats extra.We then during the course of showing this business to others will find 5 people who want a business of their own and we help them create the same $150 with 5 customers they now have $40 in profit and we repeat this two more times 5-5-5. Do the math on the income calculator you are platinum at that point and it’s all retail based volume.People love our product line and this makes sense to people,When i prospect i am asking for feedback on the business and i only ask for 30 minutes of their time and thats all we take. I love to tell the real story of Amway and promote my business not stuff it down peoples throats.

  17. jr_brady, perhaps to restate my answser to your question more simply, at this point forget the 3.5% number. It’s old, it doesn’t reflect the massive changes happening, and frankly is now an irrelevant consideration for whether you should commit to building an Amway Global business. The business has Transformed this past year, with the benefits flowing to those who are actively building with customers, not “jawing” and “arm-chairing” about it. :)

  18. jr_brady, both IBOFB and myself agree that 3.5% is not an accurate number and does not capture, nor did it ever capture, the actual retail sales number, meaning sales to non-IBOs. But whatever that number in the recent past, it surely wasn’t in excess of 10% and both the Corp and IBOAI board accept that, and accept that it was/is unacceptable, if you’ll pardon the play on words.

    The interesting — and exciting — point that one should focus on now is growth of retail sales — sales to non-IBOs which is what Lee is speaking to above. One has to be hard on the past model of BFY because it has resulted in the negative growth (ie. decline in real value terms) of the North American market over at least the past decade (and I continue to dump on that model because in spite of Amway Global’s move away from it, there are still many who promote it openly or in practice). But the folks who can’t see beyond that to what’s trending now in our business are those who probably shouldn’t be in any business for themselves in the first place.

    Finally, I don’t know how the low retail sales percentage compares to other companies. In practice, a great many also have very low authentic retail sales. My guess is that Avon has higher retail sales since they’ve emphasized that model since before they moved to more of an MLM model in the past couple of years. The beautiful thing to focus on is the real option of building a good cluster of customers using the Amway Global product portfolio and business model. As Lee said, the products are believable and something to be proud of, and that’s in comparison to everything else available in the direct sales channel.

    If you can’t find something to be proud of and sell (not just consume) and build a base of customers, then as I said above, being in business for yourself is probably not a good idea.

  19. IBOFB and rdknyvr, Great discussion. I understand that the Kirby example isn’t comparing apples to apples. To extend it to our business, the Kirby rep could hire and train other Kirby reps and receive overrides on their sales. That’s my understanding of the general concept of network marketing/MLM. Point is, I am trying to get my arms around this ongoing discussion of retail product sales vs. total sales. If the 3.5% is accurate, and using my definition of retail customer sale vs. self-consumption, then for every $100 of product sales, $96.50 is bought and consumed by an IBO, with $3.50 either purchased by a retail customer or resold to a retail customer. Is that more in line with your understanding? Also, how does this compare to other network marketing companies?

  20. There are people in this business who make alot of money retailing and teaching others to do the same. The great thing about our business is we decide how we build it and when. If you can’t get yourself 20 customers you aren’t proud of what you have to offer. We always show people the opportunity first to own their own business and if they aren’t ready for that we sign them up as customers. this is the best business in the world no risk and you can profit right away. Buy a mixed case of XS and let someone try them that’s what we do and it works !

  21. rdk, as you know I’m not a fan of the BFY model, I think it’s dumb. But I’m also not a fan of misuse of statistics, and pretty much *any* conclusion or commentary regarding the “3.5%” figure is a misuse. It certainly says nothing at all about whether the BFY model has been an “abject failure”. If anything, the reverse! A billion dollars of sales with most coming from internal consumption means the model gets results, at least for Amway. Whether it makes for profitable active IBOs or not, well, that figure says NOTHING about that.

    When things like free shipping for customers have had time to have more influence, then it will start to be a little meaningful, but that will take years to shake things out.

  22. jr_brady’s point is not unreasonable. Most if not all Kirby direct sellers would own and be using a Kirby at home. If that’s all they signed up for, they would have gotten their own Kirby at their wholesale price, buying from themselves. But to make money and be in business for themselves, they have to sell to some number of retail customers at some price which recoups their costs and provides a net profit.

    True, their door-to-door vacuum cleaner sales model does not include a tiered compensation plan for sponsoring and training other Kirby dealers, as far as I know. But the requirement for retail customers beyond one’s own purchases is common to both approaches.

    The best the Corp could assertain on “retail” sales within the past 2-3 years was 3.5%. Even assuming that this number did not fully capture all retail sales, it still shows how the “buy from yourself, teach others to do the same” model of the past 25 years has been an abject failure, as many IBOAI board members will agree. That’s why — in North America — there is now a firm requirement to report all retail sales or sales to non-IBOs. The Corp should, within a year, be able to show what the actual non-IBO, non-self consumption retail sales are… Canada has only made this reporting mandatory as of this month (Sept.).

    The baseline will be lousy to start with, but as the Corp in North America presses forward with its focus on non-IBO retail sales, they should grow and along with them, the health of the Corp.

  23. It’s very different, from a perspective of looking at the statistics. There is no incentive to become a Kirby salesman just to buy a vacuum cleaner, and even less incentive to remain a Kirby salesman even though you’ve decided not to work the business any more.

  24. Are we not in the direct sales industry? No different than door-to-door sales of Fuller brushes and Kirby vacuums. Our job is to market the company’s products directly to the consumer, what I think we generally refer to as “retail” sales. How many vacuums are sold to retail customers versus the number of vacuums purchased by Kirby sales reps? Similarly, what volume of Amway products are sold to retail customers versus IBO self-consumption? Could the figures could be obtained by subtracting CSR reported volume from total product sales?

  25. The point that alot of people miss about our business is that 75-80% of IBO’s never share the business with anyone. and the 20-25% that do either retail products or show the marketing plan and retail, do very little only 3-5% actually work this business everyday like a business. So in reality most IBO’s are really customers who had the brains to sign up for $59 and purchase whosale rather than retail.The only way to really seperate these numbers would be to charge more to become a IBO. But then you defeat the whole purpose of having a business that anyone can get involved in. I think if you are not doing at least 1500 P.V. you really should not be called a IBO because you aren’t creating enough volume to really be a business. You Know if all we had were Nutrilite products to market we would still have the best business on the planet !!! Don’t ever forget it.

  26. I love my Double X. Sometimes cost is an issue with a customer, so I recommend that they purchase the Choices Ribbon Gift Album and select T21 which is the Double X. The retail is $50 instead of $74. Sure, it takes longer to get, but it is also free shipping that way. I’ll move Double X any way I can.

  27. Frankly I think this discussion is a bit silly. All marketing is spin. All I know is (assuming equivalent margins), from a business perspective I’d rather sell 100 units of a $100 widget than 1000 units of a $5 widget, so whether the products are the same price or more is moot. I’m not sure if the “centrum” brand even exists outside of the United States, which clearly gives an advantage in making Nutrilite a “bigger” brand than centrum. You could then argue that if Centrum was available in other countries, then maybe it’s sales would be bigger. Sure, but then you might just as well argue if Nutrilite Daily was available in Booths then it would be bigger, and so on and so on.

    The claim is that, in terms of sales dollars, Nutrilite is the biggest brand, with Centrum next best at less than half (in 2006, a bigger difference now I believe). That’s the claim, it’s independently calculated, that’s all there is to it. Anything else is just hypothetical jibberjabber.

  28. I’m not comparing Double X or Nutrilite products to Centrum on quality… the discussion was “leading sales” ie. top line sales of Nutrilite vs. other supplement brands, vs. unit sales as a measure of financial growth and health. So the comparison still stands. If there is a problem for you in mentioning “Double X” then lets just look more narrowly at the Nutrilite “claim” (or Marketing’s claim) that they are #1 in terms of “tablet” sales worldwide. Doesn’t mean anything unless you can demonstrate unit sales (ie. customers/users) and growth in unit sales.

    I don’t care whether your customer (user) is doing Double X or Dailies or IL-1 HH… no one has produced sales data using units, which is the only real measure of healthy business growth — in any industry, whether publishing, cars, or supplements. Without unit sales data to back it up, the claim is only half a step above “spin.”

  29. rdk – I’m not aware of any significant changes in Nutrilite prices around the world, so dollar growth means unit sales growth. I’m with Bridgett too re Daily/Double X. Double X’s closest comparison products come from other direct sales companies, not Wyeth. As I also noted, Double X isn’t even in all Amway markets, and only recently introduced to a number of them. Indeed, it quite probably that in terms of unit sales it’s not only Centrum that outsells Double X – Nutrilite Daily probably does too!

    “Nutrilite sales” is not the same thing as “Double X sales”.

  30. rdknyvr,

    You had me until you compared Centrum and Double X.

    That’s like comparing a Chevy to a Rolls Royce.

    Two totally different markets.

    A fairer comparison would be Centrum to Nutrilite’s Daily.

    But even then, shouldn’t we acknowledge the two very different channels of distribution–mass retailers versus individuals (IBOs/ABOs/Distributors)?

    And shouldn’t we acknowledge the two very different purposes of the companies?

    Amway’s mission/purpose/goal is very different from Wyeth (makers of Centrum).

    Wyeth’s mission/purpose/goal is to make money for their stockholders.

    Amway’s mission/purpose/goal is to be the best business opportunity(and how you define “best” may be different than how I define “best”).

    So to say that Amway has failed or is failing because they don’t sell as much Double X as Wyeth sells Centrum doesn’t compute with me.

    All my opinion, of course. :)

  31. Amthrax makes a fair point. A business can be going bankrupt all the while having top line sales numbers that look good. The real metric — which all serious business analysts look at — is growth in units sold. On that point, Amway has some serious question marks and work to do. The issue regarding units sold to non-IBOs is important. Yes, IBOs can be considered consumers, but non-IBO “retail” consumers are a better measure of growth, considering the catastrophic “churn” of IBOs (and typical non-continuance of sales when they leave or quit) that the Amway Global business experiences.

    Interestingly, at the Portland Showcase event in mid-September, it was acknowledged that while Nutrilite is #1 worldwide in terms of $$, Double X is running well behind Centrum in North America in both $$ and units sold. Don’t care how you want to try to spin that for bragging purposes, it’s an issue that you can’t preen away, and the Corp knows and understands that, even if “the field” wants to pretend otherwise in order to assuage potential feelings of doubt and insecurity.

  32. $$$ sold is clearly the most important thing when you’re talking about the success of a business.

    Why do you think it’s important to separate classes of consumer, when discussing total sales?

    Re the “covert to #s” claim, in the euromonitor report it gave sales data for the next best, and Nutrilite was far enough ahead for price differences to not matter. Of course, I’ve seen the “critics” analysis which seems to believe Nutrilite sells nothing but Double X. I believe things like Daily and kids vitamins outsell XX, they certainly do in my business. Heck, we didn’t even get XX in scandinavia or australia until the last few years. Daily and kids vitamins are priced similarly to the mainstream products like centrum etc.

    Your very questions seem to imply that you too believe Nutrilite is XX and not much else.

  33. Secondly, why, as an IBO, should I be ruled out as a user of the product? It IS sold to me, by Amway.

    For data analysis purposes, I think it’s important to separate IBO use of a product versus non-IBO use of a product. I never said that I wanted to rule out IBOs as legitimate users of the product.

    Even if you try to convert down to #’s of people Nutrilite also appears to be bought by more people than any other brand.

    Do you have data to back up this claim?

    Throwing out a number like $3 billion doesn’t mean anything unless we have a rough idea on how many people are consuming the products. If I had a less expensive product but sold it to more people than Nutrilite, could I make the same argument that my product is “clearly the most successful nutritional brand in the world”? My definition of success in this hypothetical example would be numbr of people using my product, not a dollar sales figure.

    I’m not debating quality here; I’m questioning IBOFB’s definition of success based on the $3 billion dollar sales figure without knowing the total number of people using the product.

  34. Just for clairty, the $3,000,000,000,000.00 is IBO Cost, not retail price.

    Secondly, why, as an IBO, should I be ruled out as a user of the product? It IS sold to me, by Amway.

    When I became an IBO, I was THRILLED that there was a product like Nutrilite. Growing up, my mom gave us a food-based product that was very expensive and eventually went out of business. I was really bummed because I understood the importance of eating real food rather than just the vitamins and minerals found in food–aka the other parts of the plants that are found in Nutrlilite aka phytonutrients.

    Ten years later, when I showed her the Nutrilite products, she’s the one, a non-IBO who sold me on the quality! LOL.

    Are you saying that a product doesn’t have value unless you pay full retail for it???

  35. Even if you try to convert down to #’s of people Nutrilite also appears to be bought by more people than any other brand. Of course, as far as a business is concerned, it’s $$$$ that tend to matter most.

    IBO vs non-IBO consumption is an irrelevant red herring. A customer is a customer, a consumer is a consumer.

  36. When you say that Nutrilite is “clearly the most successful nutritional brand in the world” how are you defining successful?

    $3 billion in 12 months is very laudable, but do you measure success by the dollar figure that you sold to or the number of people that are using your product. Has Amway Global ever released detailed sales figures for Nutrilite products? How much of the $3 billion was sold at wholesale to IBOs for self-consumption versus retail to non-IBOs?

  37. If they’d begun negotiations earlier enough, then I believe it would have been possible to not have Quixtar “partnering” with these other existing websites, but for other stores to use Quixtar as their primary web presence and logistics provider. Back in 98/99 most other guys were yet to learn how to deal with ordering, delivery, and return etc etc – issues that a company like Amway had been dealing with for decades. Indeed these were the kind of issues that caused many dotcoms to fail. Quixtar had the big name IT suppliers to give them credibility in the arena, as well as the Amway logistics infrastructure. There could have been, indeed should have been, better margins available to IBOs from many of the better quality stores, plus of course the volume benefits.

  38. IBOFB,

    When I think of “mall” I think of EVERYTHING. Which is what Quixtar has with all the Partner Stores and the “catalog” items. But there is not enough incentive on the Partner Stores and Catalog items (PV/BV or cost/retail differential) to make much money.

    The major money is in the “core-line” exclusives, hardly a “mall”. More like a few really fantastic shops.

  39. I actually think there was a real possibility to be the best internet mall, but the opportunity wasn’t handled properly. IMO what was needed, amongst other things -

    1. A better, more open and more “researchable” website
    2. Branding, including on TV, as has been happening now
    3. Emphasis on quality and convenience, not “save money” – and actually making it convenient
    4. Less restriction on IBO websites
    5. Free or low-cost same or next day shipping

    These basic things could have made a HUGE difference.

  40. Good stuff IBOFB.

    The problem with the self-consumption model is that it distracted Amway from focusing on what they do best.

    What it became, at least in North America with Quixtar, was a company offering EVERYTHING. And so the business model became: Do ALL your shopping through your own business, and teach others to do the same! A million SKUs! An Internet Mall!

    Hence why retailing was pushed to the side. Who needs to retail when you can run a ton of volume through your own household and show others to do the same by promoting savings and cash back “rebate” incentives.

    Sounds great, but a DS/ MLM cannot operate by offering the cheapest products at the lowest prices. The two business models are diametrically opposed.

    Glad Amway is getting back to what it is are good at.

    And IMO, it’s much easier to talk about a tangible (product) than an intangible (Internet shopping)—whether you are talking to both potential customers and potential business partners.

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