The Quixtar Amway Retail Sales Rule

Is it true that you don't have to sell, just buy the products for yourself and recruit others to do the same?
The simple fact is, you can't make money in the Amway business unless AMWAY® products are sold. To say it otherwise would be misrepresenting the Amway Sales and Marketing Plan - a violation of our rules. If we hear about claims like this, we take steps to correct them.

From the Amway WEB page

 

Both Amway and Quixtar have retail sales rules in order to follow the guidelines against illegal pyramids as outlined by Federal Trade Commission. The purpose of the rule is to remove the financial incentives for distributors (IBO's) who do not have sales outside of Quixtar members, clients or other non-IBO customers. This is to keep Amway/Quixtar free of pyramiding accusations.

""We were at a major function in Memphis, Free Enterprise, in 1994 I think. Doug Devos, the blond son, was speaking. He told of all the growth that the company was experiencing and the good things to come, and then he made a statement that got a groan and some boos from the audience. "You ought to at least mention selling to your prospects, it helps keep us out of hot water with the government."" Site Visitor

The reasons for the RSR are clear when one looks at it as a "negative sum game". Unlike Amway, Quixtar has most of the information needed to enforce the rule since orders are now placed on the WEB. An easy to search database can made from all the WEB orders when individual credit card numbers and shipping addresses are on hand. The retail sales rule was largely ignored in Amway. Amway Direct distributors had enforcement responsibility.  

It is not in their best interest to enforce the retail sales rule for two reasons.

  1. It would only alienate downline distributors who wouldn't consider joining if they had to sell and just hope to just pyramid his sales via recruiting.
  2. Many uplines have considered selling "not duplicable". This reason is used because
    1. Retail sales were time consuming, provided no assured residual income, or retail mark up, and were difficult to make since the Amway premium product prices required true sales ability to show customers that they would benefit from using a product which appeared to be more expensive.
    2. If they are recruited as customers and not as IBOs they most likely have no reason to buy tapes, books and attend seminars promoted by the upline Emeralds and Diamonds. These people want to expand their "motivational supply" business since these items are many times more profitable than product sales. See the site visitor case studies.

Go to the Retail Sales Rule Summary.

Here area few site visitor responses.

"By the way, our sponsors have pissed off everyone upline by telling them that they are going to do their business their way. RETAILING, not sponsoring."

"I have tape of him (direct distributor) saying he does not enforce the retail sales rule because he does not feel like messing with it."

"I actually asked his pearl upline from Florida why there was a slip of paper inside each kit that said you had to have 10 retail sales a month. He said it was never enforced. I said, "do these retail sales make Amway a legitimate business and not a Pyramid" and he said "yes". My husband actually started taking that piece of paper out of the kits before he passed the kit on to a new recruit. Even at the rallies, the diamonds said not to worry about the retail sales; your job was to recruit.

"Retail Sales Rule? What retail sales rule? I think that what you're talking about again has to do with lines of sponsorship."

"BSMAA? I'm fairly sure I have never seen or signed one of these just like the retail customer report papers that were torn-up by my sponsor when we broke the kit."

"About the customer rule, it is taught but not fully enforced only because we feel when each individual finally makes a decision to build the business he should be accountable for his own actions and responsibilities"

"I believe that if Amway would have pursued the retail route and followed their own 70% rule, people would have made money in the business"

"No, we were told to ignore these rules". (when questioned about the retail sales rule).

Did you ever have enough true retail sales to meet the RSR? "No"

"The retail sales rule was a taboo subject in our line of sponsorship. We tried to teach our downline how to retail products to make a profit, because so many of the people involved were broke. A few of the "devout team members" went straight to our diamond to inform him of our rebellious spirit-we dared to teach something that was frowned upon by upline. We had been spotlighted for many years as "leadership" (we were only silver directs but took on leadership responsibilities) and when our upline found out that we were teaching retailing, he quickly called a meeting with our downline and informed everyone that it wasn't the "T&E International" philosophy and he would never go back on his word, never teach people that they needed to sell products. I wrote a letter to the Amway Corporation, detailing the warped teaching of our upline. After personally speaking with distributor relations about our concerns, I faxed the letter to them, asking for a reply. I never received an acknowledgement that they received the letter"

"About the Retail Sales Rule, my organization does not only NOT enforce it, the entire Storms/Bedard organization discourages selling. The focus is sponsoring, and doing 100 PV/BV. Staying "plugged into the system of BSM, etc..." I want to retail, but have been told that if I don't follow the Yager system, I will get no help or cooperation from upline...."

"My mom got "sucked into" the Amway void and was actually trying to recruit me, and that scares me to say the least. Even after I asked her to allow me to purchase soap SA8 she only wanted to recruit me."

" Consequently, it took a lot of time to make a small amount of money retailing so we stopped after about six months. Other problems included (1) an unreliable drop ship system with extremely poor customer service (the cs reps were used to giving abuse to brainwashed Ambots who, as you might suspect, are apparently willing to take a lot of abuse. The reps were not at all familiar with dealing with people as retail customers); (2) ceaseless headaches getting credit for returned merchandise; and (3) greatly inflated prices even at pseudo-wholesale that made many customers just about swallow their tongues when we quoted prices ("$40/month for daily multivitamins! What the ...!")."

"I received 2 bonus checks, and of course had not retailed to anyone. So, it would appear to be a clever maneuver by the company to shift responsibility from the Corporation to the IBOs. I found out about the RSR by browsing sites such as yours; not because it was brought to my attention by my uplines. Needless-to-say, I had 3 choices: 1) either ignore the rule and not pass that information on to prospect 2) do the retailing the rule intended 3) get out. I personally could not in good conscience NOT tell prospects about the rule (which would by itself probably kill any chance of my recruiting anyone) and certainly no one in their right mind would pay full retail for the products - so I had no choice in the matter.........."

"I also did some further digging about the "10 customer rule" that was so vividly denied last night by the guy who wants to sponsor me."

"I also did not find it difficult to sell the product at retail. Many products are superior to what is available elsewhere and I found there were other people who liked them too. However, in my own situation I could not justify the hourly revenue loss from my other business."

"They advised me not to spend my time selling products. Spend my time listening to tapes, reading books, and calling everyone on my list."

"The 50PV / 10 Client rule was never told to me ever."

"My big concern was that I can't sell products. Their response was, "we don't sell." (They just attract people with positive attitudes and a great opportunity.) Thanks for doing the numbers on the need to sell... no products, no money. "

IBO: "I am A 'Developer'. It is a group of Amway or Quixtar IBOs that have taken leadership for their organization with the educational system. Developers as a group can exempt from that clause (retail sales rule). Apparently your sources (Jamie Fellinger at Quixtar is my source) have not informed you of this."

Jamie Fellinger: " To answer your question (is anyone exempt from the retail sales rule) directly, we have not altered the IMC model and have no plans to do so. They are probably referring to a LOS category that they are working towards. For example the Britt organization uses the term "Eagle" to give certain IBOs targets to shoot for in connection with showing the plan, paying bonus checks in a certain number of legs, PV to members and clients and so on."

From US Tax Court:

Theisen v. Commissioner of Internal Revenue Tax court Memo 1997-539

When questioned whether his downliners sell the products, petitioner testified:

Generally, no. The way the plan is written is, you're taught to purchase things from yourself for yourself, and you get other people--say, Look. Just change your buying habits. Don't go to HEB. Don't go to Eckerd's. Don't go to Sam's. You get access to all these products. Change your buying habits. Buy things for yourself.

Rubin v. Commissioner of Internal Revenue Tax Court Memo 1989-290

We further note that, during the taxable years in issue, petitioners' personal usage of Amway products was more than three times the level of their retail sales of such products.

Site visitors

SUMMARY:

IBO's must have the following to qualify for even the lowest performance bonus at 3%:

1) Have sold a least one item to each of 10 different retail customers. Retail customers include members, clients, others, but does not include downline sponsored IBO's.

2) Have sold at least 50PV worth of product or $100 at IBO cost to these 10 retail customers

3) Have sold at least 70% of the month's total PV to retail customers or downline.

What do these really mean?

"Amway distributors are like most sales people. They know that their enthusiasm can be spread - that it builds the confidence you need to succeed in any selling job." Amway WEB site

 The following rule has been added:
"Rule 3.8.1. Renewal Eligibility: In order to have the opportunity to renew as an IBO, an IBO must, within their first two full consecutive calendar years as an IBO (a) comply with the Retail Sales Rule and (b) receive a Performance Bonus. Failure to satisfy these requirements will result in the IBO only being permitted to renew as a Client or Member. Once an IBO meets this threshold, they will be permitted to renew as an IBO, provided they are otherwise in compliance with the Rules of Conduct."
This rule is designed to: allow IBOs to market to individuals who behave as customers for a significant period of time as customers, thereby increasing IBOs' volume; to help increase the average monthly gross income figure for "active" IBOs ($88) by eliminating "inactive" IBOs from the calculation; and to help eliminate the "inactive in-betweener" issue.

 

The Quixtar Retail Sales Rules (from the book)

4.22. Retail Sales Rule: In order to obtain the right to earn a performance Bonus during a given month, an IBO must: (a) make not less than one sale to each of 10 different retail customers (e.g., Members or Clients); or (b) have at least 50 PV of sales to any number of retail customers; or (c) have $100 at Retail Sales Rule Cost. Retail Sales Rule Cost shall mean the published IBO cost for all items on any orders sold to a Member or Client, or the actual price paid to Partner Stores by Members or Clients. If applicable, Partner Store Retail Sales Rule Cost is applied in the month when the Corporation credits Partner Store volume to an IBO's business.


4.22.1. In producing proof of such sales, the IBO should not disclose the prices at which he or she made the retail sales.

4.22.2. If such IBO fails in any month to make said retail sales and/or to produce such proof of making such sales, then he or she shall be denied his or her Performance Bonus that month and may subsequently lose all registration rights if he or she continues to fail to meet this requirement.
This Rule shall apply to an IBO until he or she attains the status of Platinum or above.

4.18. Seventy Per Cent Rule: An IBO must sell at least 70% to clients, members and downline of the total amount of products purchased during a given month in order to receive the Performance Bonus or recognition due on all the products purchased. If the IBO fails to sell at least 70%, then such IBO may be paid that percentage of Performance Bonus measured by the amount of products actually sold, rather than the amount of products purchased, and recognized accordingly.

 

Other related Rules:

Retail Stores: No IBO shall permit the Corporation's products or services to be sold or displayed in retail stores, schools, fairs, PXs, ships or military stores; nor shall he or she permit any of the Corporation's product to appear in such locations even if the products or services are not for sale. No Corporate literature shall be displayed in retail establishments.

 

4.3.1 An IBO who works in or owns a retail store must operate his or her IB separate and apart from the retail store. Such IBOs must secure Clients and Members in the same manner as IBOs who have no connection with a retail store. Other types of retail establishments, which are not technically stores, such as barber shops, beauty shops, or professional offices, etc., likewise may not be used to display the Corporation's products, information about the Corporation's services, or literature of the Corporation.

4.3.2

Further, IBOs may not use any broadcast communication methods including mass mailings, telemarketing, national or international advertising, radio, television, facsimile services, computer communication networks including the Internet, or any other means by which personal contact is not present to secure Clients and Members or to solicit the sale of products. However, IBOs may use digital media or maintain a web site to order products or to have their Clients and Members order products provided such media or web site meets the requirements set out in the IBO Prospecting/Product Sales Web Site Bulletin, and otherwise complies with the Rules of Conduct.

Case Study of Retail Sales Rule Abuses

Case #1

Scott,

I'm not sure how much my final loss was during my active years in the business. My brother was my sponsor. He lives in Ft. Worth. I live in the Kansas City area. His sponsor was in Tulsa as was our DD. The reason I lay this groundwork is to explain why and how I lost my desire to build a consumer network.

I got in the business in late 1992 and I started off very profitably because I got real wide real quick, and I enjoy selling so I had a pretty good retail business--more on that later.

I supported the system 100% at first. Why? Because I had no reason not to. My DD, Emerald, and Diamond were all sincere and helpful. Looking back, they had to be...I was a minimum $112 / month (SOT, GG, BOM, Rally, Open) cash cow plus I never did less that 240 PV (remember I sold, and still do sell, products) per month.

I'm retired military, so I know people all over the country. At first I sponsored locally, but I decided to get out of town. I had personals in CT, RI, VA, CO, CA, and TX. This is when I started questioning..and learning.

To make a long story shorter, when I hit 4000 I asked to be warehouse authorized so I could get some shipping relief. From the upline reaction you'd have thought I'd been caught sleeping with my DD's wife. I backed off for a while.

The fertilizer hit the ventilator when my Emerald said he was making a trip to CO and wanted to know if I had anyone he could talk to. I had a small group started, 3 distributors, but they were doing over 350 PV every month.

He asked If they were "plugged in" and I told the truth--No. But they were all retailing Artistry. He asked me why they were selling and I told him that I had taught them. His pretentious wife told me that I had no business selling Artistry and that it wasn't duplicatable!!! Since they weren't "plugged in" he wasn't going to help them?!?

I then sponsored a distributor in Arlington, TX, a suburb of Ft. Worth. The reason I say this is because there is an RDC in Arlington - the one my DD orders from. I again asked to be warehouse authorized--NO!! Not duplicatable. So now a tube of Glister goes from Arlington to Tulsa to Ft. Worth to Kansas City to Arlington. Duplicatable but stupid. I'd had enough. I gave my DD an ultimatum. Either put me to the warehouse or I'm gone. He gave up a 4000 PV leg. I guess the 4% shipping he was putting in his pocket meant more to him than breaking a DD.

A quick aside on retailing. I sold a set of Queen cookware and a CMS vacuum cleaner one month. Over 500PV/1000BV plus $450 retail profit. Got fussed at by my DD and Emerald because it wasn't duplicatable. Was told if I had time to sell I had time to prospect for distributors.

Total money lost, who knows. Probably in the neighborhood of $3500. Call it money spent on education. I learned a lot of what not to do. I'm still a distributor. Who knows, I might start selling again in earnest. It's not that hard to do.

Other Site Visitor Feedback About Retailing

The greatest resistance to the whole retail concept was that we lived in a big metropolitan area, people could get anything I had to sell for less, or at the least the same price, the selections were greater, the stores were always available. I also found that so many people had been approached in the past to try Amway products that they were no longer willing to even try because of the horrendous follow up that was used. Each product used had to be a lever into two or more, or so the idea was presented for the growth needed to build a retail business. Also the products are not all that good, some are, I just finished a bottle of See spray, I used it the way that is indicated on the spray bottle and I got my "moneys" worth, but most people are not going to take the time to measure out the required amount. site visitor

Back to the home page