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The #1 problem with Amway and multilevel marketing

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Amway has  a problem, a problem it shares with entire multi-level marketing industry. The result of this problem is that the vast majority of people who join Amway never make any significant money.  It’s a problem that leads to low average incomes. It’s a problem that leads to many people not renewing their memberships.

This very same problem occurs with all MLM companies. This same problem, at an industry level, also means that a large percentage, perhaps even the majority, of multilevel marketing companies are not good business opportunities and many are outright scams.

It’s a problem that, thanks to things like above, results in the multilevel marketing concept and companies like Amway having a poor reputation among many people.

What’s the #1 problem with Amway and multilevel marketing problem?

Low barriers to entry and low risk.

It’s (relatively*) easy and (relatively*) cheap to start up an MLM company. You don’t even have to pay much for marketing! You only pay your salespeople when they actually get results! So if you’re an entrepreneur who is low on cash, or got some product that can’t compete in the traditional marketplace, or even if you’ve got some scam in mind … then MLM is the strategy for you. Low risk, low cost, so if it doesn’t work out you live to fight another today.

It’s easy to startup as an agent for an MLM company. It usually only costs a few dollars, nobody checks up to see if you’re turning up for work, you can return stuff you don’t want or can’t sell. Nobody cares what degrees you have or your success or failures of the past. Why not give it a shot for a few weeks or months and see if it’s something for you? What have you got to lose? It’s just an opportunity, not a promise.

Low barriers to entry and low risk. Amway and multilevel marketing’s biggest problem – and it’s greatest strength.

* compared to traditional strategies!

Commentary

Scam Warning: Amway Group Limited

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I’ve received a few contacts and seen a few questions on Yahoo Answers about a company called Amway Group Limited, Malaysia. The company is a scam, they offer people jobs and then require large payments to supposedly obtain the necessary work visas. When I first heard of the “company” they had a website at http://www.amwaygrouplimited.com – while impressive looking, with a little checking I discovered the site was little more than cut and pastes of text stolen from legitimate company websites. The website has since been disabled.

The scammers are also operating under the name Midway Groups Limited and Gadek Group. You can see examples of their fraudulent approach on the following site –

http://fraudwatchers.org/forums/showthread.php?t=24353

Amway Group Limited has nothing at all to do with Amway Corporation, one of the world’s largest direct selling companies. They are trading on Amway’s good name in an attempt to defraud people.

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Amway is not a scam – but you can still be scammed.

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I’ve had a few interesting discussions lately both online and offline with folk who are absolutely convinced that multi-level marketing and Amway are scams. The discussions have been with highly intelligent and educated people, including one who is a lecturer in entrepreneurship at a school for business. What I’ve discovered is that the reasoning behind their beliefs fall into two areas –

Ignorance, confusion, and misconceptions about MLM

The first is essentially ignorance or misconceptions. MLM suffers greatly by the fact that virtually all illegal pyramid scams claim to be MLMs. When they inevitably fail or are closed down by the government, the meme that “MLM=scam” is reinforced. In reality this is poor logic. The very reason the scams are claiming to be MLMs is because MLMs are legal, legitimate businesses. Nevertheless, the effect on public perceptions is a daunting problem for the legitimate companies.

Associated with this is many misconceptions about how legitimate MLMs operates. Many folk believe we make money by recruiting others, and “smart” people know that means the model will inevitably “saturate” and you can’t make any money since there’s no longer anyone left to recruit. Of course, this isn’t MLM, it’s an illegal pyramid. We don’t make money by recruiting, we make money through sales volume. MLM isn’t really a business model – it’s a marketing strategy with the aim of increasing sales volume. Indeed, in general for any given level of sales, the more people you recruit to achieve it, the less you make on it. It’s no different to owning say a traditional retail store selling clothes. You could sell them all yourself, and keep the whole profit, or could employ some other sales staff. They’ll cost you money, but you hope that the increase in sales will offset the increase in costs.

These types of misconceptions abound, with people concerned about the legitimate problems inherent in illegal pyramids, and believing they exist in multi-level marketing.

Scammers can scam you with Amway

The second area that seems to influence people is their own personal experiences, or those of people they know, or, increasingly, experiences of others they read on the internet. The interesting thing is, when you delve into the problems with those experiences, they very rarely have anything to do with Amway or multi-level marketing per se, they have to do with how some people operate their multi-level marketing businesses.

You can be scammed in any business. A car salesman can knowingly sell you a lemon. A doctor can overcharge you for a simple procedure. A teacher can “force” you to purchase a substandard text book they’d written and printed themselves. An Amway business owner could sell you Double X by telling you it cures cancer, or you can be a millionaire with little work.

In each case you’ve been scammed, but the scam had nothing to do with the car industry, or the medical profession, or teaching, or Amway. It had to do with those individuals (and perhaps some of their associates) and the way they were behaving.

The multi-level marketing strategy, and Amway as it’s largest representative, is a brilliant way of doing business which allows anyone to start and own their own business, of which ever size they desire, with little financial risk, and without having to pursue it full-time. Just like in any other industry however, you can be scammed, and if you’re so inclined, you can scam people, but like any other industry, the scammers rarely last long.

Amway will soon celebrate it’s 50th anniversary. That should say it all.

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