Amway has today announced 2014 global revenue of $10.8 billion – a $1 billion drop from it’s 2013 record sales of $11.8 billion. The company says the drop is a result of a combination of a drop in sales in key markets, as well as currency fluctuations.
Given the instability in key markets like Ukraine, Russia, and Thailand as well as some regulatory challenges in India, I thought a drop in sales was likely. I am surprised by the size of it, I’ll post some thoughts and analysis later today.
ETA: most of what I wanted to add has been said by others in the comments
Just got an email from Amway. Check it out.
What a remarkable year!
The Americas region lead the Enterprise in growth and will close the year with double-digit growth in 13 out of 15 markets, becoming the fastest-growing region in Amway. In partnership with you, we achieved record high numbers of Platinums and first-year Platinum requalifiers in all three subregions, in addition to major increases in average IBO income and the number of Diamonds.
In November, Amway North America (ANA) impressively marked 15 consecutive months of growth and higher IBO productivity. In addition, launches of Artistry® Men and Hydra-V and the Nutrilite Restage were all well received.
Latin America Spanish (LAS) saw 24% growth and celebrated the 30th anniversary of Panama – Amway’s first country in Latin America – and the 25th anniversary of Mexico. LAS also saw the successful launches of Satinique and Artistry® Color, and Little Bits™ was introduced in four countries.
Brazil exceeded sales and COI targets for the second year in a row – its best results in over a decade! The subregion also achieved its highest Platinum count in 10 years and awarded its first-time ever Triple Diamond pin. Additionally, Amway Brazil was the proud sponsor of the NBA Global Games in Rio with the Orlando Magic. The highlight was the community outreach event where Amway and NBA Cares donated a new basketball court to the children of Comunidade Cruzada São Sebastião.
The Americas region also had the honor of Dr. Sam visiting all three subregions to commemorate the 80th anniversary of Nutrilite. We rounded out the year with a focus on a Founders’ Fundamental – Family – when more than 7,700 IBOs and their guests from across the region gathered together in the Amway Center in Orlando to celebrate Family Day.
Alone, each of these accomplishments is impressive. Together, they are a testament of achievement few, if any, companies in our industry can match. Above all, they reflect the immense leadership and hard work that you bring to your Amway™ business every day. We are stronger because of your dedication. I am very grateful for your efforts and very proud of your performance.
As you look back over the year, I hope that you’ll take great pride in your accomplishments.
My sincere best wishes to you and your families for the holidays. I am excited about the future and confident that, together, we are entering the new year strongly positioned, renewed in spirit and determination, and prepared for more progress and success.
Have a blessed holiday season and a prosperous, healthy, and happy new year.
Best,
Candace Matthews
Yep! Amway on the grow while the haters and critics become less and less relevant. It’s our time IBO’s!
Every company has ups and downs. No business grows every year forever. You have to ride out the ebs and flows and stick with your business for the long haul, whether it is Amway or something else.
Now, if a business declines year after year after that is something totally different. But a one or two year decline is nothing to be worried about. Just my two cents.
I’ve been with Amway since 1969 and have experienced the ups and down. One shouldn’t quit just because there are “problems.” They are really hidden opportunities. Perhap all one needs is to gain new knowledge, such as how to use the internet. Books are a great place to find information. Chuck Holmes’ website has a couple of great book lists to choose from.
Or they can just ship the jobs off to Costa Rica….like they are already. Cuts their costs which give them more sales.
??? I’m sorry! What is your point?
Opportunities, exactly. As we’ve all learned the way to build character is to overcome obstacles, not run away from them. I am confident Amway and winning IBOs will find the win here like we’ve been doing collectively for 56 years.
In India, people have realized that :-
1) They are buying very costly supplements from Amway (e.g multivitamins at about 40 $ – 2400 Rs). Now local GOOD brands are selling same at 1/4th of Amway price. and these local & imported brands quality is higher or almost equivalent to Amway.
2) Even using popular e-commerce one can easily import from US site like eVitamins . One of my friend recently ordered good brand Omega-3 from US site at 8$ where as Amway cost same at around 30 $. Belive me , I am not promoting any US eCom site but you will get these supplements almost 1/3rd of Amway price.
3) They usually target Doctors , do organize conference in 5-star hospital. Give them free products of worth 1000s Rs. New govt has recently banned all pharms/health companies to shun such activities or banning licence of Doctors. More emphasis on generic & cheap supplements.
4) Local production : In India, they are planning to open Chennai plant this year end. Local production ..quality issue will be there. That California plant pic in magazine & Made in USA tag gona cost them.
5) Awareness : Ppl are getting more and more aware now. In India , some jobs (like IT, Services and new business) are going. ppl has understood why not spend extra time in current jobs or learning new skills which will give more money and growth and PEACE after all.
P.S. these are my view and judgement. I m from India. Wish all good luck those in Amway business and not in.
Hi jiten,
(1) I’m not aware of any other nutritional brand in the world where “quality is higher or almost equivalent to Amway” and I’ve been researching nutrition for many years. Could you give some examples?
(2) Was the Omega-3 eVitamins esterified or triglyceride form? Was it molecularly distilled? What testing did it go through for quality – most brands don’t contain what it says on the label
(3) It’s Pharma companies that target Doctors with conferences and giveaways. Amway certainly doesn’t. It may be some Amway groups (remember, distributors are independent, they’re not employees) have copied the Pharma method? Haven’t heard of that before, can you give more info?
(4) Part of the reason Amway is opening their own plant is because of quality control issues with subcontractors. The Indian government is requiring local manufacturing. Yes it will cost them a fortune. This article on new farms in China gives some background on how far they go for quality.
(5) The world is changing everywhere. Amway has a place in that, but it has not stand still too!
all the best to you to, Jiten.
You are comparing a Lamborghini vs a Kia or a Ferrari vs Hyandai. Just because they have four wheels and a steering wheel doesn’t mean they are on the same level. Now compare quality vs quality, and you would see the that Neutralite is way cheaper.
But then again you’re probably getting paid by some corporation to post things that might demenish a corporation that has made a difference in people’s life. The Amway that is connected to the wwdb has saved my marriage. From my wife telling my to get out of the house and wants a divorce, and I can tell you we are together today…
Amway Japan sales were 96.794 billion yen for 2014 which means they are at the same level (-0.17% change) as they were in 2013 (96.968 billion yen).
Again, the translation rate had a major impact on Amway Japan sales in USD.
Sales in China dropped from 29.3 billion yuan to 28.7 billion yuan. That’s not that big a drop in local currency, just 2%.
http://www.pressreader.com/hong-kong/china-daily-hong-kong/20150225/282127814925461/TextView?query=amway
I would agree except they were looking at +8% in march 2014. So the last 3 quarters were significantly down. And probably the last half was a big drop.
That’s only your guess. Neither you nor I know how the prediction was done. It could be based on product launches that had been planned back then and that were finally postponed, etc. You can conclude exactly nothing from that figure.
No matter how it was done one can conclude that the facts state they were in march looking at +8 and finished -2. They dont forecast unless they are certian of what they are saying. So some major hits arrived. In the last 6 months and no doubt will run into 2015. Thats why i think it will take a while to turn it around in china. I saw reports that abos are actively recruited by new mlms suggesting 30 to 50 thousand people switched. Devos mentioned the recruiting but not the numbers. Given the drop in the second half it likely was a significant number
Prediction is prediction. You cannot be certain when you predict, especially regarding sales. I agree that it will take some time for people to realize that if you want to build a carrer in MLM, starting to work with a new company is not the best option.
I just have a gut feeling that sales will go above last years figures as a whole. Maybe not all markets but most. I have no scientific data to back that up except that in the last 20 years sales slumps were only 1 year then it continued to climb. I also feel that most ABOs will get motivated and get the job done. The beauty of this business is that you don’t have to be the know it all, as a matter of fact sometimes that is a hindrance. Even if you do nothing more than invite your prospects to see someone showing the plan you can grow.
You are probably right but i dont see it in 2015. In march 2014 amway talked about china sales growing 8% for 2014. So things were going well. Full china sales are well down. So something went wrong in the last half and it is significant. Apparently new mlms are recruiting abos. So i think it will take a while to turn that around and its a big market. Also currency full year 2015 is expected to be again negative to the $. And the Cis political situation is likely to drag on this year. So i expect 2017 will be when we see a global return to growth.
I would not imagine exchange rate expalins 8%. The dollar was down 3% on average against China and Euro for the year.( and some Euro countries and North Amercia seem to have good growth in local currency).
It would seem Kevin’s input makes sense that it is mainly China and if so the underlying China sales are significantly down. The CIS probably down a little too and certainly down n Dollars.
If the 2015 currency outlook holds, 2015 sales in dollars will probably be down even more than what we saw in 2014 and if there is an underlying change in China it may take a while to get that back
Not sure where you get the data, but the USFOREX states that the Euro was slightly down against US dollar (0.753602 in 2014 0.753045 in 2013) meaning that you got less dollars per 1 Euro.
Chinese yuan was down too in 2014 (6.158134 CNY/USD) compared to 2013 (6.152292 CNY/USD), again a negligible, but negative impact of currency translation.
On the contrary, Japanese yen and Russian ruble – both Japan and Russia are big markets for Amway – were significantly down against US dollar.
Back in 2012, Russia was 5th biggest market with sales of 629M USD which would represent ~20 billion RUB. If the sales in rubles were constant in 2012-2014 (and I don’t think so due to the political situation), there would be a loss of 18% (more than 106 million USD) in 2014 alone (compared to 2013).
Japanese market itself is as big as the whole Europe and Japanese Yen was down about 8% (a drop of ~80 million USD in the case of constant sales).
Not sure how Ukraine is performing regarding the sales in local currency. India is probably down too due to the lack of legislation which allowed the harassment of Amway by police (plus the negative impact of currency translation of approx. 3%).
In summary, just three markets – Japan, Russia and India – represent a potential negative drop in currency translation of 200+ million USD (if the sales in local currency were the same as in 2013).
Other big markets:
Malaysia – 4% negative impact of currency translation.
Thailand – 5% negative impact of currency translation.
So, China is certainly down with sales (as the press release said), but the negative impact of currency translation is not negligible.
BTW: Coca-Cola is down with sales too and guess what reason (among others) they state: a negative impact of currency translation.
Just saw a report that India dropped from 2191 crore INR in 2013 to 2046 crore in 2014, a 6% drop in local currency, and if my calculations are correct around a 15% drop in USD.
Yes, I saw that article too.
http://www.mydigitalfc.com/news/legal-tangles-block-amway-india%E2%80%99s-path-859
I expected that the drop would be even bigger. Can you imagine what the growth would be if there weren’t the problems with legislation?
The drop came from China almost exclusively. Greg Duncan sent out a message on exactly what happened. They have loosened the reigns in China on Network Marketing so the market is flooded with new companies. Also the bigger pins have realized they can make 3 times the money in the North american market so alot of the bigger pins are building second businesses in the US and Canada in the Chinese communities.
The North American market is up big this year. Its the biggest growth Amway’s had in a decade in North America. Our training system is up 70% year to year across the board on average.
Here’s what I don’t understand. Why isn’t WWDB willing to pay new members a commission for referring new members. Currently the managment team makes 90% of their money from the sales of tools and materials to Amway reps, it’s not ethical and it’s been that way for decades. They’ll get up on stage and parade around acting like they’re ethical business owners, but then totally shaft the IBOs through their actions which is the real measure of their character. Makes no sense. You could find a ton of other training platforms out there that teach real marketing techniques that pay 50% commissions, sometimes more, where you learn how to actually build a freaking business. Or you could stay with WWDB and blow your cash on mindset training and how to be a good person, which doesn’t teach you a lick about business. Don’t get me wrong, personal development is great, but it amplifies the skills you build that make you money. It doesn’t make you money by itself. Are they still teaching the 3 foot rule and make a list of your friends and family? God help our industry.
“concerned”, first of all, it’s simply not true that “the managment team makes 90% of their money from the sales of tools and materials to Amway reps, it’s not ethical and it’s been that way for decades“. That’s a myth. As for paying new members a commission for referrals, the problem with that is that would leave no outside market for WWDB materials. The FTC has looked poorly – and for good reason in my opinion – on MLMs that sell purely educational materials, closing pretty all of them down once they got in the crosshairs. As it stands now WWDB is a volume rebate based business like Amway, with non-Platinums building Amway businesses being the customer base for the rebated material. Get enough volume, you get to the first rebate level.
On this debate over tools i feel people know what they pay and what for. Surely it is also up to them to decide if there is a payback or not. The tools are a service offered. My own view is a couple of books and tapes are largely sufficient. After that its a simple question of showing the plan to 50 or so people per month and motivating others to do likewise. I think people like the comfort of hiding behind meetings and conferences when in fact they feel it difficult to be uot in front of prospects. Its tough to do but its the only way to be siccessful. Thats why so few are successful.
Vincent, your “50” figure may be misunderstood by some of our newer readers. How about expanding on this topic?
Howard. I would be delighted to expand of course. However i feel this strategy is for those who wish to reach double diamond and above. This is very few. Below that level income net is limited and not sustainable. I feel to expose what is really needed to be successful in a general forum like this may be counter productive.
Vincent, that is very interesting. Of course active Diamonds are helping their downlines introduce 50 or more people to the business every month. New people to the business, or those just looking, probably don’t understand the context of your post. Thanks for clearing it up.
You are right to imply that it is not your place “to expose what is really needed to be successful…”
Is Diamond and above your criterion for success? Then, the first step is to achieve Founders Platinum. Next, teach six others to duplicate you. I wouldn’t expect someone who has not achieved a certain level of success to be qualified to instruct others on what it takes to reach that level.
None of our Platinum and above readers come here seeking advice on how to make the next level. They know to counsel upline for that advice.
Giving general advice, like get all the knowledge you can before you STP (See The People, Show/Sell The Products, Show The Plan, Sponsor The People), is fine. First and foremost, anybody looking to go into a new venture needs to get educated on the ins and outs of what they are going to attempt. “Check upline to find out what is recommended” is good advice. A caring and knowledgeable upline will recommend the appropriate books to read for each, individual downline. Different folks will need different strokes.
Not surprised by the size of the drop. In fact, I was more surprised by the jump from 9.2 billion to 10.8 billion several years ago. The growth rate in US dollars in the case of a global company doesn’t say much about the growth rate in local currencies, which is more relevant.
South Korea and Taiwan experienced notable growth in 2014. Brazil, Mexico, Argentina, Costa Rica, Guatemala, Chile, Panama, Italy and Spain had double-digit percentage growth in local currency sales.
As expected, Russia, Thailand and Ukraine probably experienced the biggest drop due to the political situation combined with the exchange rate of local currency against strong US dollar. India is probably down too – due to the lack of regulations and continued harrashment of direct selling by police. Hopefully, the things are going to get better with the new legislation that the government is now working on. China sales were down, though I am not sure how much. Given the problems that Nu Skin faced in China, it could be a reason for slower sales for other direct selling companies.
As to translation rates, in Japan, the exchange rate changed approx. 20% during September-December period. Russian Ruble went from 36 RUB/USD to 60 RUB/USD during the same period.
All in all, taking the exchange rates into account, the results are good, Amway is certainly doing better than for example Avon, and Amway’s commitment to not raise the prices in these markets is remarkable.
I am proud of this company!
I think you’re correct that much of the drop can be attributed to currency changes, thought I have a slight problem with the “commitment not to raise prices”. DeVos says in this MLive article –
Just last week Amway locally advised us (in an “overseas market”) that prices are increasing next month because of increased production costs and interest rate fluctuations. The last makes no sense given interest rates here are effectively zero and have dropped in recent years. The first reason is interesting since they’ve been moving some production to Europe.
Amway Global annual sales dropped due to some ibo’s in China not following the rules. Amway had warned them a few times, but they kept selling products in brick and mortar aka retail stores. Via not making it a level playing field for every other ibo’s.
So Amway pulled the plug on their IBO #’s.
That’s how great the company is, that they gave up a billion dollar in sales, so that every IBO has the same opportunity.
Check the top 100 list of MLM/ Network Marketing at DSA.org to see who’s leading the way.
Not sure how you conclude the results are good. De Vos in his video interview said he takes the bad years with good ones and he just wants to ride out this bad one. Seems sensible. Of course it needs to be a temporary event.
Good or bad? It is relative and it depends upon many factors. Compare Amway to Avon for example and you will see how good our results are. 🙂
Of course, the drop itself is not good, but we are doing very well considering ALL the factors that contributed to the drop.
Problems or opportunities?