Category Archives: Market News

Amway goes K-POP

Unless you’ve been hiding under a rock the past year, you’ve surely encountered the wildly successful Gangnam Style song and music video from Korean pop star PSY. Well, Amway Korea has apparently been swallowed by the K-Pop trend. I give you “Dreaming” one of the stranger (for us westerners) Amway videos that I’ve encountered –


For a little context, the video seems to be set in conjunction with the Busan International Film Festival, one of Asia’s most prestigious film festivals. Amway and Artistry were a major sponsor last year.

Amway to open first US business center

 

Amway's London Business Centre
Amway’s London Business Centre

Following a model which has proven successful in various Amway markets around the world, Amway North America has announced that the first US “Amway Business Center” will open soon at Citi Field, home of the famous Major League Baseball team, The New York Mets. According to a report in the latest Amway Business News, the experience center will offer –

  • Credible Opportunity Messaging greets all IBOs and their prospects as soon as they walk in the door.
  • Lounge Spaces where IBOs can meet and connect with their prospects and each other for one-on-one opportunity presentations and mentoring sessions, or just catch up on some business.
  • Brand Experiences to promote Amway’s biggest and best brands: ARTISTRY®, NUTRILITE®, LEGACY OF CLEAN™ (as well as the Healthy Living brands), and XS®. IBOs and their prospects can engage with the products and the brands for themselves through interactive and engaging experiences.
  • Training & Education through a variety of scheduled knowledge- and skill-building sessions held in the large training room. There will also be opportunities for IBO groups to reserve the room for education, leadership events, and business meetings.
  • Ordering and New IBO Registration can be done on the spot via on-site computers. A few products are also available for purchase in limited quantities.
  • Education and Activities will begin soon.

Amway UK & ROI continues to grow

Amway United Kingdom & the Republic of Ireland went through a tough time a few years ago with an investigation by the UK government (ultimately dismissed) . The company halted all sponsoring during the investigation, yet millions of pounds of Amway products continued to be bought and sold, and leaders all the way up to Diamond continued to qualify. Sponsoring renewed several years ago, along with a slightly modified business model that requires, amongst another things, Amway Business owners to have a certain amount of registered customer sales before they’re allowed to sponsor and to earn bonuses and rebates. The latest income disclosure indicates the model appears to be working well. This years figures (for October 2011 to September 2012) are below, along with the same data for the previous two years.

Retail Consultants can purchase and sell Amway products, but are not yet allowed to sponsor

Certified Retail Consultants are Retail Consultants that have developed at least 5 customers and €125 in sales, completed an online course, and are now able to sponsor.

Business Consultants have reached the top of bonus scale. If their business also has a structure that reaches minimum income level requirements, they qualify as Platinums.

CVR is Customer Volume Rebate. It includes the standard Amway volume rebate plus retail margin, which (unlike in most other Amway markets) is collected by Amway and then rebated to those who qualify.

Amway UK & ROI Income disclosure data
      2010       2011      2012
# of Retail Consultants  13,270  16,287  28,696
# earning CVR  5,522  6,582  9,161
average monthly CVR  €49  €47  €52
highest monthly CVR  €1,131  €642  €1,870
lowest monthly CVR  €16  €23  €23
# of Certified RC  7,640  10,043  12,544
# earning CVR/bonus  6,211  7,585  8,742
average monthly CVR/bonus  €132  €126  €139
highest monthly earnings  €4,865  €3,720  €5,644
lowest monthly earnings  €6  €7  €5
# of Business Consultants  50  62  76
# of new BC  12  13  21
average monthly CVR/bonus  €2,664  €2,584  €2,405
# of Platinums  45  58  71
# of Emeralds  3  3  4
# of Diamonds  1  1  1

That’s a more than doubling of registered consultants in just two years, and based on the # earning bonuses and the averages somewhere near a 50% increase in sales. One of the most vocal European critics of Amway and multilevel marketing is a man by the name of David Brear. His entire argument is based on his opinion that Amway’s products are “unsellable”. If we look at the figures above, each of those Certified Retail Consultants had to have a minimum of 5 clients in order to earn a CVR in any given month, which means they alone represent, at a bare minimum, over 43000 Amway customers and €10-15 million in retail customer sales in the UK & ROI. Many of the retail consultants will of course also be developing customers and making retail sales, as are the Business Consultants. It’s also interesting to note that at least one Retail Consultant earned straight retail sales commissions for a month of nearly €1900 (over US$2500)

As is usually the case, the beliefs of Amway’s critics just doesn’t stand up to the facts.

Good news for Amway India

In some good news for Amway India and other direct selling companies, it’s been reported that –

“An inter-ministerial committee is expected to come out with regulatory guidelines for direct selling companies by the end of this month”

Amway India and other companies in the market have been suffering from a lack of clear guidelines and the actions of some misguided anti-mlm zealots, particularly in Andhra Pradesh. Amway has been working hard to get clear laws in place. Hopefully things improve!

Class action against Amway Canada thrown out

Well, “thrown out” is probably not a technically correct legal term, but the result is the same. Back in 2009 a pair of disgruntled IBOs, husband and wife Kerry Murphy and Cheryl Rhodes, of Cloverdale, British Columbia, filed a class action lawsuit against Amway Canada. This  of course made news with the anti-Amway brigade, but funnily enough some other news didn’t – way back in November of last year, the Court sided with Amway and said their complaint should go through Amway’s arbitration system.

I should clarify – not their complaint. In what has to be one of the least successful attempts at a class action ever, Murphy and Rhodes launched this lawsuit and promoted their class action through press releases and websites. The result? Well, in a class action, one of the tasks of the Judge is to determine if there is a sufficiently large group of people with the same grievance. In May 2011, his wife Cheryl Rhodes curiously withdrew from the class action. So we’re down to one, and in the judgement, the Judge had this to say –

the plaintiff has only provided evidence of one claim – his own for the amount of $15,000. …. Absent any convincing evidence of multiple claims or multiple defendants, the issue of the reasonableness of a partial stay is simply not triggered.

So it became his complaint. Just Kerry Murphy. No Cheryl Rhodes, and nobody else stood up to offer further claims. It gets even worse for Mr Murphy-

THIS COURT ORDERS that the defendant’s Motion to Stay and to Compel Arbitration is allowed. Costs shall be awarded to the defendant.

It seems to me highly likely that the defendants (Amway) costs for a case like this are going to far, far exceed the $15000 Murphy claimed he lost doing Amway during his four times as an IBO. I notice looking through the court records that  Robert FitzPatrick provided an affidavit in support of Murphy and Rhodes. I have little doubt that anti-MLM zealots like FitzPatrick encouraged this action.

FitzPatrick and his ilk are causing real financial damage to people by leading them astray with their falsehoods and anti-mlm zealotry.

Murphy has appealed the case. I feel sorry for him.

Oh the confusion …. CSPI gets it (mostly) very wrong.

The Centre for Science in the Public Interest (CSPI) is a somewhat voracious “defender” of a healthy lifestyle. While I agree with many of their positions, I disagree with much of the way they go about it, with attacks on various foods and supplements that often go outside scientific support and verge on obsession. I think they need to remember that stressing too much about what you’re eating can be more damaging to the health than whatever it is you are actually eating!

Anyway, this week CSPI set it’s eyes on Amway and Nutrilite in a letter to Amway President Steve Van Andel and a widely circulated press release. At best their claims against Amway are confused. At worst they are outright deceptive. They are also incredibly ironic!

CSPI attacks Amway over Nutrilite twist tubes, mentioning in particular two products, Nutrilite Fruit & Vegetables 2GO twist tubes  and Strawberry Kiwi flavored Immunity Twist Tubes. CSPI’s letter and press release show a lack of due diligence on their part both with regards the products they attack and Amway itself, as well as, surprisingly, a lack of understanding of FDA regulations. I’ll start with their confusing, and misleading press release.

In the release they say –

“Fruits & Vegtables 2GO” has “the antioxidant equivalent of two of the 9–13 daily servings of fruits and vegetables your body needs,” according to Amway. But there’s far more to fruits and vegetables than just antioxidants, according to CSPI.

Oh the irony. CSPI is pretty much parroting Nutrilite’s greatest marketing differential back at Nutrilite to falsely criticise a Nutrilite product. Yes, CSPI, you are right. There is far more to fruits and vegetables than just antioxidants. It’s what Nutrilite has been saying for nearly 80 years. That’s why Fruits & vegetables 2GO has actual fruit and vegetables in it! A review of the ingredient label shows it includes “Acerola Cherry Concentrate … Pomegranate, Cranberry, Blueberry, Carrot, and Red Beet Juice Concentrates”. Real fruit and real vegetables, complete with all those phytochemicals CSPI correctly points out are important.

CSPI seems to have assumed that Amway’s products are like most other competitors in the nutritional supplements category – composed of synthetic isolates. In general, they’re not. That’s the Nutrilite difference. In their letter to Steve Van Andel, CSPI goes further –

Amway claims that “60mg of vitamin C from NUTRILITE Acerola Cherry Concentrate [provides] the natural vitamin C equivalent of about one mango or 1/2 cup of cooked broccoli” and “5 mg of Beta carotene from the algae plant [provides] the natural beta carotene equivalent of about one medium carrot or one cupe of cataloupe.” These claims suggest that the ingestion of isolate vitamins or antioxidants have the same benefit as the ingestion of whole foods such as mango, broccoli, carrots, or cataloupe that countain those vitamins and antioxidants. This is not the case, and suggesting as much is deceptive to consumers.

CSPI has somehow come to the conclusion that “Nutrilite Acerola Cherry Concentrate” is somehow an “isolated vitamin”. It’s not. It’s exactly what it says, Acerola Cherry Concentrate. Amway also clearly states that it’s natural beta carotene, from algae, provides the equivalent beta carotene as a carrot or some cantaloupe. “equivalent” is not “the same“. A cup of cantaloupe is not the same as a medium carrot is not the same as some algae. Contrary to CSPI’s claims, Amway nowhere suggests they are, and I can’t see how this is at all “deceptive to consumers”

Now, the Strawberry/Kiwi flavored immunity twist tube is one of those exceptions from “the Nutrilite difference”. It doesn’t contain fruit and vegetables as nutritional sources, it’s primarily Vitamin C as ascorbic acid (almost certainly synthetic). Personally I, and others who contribute to this blog and Amway Talk, were a little bit disappointed in the twist tube products when they came out, because they didn’t uphold the Nutrilite difference. The Fruit & Vegetables 2GO product, released fairly recently, begins to address that. Still, CSPI’s criticisms of this product verge on the childish. Despite the very name of the product saying it’s “Strawberry and Kiwi flavored dietary supplement”, CSPI apparently believes the pictures of a kiwi and a strawberry on the front misleads consumers in to thinking it has actual fruit in it. That might be true if you were already aware of the normal Nutrilite approach, but for the vast majority of consumers – really? A can of fanta has a picture of an orange on the front. Do people really believe it contains oranges? Pictures of fruit on packaging are an extremely common approach for depicting the flavor of a product. Is CSPI going to threaten to sue them all?

CSPI also criticises this product for the claim that  it is a an “immune system booster” that will “protect your cells.”  CSPI believes this claim is deceptive as it implies it prevents or cures disease – a no no under FDA rules. They’re wrong. This is what are categorised by the FDA as “structure/function” claim, not a disease claim. The idea that antioxidants are import in protecting cells and the immune system is well established, I believe Amway is on safe ground on this issue.

There is one area where I think CSPI is correct in their criticism. They state – “Also, both product lines contain the artificial sweetener sucralose, despite a print advertisement for “fruits & vegetables 2GO” that claims the product has no artificial ingredients.”

Both products state on their packages and on the Amway website that they contain “no artificial colors or flavors”. This is correct. Personally I think this kind of marketing line does verge on deceptive as many people would interpret it as “nothing artificial” rather than just limited to colors or flavorsSucralose is neither a color or flavor so Amway is technically and legally correct. However, CSPI also refers to a print advertisement  (pictured right) for Fruit & Vegetables 2GO which states the product “contains no artifical colors, flavors, preservatives or ingredients“. This is clearly wrong, it contains sucralose, which is an artificial ingredient.

So CSPI gets one claim right out of the many they make against Amway. Their letter to Steve Van Andel though, I find extremely ironic, with several pages devoted to educating him about the benefits of phytochemicals, a consumer field Amway and Nutrilite virtually pioneered!

A little more due diligence next time, CSPI.

Interview with head of Amway Russia

Just came across this great interview by Voice of Russia with Richard Steven, General Director of Amway Russia. The interview covers the startup, success, and challenges of opening Amway in the country. He confirms that Amway Russia has record sales for 2011 and global sales exceeding $10 billion. Confirmation of global sales is expected as early as today.

Check out the interview (an MP3) – Rushing for Success-> Amway: Six Years in Russia.