Rebuttals

I get letters from current distributors, many of whom have the same questions and arguments. This page attempts to answer and rebuttal many of the standard "boiler plate" Amway/Quixtar distributor arguments. I write this page to save them time writing letters, and I save myself time answering the same arguments all the time.

Index of Rebuttal Topics

"There is no more Amway in North America. Quixtar has replaced it"

"Amway has created more millionaires than any other business"

"You site must be funded by Amway/Quixtar's competitors"

"Why are there so many well educated professionals in Quixtar; Doctors, Lawyers, Congressmen etc?"

"You can get residuals 20 years from now for work you did the first year"

"WWDB is a nonprofit corporation, tapes are sold at cost"

"World Wide Group accounts for 80% of Amway's business, now Quixtar's"

"How come there are more positive books on AmQuix, than negative books?"

"These guys that run WWDB make anywhere from $300K-3M/month. One guy makes 1 million every 3 days."

Quixtar's second hundred days was a 50% growth over its first.

"Amway has "sticky" customers"

"Why you do you chose to pick just on Amway when plenty of other businesses tell "white lies" as well"

"I don't know anyone one in this business who has not showed the plan 10-15 times/month and isn't Platinum"

"Partner stores pays Quixtar distributors a 25% commission for referrals"

"Where did you obtain the data in your site"

"People just don't show the plan. That is why they fail"

"What makes you an authority"

"The overhead costs of an Amway distributorship are low when compared to a traditional business"

"Procter & Gamble spent $1.5 billion on Advertising. Those advertising dollars go in the Amway distributors pockets."

"Didn't you pay to go to school. That cost money. You are paying for education and training with the tools"

"Cassette music tapes in stores cost $6 or $7, what's the problem with making money off of them?"

"They will be paying PV and BV on tapes to us in January"

"Anybody make numbers show what they want"

"I am almost a direct distributor and I will be making $4,000/month"

"I net $1000-1500/month in my business"

"Amway has taught me money management techniques"

"Apparently you haven't consulted with the Federal Trade Commission"

"The team I joined is very open, and very professional in the way they build this business".

"No one in this business makes money until you do"
"How can you do an analysis on Quixtar when it doesn't launch until 9/1/99?"

"I have businesses in several states"

"Microsoft has partnered with Quixtar"

"Amway has been around for 40 years, It can't be a scam"

"Quixtar is not just Amway on line"

"Amway is systematically shutting down negative WEB sites such as yours"

"I am curious. Do you have a relationship with Wall-mart and Proctor and Gamble?"

"My employer is only paying me a small fraction of what they are making off of me"

"I'm saving money on what I buy, your price studies are all wrong"

"Your price studies do not include the concentration items"

"Wal-Mart never sent me a check or gives me a rebate"

"I save time, gas and expenses on my car. By the time I add all that up I'm saving money"

"If you owned a Wendys would you eat at McDonalds?"

"Amway earned $7 billion"

"Quixtar will do $100 billion its first year"

"Quixtar was larger then Wal-Mart, Sears and Home Depot combined"

"You are just a broke loser trying to blame someone else for your failure!"

I got "LAZY" just as YOU DID but I WILL NOT blame Amway for my mistakes

"Your page is hurting people"

"Amway works"

"Why are you so negative"

"If people just showed the plan 10-15 times/month, they wouldn't be losing money"

If you spent as much time working Amway as you did putting together this page, you would be Crown!

"Distributors who lose money have only themselves to blame".

"It's not just the actual cash money, part of the attractiveness about this business is for taxes "

The `"Plan'' was designed to have a NEW person GO 1000 PV the first month. I.e. Profitability!

Our functions and tools cost a lot less than Zig Ziglers, Anthony Robbins or any of the other motivational speakers!

"You have not actually tried to do it yourself to see if it works"

"How can you do an analysis on Quixtar when it doesn't launch until 9/1/99?"

"You must be a democrat and you probably voted for Clinton"

 

"Amway has created more millionaires than any other business"

I get this line all the time. I haven't had one distributor, whom I have challenged, give me the source of this famous "Amway urban legend". Assume for now, distributors are talking about people who earn $1 million/year from the Amway products bonuses, and not the dictionary definition of $1 million in net worth. How many US Amway Ama-millionaires are there? Are there 500, 1000, 1,500, 10,000 distributors in the US earning one million dollars a year from Amway? Let's look at some numbers. Amway US sales to distributors were 30% of $5.7 billion in worldwide Amway "Guesstimated" Retail Sales. Less the 25% estimated retail mark up, along with the very best case of 31.5% rebated back to distributors, money earned by distributors from Amway is: 5.7*(1-.25)*.3*.315 or $403 million in the very best possible case! Assuming nobody but Ama-millionaires got money from Amway, there are only 403 Ama-millionaires. Back out the 3% bonus for self-consumption at 100PV and it leaves only 364. We know that directs and below get a 25% performance bonus, leaving just 6.5% in performance bonuses for people over Direct Distributor. The remaining 6.5% of bonuses, generates $83 million for the Ama-millionaires, or 83 distributors at most. So, 83 divided by 750,000 US distributors puts you at 1/10 of 1%, or at most one out of every 9036 distributors are Ama-millionaires by income alone, ain't it great!

"That added to the annual bonuses would easily put them over the seven digit level for Amway/Quixtar earnings for one year and this doesn't include SIP money. Obviously this would only be the top business owners and I would say on average that the top 15 to 20 would be in this category each year. Many IBOs (who don't rely on BSMs) are millionaires based on the money they earned from the business and the way they managed that money. You also have to give credit to those individuals who learned business skills from the business and in turn, used that knowledge to increase their net worth."

An Amway representative's response to my question "how many people get $1Million in annual compensation or more from Amway".

Let's look at it from the dictionary definition:

mil•lion•aire (mil'-yu-ner'), n a person who is worth 1 million dollars, pounds, etc.

Assume you have to save their money to accumulate $1 million per year, and it is not just earned in one year. Now the analysis becomes quite complicated. In order to save money from an income, one must first pay taxes, living expenses, as well as the AQMO business overhead costs. How good are Amway/Quixtar IBOs at saving money? How stable long term is their income, really? Now the argument becomes ludicrous since we are comparing net worth of people who have sub $100,000/year Amway jobs versus regular jobs at corporations. Assume there are fewer Amway IBOs with million dollar incomes and more, with say, $50,000 incomes, but now they have to save their money to accumulate $1 million. Assume the guy can save 15% of his income per year, or $7,500/year. In 28 years at 10% return, the guy has $1 million. So it would seem that at most 8,060 people could split up the $403 million in bonuses and be millionaires in say 28 years! The discussion now has degraded in to one of how many companies out there have more than 8060 employees who make more than $50,000/year. I would think lots! Amway direct distributorships come and go. Look at how many Directs fall out of qualification. You can't assume you can do nothing and make $50,000/year in Amway performance bonuses. Without constant attention, any Amway/Quixtar business will just fall apart. Ask any diamond that has fallen out of qualification, and they are actively working the business!

Now let's use the definition, that any income stream can be multiplied out to determine its present value. Assume you have an asset that generates $67,000/year in income. This is the same as $1 million in a 30-Year US Treasury bond at 6.7%. Now assume that an Amway distributor makes $67,000/year in his business. Some might consider him a millionaire. I wouldn't. If he tried to sell his business to his upline he might only receive $335,000, or 5 times earnings. Most people will not pay $335,000 to buy themselves a full time $67,000/year Amquix job.

"Meanwhile , some of the big distributors are unhappy enough to quit. Last September Robert Crisp (triple diamond) of Tulsa sold his organization for about $600,000. Crisp said his downliners generated as much as $120 million in Amway sales, providing him with an income averaging $200,000, but the business had fallen over 30% from its peak 1980." Forbes March 25, 1985

Robert Stonelake of Marina DelRey, Calif, a 20 year Amway veteran who served 6 years on the companies distributors association, says he sold his operation, with nearly $90 million a year in sales, in January for $325,000. He claims his income dropped 40% from the $175,000 peak in 1981." Forbes March 25, 1985

"Rick Setzer and Sue Lynn Setzer ... paid Belknap (triple diamond distributorship) One Hundred Fifty Thousand Dollars ($150,000.00), as part of the purchase price of Two Hundred Seventy Thousand Dollars ($270,000.00)". Setzer vs. Amway

From these Forbes magazine examples it seems the present value for an AmQuix business is only about 3 to 4 times its annual earnings. No one will value an Amway business at the same multiple of a "risk free" Treasury bond, 15 times earnings, especially since it still takes lots of time and effort to keep the group from falling apart. You needn't show the plan to collect your interest off the Treasury bond! So here we are again trying to determine how many corporations have more than 6,014 people earning $67,000/year or more in jobs versus the number Amway "distributor jobs". There are plenty of other corporations. Amway distributors, as a group, don't even compare.

So much for the Ama-millionaire myth. It is a seductive sales ploy, but it is meaningless and unsubstantiated.

I have calculated how many million-dollar fortunes, which have been wasted away in Amway. Last year at least 207 "million-dollar fortunes" were lost last year in Amway because distributors spent more on their distributorships overhead than they received in actual Amway bonus, rebates and retail customer markup.

I would also argue that Wal-Mart whose, market capitalization is in the hundreds of billions of dollars, as created more wealth than Amway will ever be able to match. Wal-Mart has many shareholders besides the founding family. Wal-Mart's positive profitability last year created at least 3056 new "million-dollar fortunes" for the $3Billion plus in profits it had, compared to Amway distributors losing 207 "million-dollar fortunes". Show me a legitimate published source for the fact that "Amway has created more millionaires than any other business" and we can talk about it. I have never heard back from a distributor after asking for the source of this "amazing fact". [Back to Index]

"My employer is only paying me a small fraction of what they are making off of me"

This is another unfounded statement that distributors use. Let's play with some numbers from one of the most profitable and well-run companies in the world, General Electric. Using GE, we will be using the most favorable numbers, from the pro-Amway position, to show the point that most distributors just don't know what they are talking about.

GE 's 1997 sales were $90.84 Billion, had after tax profits of $8.2 billion and had 276,000 employees. Sales-per-employee was an eye popping $329,120/employee. This is outstanding, consider that the 100PV, non-retailing Amway distributors has distributorship sales of only $2,400/year! (Amway states that sales to active distributors were about $1,700) (One can't count downline sales, since the downline claims their sales for themselves) Most other companies come in below $200,000/employee. Now the after tax profit is $29,721/employee. Even if the worst paid employee were to get $11/hr plus 30% benefits, the total compensation package is $28,600/year. It seems here even with the best numbers that employees still gets at least half of what they earn for the company. This is not a very small percentage as distributors claim. GE also has invested equity of $8.23 billion or about $125,000/employee. Given the capital employed and the after tax profits, GE's return on equity is 23%. In less efficient companies, the employees will get much more than 50% of what they earn for the company. If you invested $125,000 in a risky business you would like it to earn 20%+ too. The capital must be employed in order for the people to earn the wages in the first place. [Back to Index]

 

"I'm saving money on what I buy, your price studies are all wrong"

I hear this quite often. It may be true that they are saving money, on some things. I also know what I found when I did my price study. To further the dialog, I ask the distributor if he has a personal comparison written down and if I could have a copy of it. I ask because I want to know the distributor took the time to look at the numbers for himself and honestly recorded everything. Of the numerous distributors I have challenged on this point, I only received two price studies. After looking at the comparison I saw that only core cleaning products were used. Sure you might be able to save on some Amway cleaning supplies, I never said you couldn't. The point that I make is that you won't save money by changing all your buying to Amway. Amway sells food, car care, catalog, electronics products, not just soap. I'm sure you would find the soap portion of a distributorship to be a very small percentage of total sales. Distributors think they are saving money across the board because they don't want to believe otherwise. If they proved it on paper that they were spending more, this would be very negative and underpin their business hopes. There was a guy from Hawaii who said how competitive the Amway prices were there. We agreed he would do a study at Wal-Mart and I will post it no matter what the results. I never heard from him again. This is an example of a typical distributor writing to me, a lot of talk but they never put up any facts or want to do any real work that would question the business basics. I'm only out for the truth. Show me your price study with 100+ items, across all products in comparable sizes, at discount stores and their generics and we can talk about it. I never hear back from distributors after this. [Back to Index]

 "Your price studies do not include the concentration items"

I get this all the time because the distributor jumped to conclusions and didn't look any further at the detailed spreadsheet with assumptions quoting equivalents from the SA6546-"The power of concentration". My studies included food, automobile, and non-consumable items. It just goes to show you how many distributors jump to conclusions without any study or analysis of the data at hand. Once challenged that I did include the concentration items, I never hear back from them.

Some of the Amway branded cleaning items are very cost effective. However, the usage rate is so low that the sales of these products cannot be relied upon to build a profitable business.

[Back to Index]

"Wal-Mart never sent me a check or gives me a rebate"

Wal-Mart never gives you a rebate, but who really cares? What difference does a 3% rebate make when you are paying 40+% more on average for the products from Amway? Would you want to save 40% now rather than get 3% back later? At Wal-Mart, you get your rebate immediately at the cash register. You don't have to wait to get if from your upline, and you needn't spend a minimum of $200 in one month to get a measly 3% rebate either. If you only spend $50 at Wal-Mart you still get your 40% savings on average over Amway prices. [Back to Index]

"I don't like driving to Wal-Mart. I save time, gas and expenses on my car. By the time I add all that up I'm saving money"

If you truly believe this is the case for you, then great, it is a positive for Amway/Quixtar. Go for it. This will be your target market. Exploit it. I typically do not make special trips to Wal-Mart, or the grocery. If a special trip were needed, that means I need the item right now and can't wait for UPS to deliver it in a few days like Amway/Quixtar. I catch Wal-Mart on the way to buy perishables at the grocery store or I can stop by the 24 hr Wal-Mart on the way to work in the morning when there are no lines. If there is a line, go back and get checked out in the Electronics Department, sporting goods, or the garden shop. There is usually no line. It amazes me how uncreative people are them they run into an obstacle like a line at Wal-Mart. The lemmings stand in line, the smart people find a better way. I find many distributors use this standard spiel of convenience to justify the existence of their Amway/Quixtar "business", and haven't really thought about ways they would optimize their shopping if Amway were not around. The pitch sounds good, but with some thought and planning the travel time and costs can be minimized. The slight amount or time and mileage added to other errands are certainly not worth the 40% cost premium I found to exist with Amway distributed products. [Back to Index]

 

"You need to buy from my own business to support it. If you owned a Wendys would you eat at McDonalds?"

This is an interesting argument. In business we call this the "make versus buy" decision. If I owned a Wendys restaurant my incremental out of pocket costs (variable costs) to take a hamburger from my own store may be a quarter or 50 cents. If I went to McDonalds, they are going to charge me full price and I'll pay a buck or so. You should ask the following question. "Can I get what I need cheaper from someplace else or can I get it cheaper in my own store". You need to know the costs of both ways to make a rational economic decision. In the case of the Wendys/McDonalds question, I will eat at my Wendys because my incremental cash outlay (variable cost) is less than McDonalds. I only pay the variable cost of the meal at my store. At McDonalds, I pay full cost which includes both fixed and variable costs. The fixed cost allocation could be greater than the variable cost. If however McDonalds sold hamburgers cheaper than my variable cost (raw material cost), and I liked McDonalds, I would be making an irrational economic decision to always eat at my Wendys restaurant, just because I owned it.

In Amway, you need to compare if the Amway price, less the bonus (variable cost) to your favorite discount store cost. Which ever is cheaper you should buy, if you are a rational and logical economic being. Paying more for an Amway product just because it is your business is irrational and illogical, economically speaking. In my price studies I found that I would pay 40%+ premiums with Amway over Wal-Mart. Even if I qualified for the Amway 25% rebate level, I might just break even with Wal-Mart prices when you consider a diversified basket of goods from Amway. If you had not gotten into Amway would you still be buying their products? If, before, you had gotten in Amway and you were satisfied with the "supposedly" lower quality store brands, why should you upgrade your buying habits and pay more just because you have an Amway distributorship now? If the Amway distributor cost minus the rebate, exceeds the competition what is the point? There is no other reward for having purchased Amway products. The only reason to by from your own store, if it is more expensive, is a symbolic gesture, to your downline, showing how much you like and adore the products, even though you could take them or leave them. If you don't buy the products, who is going to buy them? Most people shun the thought of retail selling in Amway. If you told them they need to retail product many will not get in. If a diversified basket of goods is more expensive at Amway wholesale prices than in a discount store, whom will you be competitive against when you add in Amway suggested retail markup? It is rather hypocritical if you ask me. It is funny that the millions of distributors who have quit just don't keep buying the product because it was so much better and such a good value for the money. [Back to Index]

"Amway earned $7 billion"

Amway did not earn $7 billion. They didn't even sell $7 Billion in product. They reported Estimated Retail sales of $7. Billion for 1997, and $5.7 billion for 1998, for an 18.5% drop in sales. In 1999 they reported $5.0 billion in sales, another drop of 12.5%. Distributors confuse sales with profits, and many don't even know the meaning of Estimated Retail Sales. Despite the currency translation losses in Asia, true sales still dropped $200 million in 1998. Additionally, new markets were opened in India, which should have increased total sales even if all other markets had not even grown.

Estimated retail sales, are not the actual sales of the corporation. It is the company sales marked up by 25% to estimate what all the product could have been valued at if sold at manufactures suggested retail prices. Since distributors consume most of the product the Estimated Retail sales number is used to make them look bigger than what they are. According to the May 11th, 1999 USA today article, Amway states that only 30% of sales come from the USA. This means actual US sales to distributors are only about $1.28 billion. Wal-Mart had actual sales of $106 billion in 1997. It would be very interesting to have Amway release the US sales figures and distributor counts year by year to see what the real growth rate of the US business is. Nothing speaks as powerfully as data! This way distributors could not hide behind the fact that as new distributors are recruited others are quitting. [Back to Index]

 

"If you spent the time building your business that you spent on this page, you would be a success by now. You are just a broke loser trying to blame someone else for your failure!"

First of all my interest in Amway was cautious. I was not going to go off half cocked telling all my friends what a great thing this was until I researched if for myself. I never had an "Amway Business". I had to buy a kit just to get more information on prices and the business rules. My upline would not lend them to me before I "joined". So I had to buy a kit. After a motivational weekend, I decided that if I were going to do this thing and repeat the lines of savings and efficiency, that I knew would make the business grow like crazy, I had better proved it to myself. That is when I started my price study. After seeing that most goods from Amway were not competitively priced, and analyzing the overhead/gross margin ratio of an average distributorship, I could not ethically repeat the things that initially interested me in the business. The economic claims that interested me just weren't true. I never showed the plan. I was never an active distributor. I had no sales other than the purchase of my kit. I never built the business because the business wasn't good enough for me from a purely business and competitive sense. [Back to Index]

"Your page is hurting people"

This is an interesting comment. I look at it as a win-win situation for distributors and for the people who will "blow-out" as distributors call quitting. According to the Amway web site, and Forbes magazine about 50% of distributors quit the first year. This means that a very high percentage of the population is misled about the work required, or not cut out for Amway as a self-consumer or business builder! If I were Amway, I would not be proud of this statistic, because it implies, at a minimum, that the prices and products are not more competitive than elsewhere, and people will not "just buy from themselves to save a little money". Additionally, if there were truly high value, competitively priced products, then it should be easy to get friends and neighbors to be customers so some profitability could be had in one year. If you could at least buy for yourself and save a little money, why quit the "Amway buying club"? Quitting is no doubt bad for both groups. Secondly, the business is not as easy as presented, and takes lots of hard, dedicated work. Since the products and the prices don't just "sell them selves", the distributor must become a skilled sales person, who recruits people to consume the Amway products, in the name of supporting their own small business.

People who "blow out" might have wasted a lot of time, several hundred if not thousands of dollars, and a tremendous amount of mental effort on their "Amway business experiment". The sponsoring distributor is also upset because it is not a good feeling to see a hard won recruit up and quit. It cost the distributor time and mental effort as well.

Now comes a site like mine. New people looking at the business can see new ways of looking at the "opportunity". Many site readers frankly don't understand the business and economic ideas presented in my pages. Those that understand this type of thinking may formulate the same thoughts and opinions later after they have already gotten involved. If the rational and logic make sense to them now, then there will be a good chance that a later exposure to the logic will make them question the whole thing and quit.

"By the way-Thanks for presenting this Article on the internet-One of my new recruits read your article and I think she will probably quit. These types of articles let me know who has the will to build the business and who doesn't." IBO site visitor

So in effect I am helping distributors with, what we call in manufacturing, the "first-time yield". Those that see no logic or rational in my page, will join and probably stay in, decreasing the percentage of first year distributors who quit. Those that see the page and to whom it makes sense will probably have blown out anyway. Many site readers, who are distributors, have commented that my page helps them. They make their new people read it to understand the common problems and integrity of Amway recruiting. [Back to Index]

"Amway works"

Certainly Amway works for a very small percentage of those in the business, hey 15 out of 750,000 make a million a year or more according to Amway, so I can't say it doesn't work in an absolute sense. Any business, no matter how bad the fundamentals are, will work for a few. From a rational business sense, Amway does not work very well. It would work better, for more people if they had at least a higher rate of sales growth, or more sales to non-distributors and non-building distributors. A rational business person would not enter a market with flat or negative little sales growth (Amway sales dropped 18.5% from 1997-1998, 12.5% for 1999, or a 28% drop in two years). Distributors lose money as a whole distributing Amway product. So I ask writing distributors what the point is, when the majority of distributors lose money and the sales are not growing fast enough to "grow" people out of the losses? Only one distributor has argued against the rational or assumptions of my pages "Amway - a negatives sum game", or "fun with math!" pages which mathematically show how distributors on average are losing money on their business. We agreed that the program of "just buying from your self" would not generate enough volume and margin to make a distributorship profitable, given typical "system overhead costs". If, however more people would retail products, and sell to non-building distributors, it could be a very viable business. [Back to Index]

"If people just showed the plan 10-15 times/month, they wouldn't be losing money"

This is an interesting come back. With the current business model being employed, people would still lose money in the same proportion as they do today. It is assured mathematically. By showing the plan more and bringing more people into the "negative sum game", it only increases the losses downline. As the number of people in the "game" grows, so do the absolute total losses of all distributors as a whole. See Amway - a negatives sum game", or "fun with math! Until a large majority of people want to buy Amway products for the sheer value of the products and service, there will not enough gross margin being generated by the "self-consumption" distributor business model to overcome the normal and customary overhead expenses of a distributorship.

Secondly, this come back assumes there is enough "untapped market" left so that there are enough people who haven't seen the "plan" to become interested and join. Based upon Amway sales data, it would suggest that with current business model and product price level that there is little "untapped market" left. A huge "untapped market" would show itself by positive double-digit sales growth. Amway had negative double-digit sales growth last year. People are voting with their feet and they are walking away from the opportunity faster than they can get new people interested. This is a very tough recruiting environment! It will be interesting to see how many of the new Quixtar distributors hang on for more than a couple of years.

Distributors as a whole will lose money as today until the "self-consumption" business model is changed or the overhead costs are reduced. [Back to Index]

"Distributors who lose money have only themselves to blame. They spend the money on books, tapes and seminars, but just don't show the plan enough to build their volume"

This is true. If money-losing distributors could get a downline then they would not lose so much money. The negative sum game however ensures all people on average will lose money and the number losing money will always be greater than those making money with the "just buy from yourself " business model. What is interesting to me is that distributors are mentally conditioned, a.k.a. brainwashed that only losers quit the business. To quit is the ultimate embarrassment in Amway. To quit is to actualize that you are a failure in Amway (it is supposed to be so easy anyone can do it!). So, if they hang on and don't quit at least they haven't "realized" their failures. It is a similar analogy to an investor who has losses in a stock and doesn't think he has a loss until he sells it. Hey, there is always the chance it comes back! Just like the distributor who won't quit, he might one day become successful. It is ironic that money making distributors know these people won't show the plan and won't do what's needed to make money, but at the same time continue to let them spend their money on the tapes and seminars. I guess the upline doesn't care. There is good money to be made in the tools. Why tell a good customer to stop wasting his time and money? These people are at least needed to buy the product and later turn in the 60% of all distributors who don't build the business. So much for high integrity people in the business.[Back to Index]

The `"Plan'' was designed to have a NEW person GO 1000 PV the first month. I.e. Profitability!

This is an interesting comment. In the ideal situation you need yourself and 4 people to do 1000PV/month. If everyone were to join and be at 1000PV in one month, then in 12 months 244 million people would be in Amway. To go further, it has been said to me that after the first three "no's" people quit. This would imply a "hit rate" of less than 33%. At a 25% hit rate, then you need to prospect 16 people to get 4. The entire population of the United States would have been prospected within 7 months. In less than 9 months you would have the current distributor count of 750,000. In theory, it is an interesting idea, but in practice it doesn't work. Maybe "100PV the first month" plan the doesn't work because the economy doesn't value the Amway method of promoting and distributing goods, implying it is less efficient than other methods. [Back to Index]

"The overhead costs of an Amway distributorship are low when compared to a traditional business"

This is true. They are comparing the overhead costs of other businesses, and how they can't match the absolute low costs of an Amway business. The expenses of Amway could only be between $1,000 and $3,200 per year, even more if you drive a lot out of town to recruit people. I agree the sheer dollar amount is low, but correspondingly the sheer sales dollars of an Amway distributorship is also very low! Take for instance a self-consuming distributor doing little or no retail sales, trying to build his downline by saying "buy from yourself and show others how to buy from themselves". At $200/month the sales of this distributor amounts to about $2,400/year. One cannot count the personal consumption sales of the downline. These sales belong to each downline distributor. One cannot double count sales, as is done with Amway "pin levels". In effect, the absolute low dollar terms, the overhead costs of an Amway distributorship is not even exceeded by the sales volume of that distributorship. Typical distributors are spending more dollars on their business overhead than their distributorship has in its own sales! A typical self-consuming distributor is generating about $600/year in gross margin, which can be divided up inside a direct distributorship. So yes, the overhead of a distributorship is low, but the sales are so pathetically low that on average all distributorships will be losing money. [Back to Index]

"Procter & Gamble spent $1.5 billion on Advertising. Amway spent just $10 Million. Those advertising dollars go in the Amway distributors pockets."

True, the money Amway doesn't pay in advertising can be made available to distributors so that they can do the product promotion. P&G had 1997 sales of $35.764 billion, and advertising and marketing expenses of $3.468 billion. I guess Amway forgot about marketing costs in their comparison. The USA Today article only listed "advertising" expenses. Anyway, advertising and marketing come out to 9.7% of sales. From "Fun with Math", actual corporate Amway US sales were $1.28 billion. My estimate of cumulative Amway distributor marketing expenses is $718 million. At most, US Amway distributors earned $511 Million from Amway bonuses and retail markup, compared to the $718.million they spent promoting the Amway product line. This makes the real Amway sales and marketing expenses amount to 56% of sales! (.718/1.28) Amway distributors spend over six times more per sales dollar than P&G to promote Amway products! I did not even include the estimated time spent by distributors promoting their businesses of 169 million man-hours! This is true inefficiency! [Back to Index]

"Didn't you pay to go to school. That cost money. You are paying for education and training with the tools"

Education and training are important, no doubt. The problem is a business problem and not a problem of needing or not needing education and training. The problem is that "distributor continuing education" through books, tapes, and seminars can at a minimum cost $800/year. This figure only includes standing order tape, and 4 functions at $125/ function including T&L.

In relation to the business, a self-consuming distributorship has sales of $200/month or $2,400/yr. $800 in "education" turns out to be a huge fraction of the total sales. Each down line "owns" his own sales. Logically you can't count downline sales as yours if they are "duplicating" what you do. Since each new 100PV/month distributor brings in about $600 in gross profit to a group, the distributor just spent the total gross profit he brought to the group in "Continuing Education costs". This is not a one shot deal like going to college, they happen every year! No profitable business in the world has training costs equal to 1/3 of gross sales or 133% of gross-margin, as is the case of an Amway distributorship! In the General Electric example above, the company could afford to spend $1,000 or more per employee because that employee generated on average $329,000 in sales/year. $1,000 in training costs comes out to be less than 0.3% of sales where an Amway distributors spends 100 times more as a percentage of sales or 33% of sales. Training and education are not bad it is just the small absolute sales and gross margin of an Amway distributorship cannot support the upline recommended amounts of training and still be profitable for all involved on average. As long as all the distributors reproduce these costs, and have little outside retail sales, everybody will lose money on average. [Back to Index]

"Cassette music tapes in stores cost $6 or $7, what's the problem with making money off of tapes or tools?"

There is certainly nothing wrong with making money on tapes or seminars. Free enterprise is free enterprise. If people will buy them, then sell them. I just see a very large conflict of interest, and an integrity issue, which can easily be abused. Many new distributors are never told that the uplines all benefit by each tape they buy; those tapes that were recommended to them for purchase by their upline. The weekly purchase of a $6 "standing order tape" (SOT) puts at least $5/distributor in extra gross margin into the uplines businesses. Now everyone knows why high level distributors recommend new distributors order the weekly SOT. If the distributor were a 100PV/$200/month distributor, then he is only generating at most $13/month ((31.5%-25%)*$200) in bonuses and rebates for the complete upline over direct distributor status, but just one SOT distributor will generate $20/month/distributor in gross margin! If a new distributor kit comes with, say, 10 cassettes or so (this depends upon your organization) you bet your upline DD and above were very happy you joined as they cleared more profit on the sale of the cassettes than they did on the product in the kit. There was probably $50 worth of margin in the tapes, and only around $7 in product related rebates and bonuses to the high pins. Over the course of a year, at $200/month a distributor would produce about $156/year ($2,400*.065) in gross margin for those above DD. If this distributor bought SOT, 20 recruiting tapes/year, and attended four functions he just generated about $460 in gross margin for the upline or about or almost three times the gross margin from Amway product bonuses! Again, it is not bad to make money on the tapes. It only presents an integrity issue when the margins are so attractive.

The real business of the high pins turns out not to be promoting Amway product, but actually selling tools and motivational supplies to lower level Amway distributors who are really promoting Amway products. The new distributors think the money is in the Amway rebates and bonuses, when their "high integrity" upline is more concerned about selling tapes books and seminars than Amway product. It would seem to me that if the real business, of the high pins, was to make money from Amway rebates and bonuses, they would reduce the cost of tools so that more distupidors could be profitable sooner, and expand their business faster. I had a 20-year Amway, supposed high pin, write me. I asked him if he could maintain his life style today on the money he makes from just Amway and not tools. He avoided the question and never answered it. He had also stated that some organizations are setting up rebates and bonuses schedules for tools in their organizations. To get around the problem of only high pins making money on tools. This is an interesting concept as the organizations can now just sell themselves tapes; books and seminars. They won't need Amway anymore to sell each other product. What are they going to do; raise the price of tapes so that there is more money to give away to the low distributors? Pretty soon they will be selling each other tapes and holding seminars to teach themselves how to improve their tape and tools business! [Back to Index]

"You must be a democrat and you probably voted for Clinton"

What would posses a distributor to say such a thing, I don't know. I don't know what difference it makes either. It if matters, I vote republican most of the time. My site is here to tell the truth and present alternative views to the "wonderful Amway opportunity". I have few rational debates with site readers; all the others have chickened out or couldn't debate rationally and logically. [Back to Index]

"I am curious. Do you have a relationship with Wal-mart and Proctor and Gamble?"

I have no relationship with P&G and Wal-Mart. Maybe one of my mutual funds has stock in one or the other but I have no ties to either of them. In a competitive analysis, for business, one only need look at the biggest competitors in the market place with PUBLICLY available information. The use of Wal-Mart is made because Economist Paul Pilzer, a paid spokesman of AQMOs, has said Wal-Mart is the most competitive method of distribution. When I was researching Amway, distributors claimed that Amway was very efficient at distribution. I wanted to know the truth so I ran the numbers myself. Wal-Mart distributes a wide array of commodities similar to what Amway distributes. The financial information, via the annual report is available on the WEB. P&G was also chosen since they manufacture products most similar to Amway and has PUBLICLY available data on the WEB. The first PUBLICLY held soap company that pops into my mind is P&G. Are there any others that pop into your mind? I believe Lever Brothers is a company based in the Netherlands, so currency translations and overseas differences in overhead costs would cloud the results.

If I did not use Wal-Mart and P&G, whom else should I use that have data so easy to collect? To me the choice was the most logical I could make in order to make an economic comparison.

My research is just manipulation of data from the annual report. Anyone who has attended a primary course in managerial accounting can easily perform such analysis.

My site has cost nothing to administer. I get the server space free as a benefit from my ISP, for which I pay $170/year. I believe AOL would cost about $240/year, so I pay no premium. The search engine listings were free. I write my pages in Microsoft word, so it is only my time at stake. Using true Amway hype and logic, since I do use Microsoft products to write my page, that makes Bill Gates, Intel, Toshiba, 3com and Microsoft are all partners in my page! [Back to Index]

"Apparently you haven't consulted with the Federal Trade Commission"

The Federal Trade commission has only ruled that Amway is a legal pyramid scheme and not an illegal pyramid scheme. The FTC doesn't endorse Amway as a good business opportunity. It only says Amway is not engaged in illegal activities. No where in my site have I said Amway or its distributors are violating the law. [Back to Index]

"How can you do an analysis on Quixtar when it doesn't launch until 9/1/99?"

The same way Amway IBO's can promote Quixtar before it is launched on 9/1/99! [Back to Index]

"Quixtar is not just Amway on line"

Amway distributors will have transparent access to all Quixtar features. All they need do is join Quixtar. They are allowed to operate both Quixtar and Amway distributorships if they wish. Quixtar shares so many of the same features of Amway that the are nearly identical. [Supporting WEB page] [Back to Index]

"Microsoft has partnered with Quixtar"

Microsoft is nothing more than a vendor to Quixtar. They have no equity investment in Quixtar. The "Microsoft Partnership" is a masterpiece of Ama-spin, created by Amway and perpetuated by distributors. Amway knew its press release would be taken out of context, but they had to give Quixtar a sense of credibility. They couldn't use the Amway name due to its reputation, so they name dropped Microsoft instead. Entangle the press release with "partnership" and you have a wild fire in the ruthlessly efficient AQMO information (rumor?) system. How many people are going to join because they think Microsoft is promoting Quixtar? Quite a few from all the e-mail I see. People respect Microsoft for its prowess in the Internet and computers. Who wouldn't want to be in a business that the richest man in the world's company just partnered with and is to be the next revolution in distribution? This is an excellent example of how simple facts get blown out of proportion in the Amway/Quixtar rumor mill. If they can hype and misconstrue such a simple idea, how can one trust other "Ama-facts" coming from distributors/IBO's? This only goes to show you that most distributors have no idea what they are taking about. If they can't even get a simple fact straight like the "partnership", how can you believe that the majority of people are making money in Amway? Maybe they just assume people make money in Amway like they make assumptions about the Microsoft "partnership". [Back to Index]

"Amway is systematically shutting down negative WEB sites such as yours"

Short of me e-mailing abuse@quixtar.com for specifics on Quixtar, I've had no contact from Amway. I have just completed a subpoena in the P&G .vs. Amway suit. My site has been up since Feb 28, 1998, and I have not had one Amway initiated correspondence about the content of my site. Amway has not written me or detailed any numbers on my site which they feel are in error. I would be more than happy to engage in a logical and rational debate about the business and economic aspects of the Amway business opportunity as run by the AQMO's. The more statistics Amway could provide the more people could evaluate the "successfulness" of distributorships overall. The conclusions for my calculations are my opinions only. Site readers can take them or leave them. As long as I do not libel or slander in my site, I am within my First Amendment rights to free speech to have this site up. Sidney Schwartz took his Amway the Untold Stories site down due to a lawsuit, in which Amway named him as a defendant. What I understand is that Amway alleges that Mr. Schwartz was being paid by Proctor and Gamble to post his negative pages. The other site, "The other side of the plan", was removed by the author for personal reasons. [Back to Index]

"Anybody can make numbers show what they want"

To some extent this is true. I give a complete list of assumptions and in many cases step-by-step show the calculation in my pages. Uncritical thinking and dream filled distributors disregard the numbers altogether. The calculations are not complicated. Any high school business course student could do them as well. Distributors don't take the time or the effort to understand the calculations, and the business ramifications from them. Distributors will tell me my calculations are incorrect but then won't tell me what details are flawed. I guess because they saw a few guys parading around at a seminar, as if they made lots of money (they never saw the tax returns and sources of income for all these successes either), then they have to believe they will some day be rich too moving Amway products. I guess it is much easier for dream filled distributors to wholesale throw out a rational and logical argument because they are too lazy, incompetent, or don't want to really know the facts and spoil their dream. Like Peter Lynch, the famous mutual fund manager, said, "People spend more time researching the purchase of a new refrigerator, than they do an investment of several thousand dollars". I guess the same goes for Amway/Quixtar distributors who spend lots of time researching the business by attending motivational seminars rather than researching and understanding the business numbers. [Back to Index]

I got "LAZY" just as YOU DID but I WILL NOT blame Amway for my mistakes

I'm not blaming Amway for anything. I'm just pointing out the very poor business fundamentals driven by the AQMO overhead costs, and poor product price competitiveness. If you want to blame yourself for being lazy, that's your beer. Maybe if people were actually excited about the good deal they get from Amway products the business would have grown faster. Just maybe, if people thought they saved money with Amway, the "market" would have rewarded your business with a higher growth rate and it would have not been so difficult to get people to join and buy product.

I think the only thing that Amway has proven over and over again is that it offers very little to the economy in the United States, and that is why Amway and your business in the United States did not grow faster. Your comparison of success of Amway in the USA is no more than saying a lottery is successful because of all the people who won a jackpot, even though most of the people lose money playing the lottery.

"For centuries people have been willing to pay more for a lottery ticket than their chances of winning would justify, because they are captivated by the possibility, however remote, of a big score."

Alan Greenspan - Federal Reserve Chairman

If you want to push a box down the street will it be more effective to use a stiff stick or a use string? Selling products with the Amway prices is like trying to push the box with a string, there is no competitive advantage which the MARKET recognizes, and that is evidenced by is sub par sales growth in the US when compared to a faster growing competitor like Wal-Mart.

Maybe you are on the opposite side of the market in this case since the majority of people who read my site KEEP their money. They know their dream isn't big enough to cause them to be stupid enough to try to push uncompetitive Amway products in a business where the overhead costs are most always higher than the distributor's personal sales! [Back to Index]

If you spent as much time working Amway as you did putting together this page, you would be Crown!

 I have a few hundred hours in my site. I can safely say I have saved other people hundreds of thousands of hours by having a concentrated source of critical business information about Amway/Quixtar. Site visitors can make an informed rational decision about Amway/Quixtar. People who tell me I can be a Crown distributor in just a few hundred hours of work must not understand how much work and effort are required to be successful in Amway. The statement is a great emotional outcry but totally lacks rational thought. It just goes to show you how irrational some distributors are. [Back to Index]

"Quixtar will do $100 billion its first year"

This is a great statement, which shows that distributors have no concept of business or numbers. The US sales to Amway distributors amounted to only $1.28 billion. A jump to $100 billion implies a growth rate in one year of 7812%. I don't know of any corporation, which could handle such a growth rate in one year, starting already over a $1 billion. Even if Quixtar were to sell half of this through partner stores it means the number of US Amway distribution centers would have to be increased over 35 times, in one year. I doubt the Amway Corporation would have the free cash, or cash flow to finance such an aggressive expansion of buildings as well as stock them with product. Even if they could build the distribution centers the current low unemployment situation would stem their ability to actually pick the orders, and get them sent out. This is just another example of Ama-hype used to try to build credibility for their poor business opportunity.

Quixtar reported for the first two weeks of operation, only $1 million in sales. This is only 26 million annualized. Sales are far short of 3-4 billion the first year, let alone $100 billion. Sales at Quixtar were reported to be $250 after 6 months. See analysis of Quixtar year end press release. [Back to Index]

"Why are you so negative"

I don't think one is "negative" when anything is looked at in a critical light. There are obvious business and economic flaws with the Amway AQMO business model. Is it ethical to just ignore these in the name of "not being negative". The main purpose of Amway is to make money. Since the majority of Amway distributors are not making money when they run their businesses, how can one say it is "negative" when the original intent of the business is not being fulfilled? [Back to Index]

"I have businesses in several states"

Amway IBO's claim are they independent business owners. They do not own their downline's businesses, even though they claim they have businesses in many states or even several foreign countries. This is just one more form of hype and half truths IBO's use to deceive people into thinking their Amway business is something more, and bigger than it really is.

"Amway has been around for 40 years. It can't be a scam"

True, Amway has been in business for over 40 years. Despite being in business in the USA for so long, US sales to distributors is only $1.28 billion. Wal-Mart in contrast has been in business fewer years than Amway, but has US sales over $100 billion. How can Amway stay in business in the US despite the continual fallout of new distributors? It is very simple. New IBO's replace those that quit. Amway is just a giant merry-go-round. New, unknowledgeable people are brought into the system. Since they have just less than 50% turnover each year the new "dream filled" distributors are stocking their shelves with Away products, making up a tidy sum in sales before they quit. The small fraction of superior salesmen and motivators stick with it, keeping the merry-go-round spinning for years and years. Assume for instance of the 750,000 Amway Distributors, that 100,000 of them never quit, and that the remaining 650,000 turn over in a period of 5 years. If each distributor buys an average of $2,400 of product the first year, and 125,000 the distributors are turned over each year, then $300 million in sales come from new people. One quarter of US sales could come from first time purchasers by new distributors trying to buy their way to 100PV ($200 sales) each month. That is why growth seems so fast for new groups, and slow for older existing groups. After the first year the new distributors have filed their household with Amway distributed products. Personal consumption tapers off in the subsequent years after they cannot interest others in the plan, and they discover they were not saving any money. It would be very interesting if Amway had the credibility to release retention information based upon number of years in Amway.

As long as Amway can keep pushing the dream of having your own business and retiring in 2-5 years, there will always be people ready to try Amway, and see if it works. [Back to Index]

"Our functions and tools cost a lot less than Zig Ziglers, Anthony Robbins or any of the other motivational speakers!

These people are in the motivational business, I always thought that you were in the Amway business!

"I am almost a direct distributor and I will be making $4,000/month"

 Amway/Quixtar distributors like to brag about their GROSS income of their business but rarely tell you the NET profit from the operation, once downline performance bonuses are paid, and business overhead expenses are subtracted. If the downline is vary narrow then it will all get paid downline, and you will keep very little of the gross profit. If the downline is very wide it is much more profitable but also unstable since people below you have not the "cash flow" through them to imply that profits are just around the corner. In a wide downline people must love the products, service and the prices in order to keep them buying. If your business has a good portion in retail sales to personal customers, it can be profitable. Most distributors rely on "networking" to build sales rather than getting solid retail customers. [Back to Index]

"The team I joined is very open, and very professional in the way they build this business"

The fact is, every LOS says the same thing. OK, let's see how different your team is from *other* teams.

When you prospect someone, do you let them know that they are taking a look at Amway/Quixtar during the contacting/inviting stage or do you avoid mentioning it? If you avoid it, you're no different than other organizations

When someone asks you "What is this?" Do you have a ready answer that dances around the question and avoids saying Amway/Quixtar? If so, you're no different than other organizations.

If someone asks you "Is this Amway" do you answer the question with a question like "What do you know about Amway?" (Or something similar)? If so, you're no different than other organizations.

Do you tell people that they will save 30% over what they are currently spending at the store? If you do, you're lying like other organizations.

Do you toss out any facts/statistics that is designed to scare people about their financial future ... ie ... most small businesses fail in the first 5 years, cost of college education for children, the future of social security, how a j-o-b just cannot provide financial future anymore and how this business is the vehicle to achieve their financial goals? If so, you're no different than other organizations.

Do you discuss the high turnover rate in Amway with people you sponsor? Do they know that every year they will be replacing half of their organization? Do they know that on average, only 1 out of 122 IBOs are directs? If they don't, then you're no different than other organizations.

Do you tell people that selling is optional, even though Amway/Quixtar's rules and regulations specifically state that in order to earn a performance bonus a certain amount of retail sales ARE required? If you do, you're no different than other organizations (and possibly violating state and federal anti-pyramid laws).

Broke loser, stinking thinker, wimp, whiner, weanie, failure – are words like this in your organization's vocabulary to describe those who say no to the Amway/Quixtar business or quit? If they are used, then you're no different than other organizations.

Are people encouraged to cancel magazine/newspaper subscriptions, cable tv and depend on their upline for all the information they need? If they are, you're no different than other organizations.

Are people encouraged to associate with POSITIVE WINNERs instead of broke losers, stinking thinkers, wimps, whiners, weanies etc who said no to THE BIZNESS? If they are, you're no different than other organizations.

Are people encouraged to skip family events, no matter what it is, when there is a conflict with a "function?" If you do, you're no different than other organizations.

Are people encouraged to lie to their employer's to get time off to attend functions? If you do, you're no different than other organizations.

Is the upline the supreme counselor on anything regarding your life? Is the upline all of a sudden more interested in your future than the family and friends who have known you and loved you all your life? If that's true, then you're no different than other organizations.

Is the "secret" to success in your organization THE SYSTEM (books, tapes, functions)? Has nobody every made it without THE SYSTEM? Is THE SYSTEM 100% optional but 100% necessary? If so, then you're no different than other organizations.

We could go on and on ... but I think you get the picture. You may have a few phrases that are different, but the tactics and techniques of Amway's distributor's force haven't changed much in decades. You may think your LOS is different, but it really isn't. [Back to Index]

"Quixtar was larger then Wal-Mart, Sears and Home Depot combined"

Quixtar reported sales of $100 Million for the first 90 days of operation. Annualized it amounts to $400 million. Wal-Mart did $160 Billion last year. It is obvious many Quixtar distributors do not know what they are talking about or they take their audience for fools. [Back to Index]

"No one in this business makes money until you do"

 "You [the Direct Distributors] present the wonderful numbers on the blackboard about all the money they [distributors] can make. Maybe you ought to tell them about all you're going to take from them [with your tool businesses] before they make any. Maybe that would be the rest of the story." Rich DeVos 1982 - Co founder The Amway Corporation- Directly Speaking tapes [Back to Index]

"I net $1000-1500/month in my business"

A distributor above 4000 PV with a very wide downline might be able to actually net this when having low overhead, and having retail sales. The real issue is how much time they are working the business. At 4000PV these people have to be hustling in the business. They are most likely showing the plan 2-3 times/week as well as attending several meetings. For a husband and wife their time commitment is 9 hours/week showing the plan (4.3 weeks/month=38.7 hours), add in another sixteen hours for meetings and phone calling secessions, 54.7 hours now 2x for the wife, or a total of 109.4 hours/month. So they have signed up for $13/hour job @ $1,500/month. Not bad money part time but if the net slipped to $1000, then it is $9.14/hour. top[Back to Index]

"Amway has taught me money management skills"

This is most likely true. People coming to Amway are in lots of cases strapped for money. These people will not make "good" Amway distributors because they don't have the free cash to buy tapes or spot a couple of hundred dollars in tickets for a motivational seminar, or even products. In order for the upline to market the new distributors his "life improving motivational system" he must teach them how to more wisely spend their money and set their spending priorities. These priorities being first to spend money on standing order tape and to attend all functions. If there is money left over to buy Amway products then it is of no consequence. The tapes and seminars are more profitable to an upline anyway. So yes, people learn how to prioritize their spending, but it is from one type of good to another. [Back to Index]

"People don't show the plan enough. That is why they fail"

Certainly people need to show the plan in order to grow their Amway/Quixtar business. This rebuttal will focus on why people don't show the plan versus those that have shown the plan and still failed to be profitable. See my case studies page for those who followed the plan and still didn't make money

Since you are not allowed to advertise on the web or open a store to sell Amway products you must rely on the "personal touch" and networking aspects of the business and show the plan. Why don't more people show the plan? Most uplines condition their downline to believe that "they lack self esteem" or "use the wrong approach" when contacting people. Others like the site visitor below know the plan they show is full of holes.

"It was hard to Show The Plan (STP) to people when the numbers I show people are wrong " IBO Site Visitor

I look back at my own experience to understand why others might have a problem showing the business. I got interested in Amway because I was told it was a more efficient distribution system. Once I investigated the facts, I found Amway was even less efficient than other methods of distribution. The higher prices Amway charged over discount stores as well as all the time attending meetings, recruiting, and traveling somehow seemed an awfully complicated way to "sell myself $200/month worth of goods". I did some calculations and found that there might be some money in it if people liked the products but most likely the money spent on seminars and tapes would keep everyone unprofitable for a long time. Putting all this together I could not really get excited about the business from a fundamental business viewpoint. It lacked competitive advantages except for the fact you could "earn money off sales of others".

The facts did not add up to me. Now come the people who don't think like I do. They are excited about the potential of business. In the back of their mind they are not convinced that the products are a real value they can tell their friends about. They see no overwhelming advantage with the products. Other than the fact that one can network (build a downline pyramid and earn from their sales), there is nothing else to tell their friends about, except possibly the warm and caring atmosphere of the "Amway experience". It is not like walking into a Wal-Mart for the first time and being truly impressed by the prices and selection. Since the distributor is not completely sold on the products, prices or service his confidence is not sound. The distributor is unsure this is a good thing. He is only relying on faith that people are making money in it. A lack of confidence is confused with a lack of "self esteem" and no motivation to show the plan. The reason people don't show the plan more is that on the very core level they don't believe Amway offers better value than the competition. They have only one advantage to sell the business on. That is the Networking aspect. They will be selling this well before they ever know if the networking even works. This is a complete leap of faith and only a few people will make it. Further investigation shows that the networking aspect is so time consuming and expensive due to travel that the potential profit from the product's side of the business does not justify the effort or time. That is why the tools bonuses and kickbacks from motivational seminars came into being. The additional revenue from these sources makes it worth while for an Emerald to drive all over and show plans for people, and the diamond to impress people by flying people around in a plane.

In my opinion people don't show the plan because they are not convinced the products offer significant enough value to interest people in the business. The dream of being rich is the main selling point, and not superior products at a great value. Only those who can sell the dream will be successful at Amway/Quixtar. Like they always say to me "It is a people business".

"The reason why people do not take action is typically because they have fear and doubt. Confusion creeps in. Therefore they will be afraid to contact someone who is really sharp and very ambitious" Tape PM-44 "No Apologies" Diamond Direct Distributor-Joe Markiewicz.

[Back to Index]

 

"What makes you an authority"

Well I never said I was an authority. I do have a graduate degree in business if that helps. The arguments laid out on my site are simple common sense and logic. For instance the negative sum game. If IBO overhead is not kept in control then it can come to pass that IBOs will spend more to run their business than they generate from their self-consumption. If they buy $200/month on average, with no retail sales, but spend more than $600/year on average they will be losing money on average. Some will make money, but most will lose money. That is proven with mathematics, you needn't take my word for it. I need no implied authority for people to see this for themselves. We can of course debate the assumptions and the degree to which people are building the business and degree of retail sales but the math is pretty simple in any case. Bring in retail sales like they should be, and have lots of non-building IBOs and you too can have a profitable and thriving Amway business. I point this out on my site as a weakness in the typical AQMO business model. Why aren't there more retail customers for Amway distributors? [Back to Index]

"You have not actually tried to do it yourself to see if it works. How can you judge a Chevy if you never owned one?"

This is a very interesting comment.

When you buy a car, you might look at the available data to help make a decision. You can't possibly afford to buy each and every car to see which one is best long term. You don't even have time to test drive every car as well. You could of course look at data such as rates of repair frequency, cost to repair in an accident, or even better yet how many are on the road in proportion to other cars. If you looked at sales growth numbers you would also find out which ones are more popular, via how people are "voting" in the market.

If Honda sales were not growing and had a 28% drop in two years, would you think the market thinks they still make a great product? If the factory did not burn down, I would be asking what was wrong that caused the market to stop buying their products. If 50% of Honda owners sold their car in the first year versus other makes which only had 20% turnover in the first year would you think people are discovering something is wrong with their vehicles? If 50% of the people that went into Wal-Mart never came back, do you think they would have grown to be $160 billion in fewer years than Amway's $5 billion at guestimated retail sales?

Taking this comment to the limit it means that we should jump into anything and everything without first giving it any thought. This comment means that we should not trust ourselves to make a rational and logical analysis using data and observation before we do anything. We must try everything blindly, as our judgement could always be wrong, and it might just work for us despite our analysis. This argument means we should not use our mental facilities to help steer us towards opportunities that might have a higher probability of success, and steer us away from those with lower probabilities of success. To go back to Peter Lynch, he would study the numbers of a company first to see if it first met his criteria for investing. If a company's sales fell, say 28% in two years, and 90% of its stores were unprofitable, would you buy the stock? Would you move on to another investment, which has better fundamentals? I would dare say the investor who ignores these fundamentals in the business and the technical condition of the stock chart would most likely lose money when purchasing the stock. Many people can and do buy stock on a whim. A few lucky ones will make money, and some will lose money. The best and most consistent stock pickers use some sort of criteria to select stocks, or follow a proven routine such as index investing. One might argue that Amway has a proven system. Data concerning distributor dropout rates, poor levels of retail sales and sales growth would also tell me it is not practical for the average guy. Some will make it. The mathematics ensure this since Amway is nothing more than a merry-go-round with its 40%+ annual drop out rate. The poor recent growth of Amway sales (-28% in two years) also assures mathematically that the number of successful people in Amway also is growing poorly, most likely even shrinking. You need growing sales, to grow the total number of qualifying direct distributors. If Amway/Quixtar sales are flat it only means that new people are just replacing quitting people. If another's business is growing, then someone else's is shrinking. I guess I would rather work a business that the market is rewarding with good growth rather than being in a business that is shrinking.

So here I am routinely criticized for having not worked the business, when I used business analysis techniques to weight the fundamentals as a potential business opportunity and make my decision from that. The business reasons why I don't do Amway are on at this link . Should some of those fundamentals change, most importantly the growth rate in sales, I would have to reconsider my decision. If it isn't growing in aggregate, why waste my time? [Back to Index]

"Where did you obtain the data in your site"

Since Amway does not release data in tabular form I have accumulated the data made public each year by Amway in their annual sales press releases, and from positive books on Amway. The sales of Amway Asia Pacific and Amway Japan were obtained from their annual reports. The summary of Emeralds and Diamonds was accumulated from the Amway Amagram magazine. Distributor overhead costs came from my own observations in the Florence line and from site visitor responses. Tax court cases came from a law data base. Divorce court records came from the actual court record. [Back to Index]

 "Amway has "sticky" customers"

Amway's reports annual renewal of distributors at just better than 50%. This means that just about 50% of potential customers or one-time customers don't come back. I don't think Wal-Mart was able to grow to its current size by having just under 50% of its customers not coming back. I wouldn't exactly call 50% renewal a loyal customer base. Why not write Amway and ask them for historical data on new signups, renewals, as well as renewal by years in the business? Amway can deliver its IBOs to a partner store web site, however these are typically not the same customers over time. As soon as an IBO loses interest in "supporting his own business", he sees no other major economic advantage to shopping at Amway and drops out. [Back to Index]

"Partner stores pays Quixtar distributors a 25% commission for referrals"

It is true at just a few partner stores that at total commission of 25% of sales could be paid. This is the classic "Amway/Quixtar diversion". They pay 25% of BV (Business Volume). $1 in sales is not always 1 BV point. This means a store that paid 100%BV would get the full 25% or $0.25 for every $1 in sales. At the more popular, mainstream partner stores the commission is 20%BV of sales $'s for IBO and 10%BV for members. This means that 20% of each dollar in sales is eligible for the 25% commission. A $100 sales would generate $5 in commission. A far cry from the implied 25% commission. At Bass Pro shops where they pay 12% of BV out, this means a $100 purchase would generate a referral commission of at most $100*12%*25% = $3 to the distributors at the direct level and under. This same sale to a Member would generate $1.50 for the group. It is not so attractive as they hype it up to be.[Back to Index]

"WWDB is a nonprofit corporation. Tapes are sold at cost"

It is not true that WWDB is a nonprofit corporation. A quick call to the Washington State Secretary of State reveals that the World Wide Group is a for profit Limited Liability Company. In other lines of sponsorships the tape and seminar profits help defray the huge travel and promotion costs of upline Diamonds and Emeralds so that they can keep more of the Amway products income. Public Court documents of an Executive Diamond in the INA organization where his business results were published showed gross revenue of over $1.5 Million, and a business net profit of $302 thousand. 80% of his revenue from Amway and INA was spent on promoting the business. In the case of WWDB, they might be able to shoulder the burden of many of the Diamond's overhead costs of travel and telephone through payments from the LLC, where as other lines of sponsorship cover these costs as individuals. If WWDB did sell tapes at manufacturing cost, they would only cost about $0.65 each. A WWDB tape costs $7. Ask what happens to the $6.35/tape! In the end Amway/Quixtar consumes a tremendous amount of economic resources for personal face-to-face promotion.. [Back to Index] See Related page

Quixtar's second hundred days was a 50% growth over its first.

Sales growth is a very good number to look at to see the market acceptance of Quixtar. The 50% growth rate reported here would surely be a terrific performance as long as Quixtar had to build its sales base from scratch. Since Quixtar is an offshoot of Amway and could effortlessly tap Amway's 750,000 US distributor force, it is not surprising that Quixtar could have reported this type of growth. However, what is not reported is the corresponding cannibalization of Amway 's sales to the benefit of Quixtar. A better measure of Quixtar's success would be the incremental sales growth from brand new IBOs who were not in Amway the previous year. If this type of growth occurs after the majority of IBOs have switched over to Quixtar then it will be a measure to take seriously. For the period between 200 days and 365 days, Quixtar reported a 22% drop in daily sales as compared to the 100 to 200 day period. See analysis of Quixtar year end press release. [Back to Index]

"You can get residuals 20 years from now for work you the first year"

In Amway and Quixtar you are no doubt entitled to residuals off your business, that is, on what ever is left of the business over time. Briefly, assuming we are talking about residuals from a direct distributor you sponsor, you must not forget that you will not get the 4% unless you maintain 7500PV in side volume or have two or mor qualifying legs.   As you have less and less side volume your 4% gets reduced. At less than 2500PV side volume, you get nothing of the 4% if you have only one qualifying leg. If you didn't directly sponsor the direct, there is a chance his sponsor gets enough side volume to push you out of the picture and he collects the 4%. Amway has reported that just over 50% of distributors renew every year. This means if no recruiting is done, that in 5 years only 3 out of 100 will still be around from which to collect residuals. I have seen first hand retention rate information for 9 Emerald distributors showing any where from 48% to 53% retention in one year. If you don't maintain a group by an active presence it can fall apart. This from Canadian Tax court sums it up.

"Even when a distributorship broke away and he obtained residuals, this problem (profitability) remained and, as he has experienced, it is clear that travel and the telephone remain necessary in order to keep the groups active and successful. Lou Collins, an "Emerald" distributor, verified this when he testified that he is in personal or phone contact with Messrs. Keeping and Noseworthy, at least every two days throughout the year. By contrast, Mr. Keeping did not recognize the need for of constant contact to keep his established leg together and motivated. Rather his practice was to establish one group and then devote his limited time to establish a second group. However when he did so, the first group began to fail and ultimately did fail. Thus, it appears that establishing and maintaining three groups from Garnish will require two or three times the travel time and financial costs that Mr. Keeping has experienced. "

LYMAN KEEPING, and HER MAJESTY THE QUEEN Canadian Tax Court Docket: 97-3402(IT)G

So given that you must personally sponsor the direct, maintain 7500PV side volume without it splitting off, and cope with 50% of your people in your side volume leaving each year, it would seem that the residuals are not residuals at all. Without constant maintenance of your side volume group, assuming your sponsored direct maintains the work as well to stay in qualification, there appears to be only a small probability of residual income. [Back to Index]

"I don't know anyone one in this business who has not showed the plan 10-15 times/month and isn't Platinum"

This is commonly said by new distributors. There are many examples of people who have done the work but for what ever reason did not become profitable and quit the business. Many who have done the work, but it didn't work, may not be active anymore either. Most lines of sponsorship have strict rules about cross-lining. This is the process of communicating with other distributors who are not in you immediate line of sponsorship. Cross-lining rules are important because it sets up a "fire break" to isolate problems from other legs. Problems in one leg can be isolated in one leg and not spill over into the other legs. Problems can be nothing more than a star distributor quitting after seeing a negative web site, a divorce by high level distributor which causes others to question what the business is all about. Most new distributors have no idea what has gone on, or is going on beyond their immediate downline, and their immediate upline direct, due to their own time in the group being very limited. They can say they know no one who has not showed the plan to success precisely because they have not been exposed to all those who haven't made it. Rules on cross-lining, limited personal experience, and high drop out rates all restrict the new distributor to viewing only high PV distributors, or ones still working to get to profitability. [Back to Index]

"You mentioned the stricture against cross-lining on one of your pages, and oddly enough, I agree in part with your viewpoint and it was, in fact, a disagreement with my upline Emerald on this matter which prompted me to resign my distributorship in 1998. The particular details are irrelevant, suffice to say that my wife and I had grown friendly with another couple, and the Emerald bluntly and rudely suggested that I discontinue that relationship." IBO Site Visitor

"These guys that run WWDB make anywhere from $300K-3M/month. One guy makes $1M every 3 days."

This came from a site visitor who singed his name as "doctor", had attended two WWDB functions and was ready to join Quixtar. A little analysis would say that his "facts" are just a little off base. The last press release from Quixtar had $250 million in sales after 200 days and pay outs of $75 million. Now the guy who makes $1million every three days would have taken himself $86 million out of a bonus pool of $75 million. Not only did he make all the money that Quixtar paid out, none was left for anyone else!

Seeing how he cannot be in Quixtar and make the money claimed, lets assume our star distributor was in both Amway and Quixtar. Amway had US IBO 1999 sales of about $1.28 billion, of which 31.5% at most is paid out. After factoring the 25%, paid to directs, this leaves $83.2 million to be paid out to high level distributors. The above mentioned star distributor is taking out $120 million/year so it again seems there is no money left for anyone else.

This is just another example of totally baseless Ama-rumors not being checked out by supposedly intelligent people, who have checked their brains at the door. [Back to Index]

"World Wide Group accounts for 80% of Amway's business, now Quixtar's"

Jamie,

I got this from a site visitor. Does WWDB really do 80% of Amway/Quixtar's volume?

Regards,

Scott

"If you have it I would like the original e-mail, or contact information, so we can follow up with the IBO in question. He/she is a little off on the numbers quoted and I'm curious about where that number came from. Thanks, JHF" Jamie_Fellinger@quixtar.com [Back to Index]

"How come there are more positive books on AmQuix, than negative books?"

" I asked for stuff written by people outside of the "business", but the sad thing is that they are all COMISSIONED to write good things about it." Prospect - Site Visitor

I would attribute this to the market for each type of book. In the US alone in 1999 there were 750,000 distributors. Due to Amway's almost 50% turnover rate this means 375,000 people will be introduced to AmQuix and motivated enough to join. Since books are a "tool" in the business and reading is vigorously promoted, it is very likely that pro-AmQuix books would sell very well to all those new distributors re-enforcing their decision of getting in the business. Books negative to AmQuix have a much smaller captured market. In theory there are 375,000 new people leaving the business each year but since most of them have had their fill of AmQuix and know from personal experience the realities of AmQuix, few will be willing to pay for something they already know and are fed up with. Additionally there are so many free negative web sites, which satisfies much of the market for contrary information already. [Back to Index]

"Why do you chose to pick just on Amway when plenty of other businesses tell "White Lies" as well"

The reason I have chosen Amway is that the Amway scam is more intriguing to me. Amway AQMOs use more interesting psychological techniques than these other businesses. In contrast to the other scams IBOs throw at me, with which I fully agree do not add value to the economy, the Amway scam actually recruits its scammed participants to perpetuate the scam. Many people use their personal relationship to help lower a prospects skepticism. All the other scams you speak of come from strangers, where natural skepticism will be higher. Frankly there are too many other scams to follow, but Amway has the most interesting characteristics to me. I don't not recall any colleges coming to my home and saying I could retire in 2-5 years or make $50,000 in one year after graduation. If fact all they told me is that they provided a school, which I could attend. When you sign the second mortgage, which is disguised to look like a first mortgage, you can read the contract and see the interest terms and what it will cost you. Bob Rohrman only promised a car, and he might be off by only a couple of hundred dollars. I get notes all the time from former IBOs spending 10-$15k in Amway. Anyway you can check what Bob Rohrman paid in the many wholesale buying guides for cars. Try getting a wholesale price list from IBOs before you join or even a list of typical AQMO expenses!

Interesting enough this question admits lies are being told and only seeks to rationalize the typical Amway lies because other businesses "lie" as well. I though Amway was supposed to be the "best" and most ethical one! [Back to Index]

Why are there so many well educated professionals in Quixtar; Doctors, Lawyers, Congressmen etc?

This is a very interesting question for it implies that supposedly educated and smart people might be interested in AmQuix. It might imply professionals participate in higher than average population proportions or imply that their higher education and intelligence have ferreted out some secret to AmQuix that lesser trained and educated people will not discover.

Firstly, there is no official data from AmQuix or any line of sponsorship that says there is a higher proportion of these professionals in AmQuix than in the general population. The comment is anecdotal at best. Given the preceding point, if the data did support the fact that there were a higher proportion of professionals it would not be surprising. From my experience, professionals of these types have higher than average motivation and drive levels compared to the general population. This motivation and drive showed itself early in their lives and led them to pursue advanced degrees. Thus a higher motivation and drive level would show itself in people looking for additional ways to make money as well. One of the key selling points made by the AmQuix "plan" is to retire in 2-5 years. This pitch will appeal to many hardworking professionals who have little freedom in scheduling their time. This higher level of drive and motivation would also prompt some to look at the AmQuix opportunity as a way to "buy their time back". It would be interesting to see the data as it might also show that certain professions are poorly represented in AmQuix such as high level corporate officers, engineers and scientists, and economists.

The second and most important question is, have these intelligent and smart professionals discovered that the AmQuix plan is a superior way to make money and buy their time back? Do professionals like these have "extra" smarts which allow them to see inherent benefits in AmQuix that others miss? One would first ask about the other group of doctors an lawyers who saw the AmQuix plan and did not get in. Are these people somehow less "smart" than their peers who did get in? I would tend to think the proportion of people who did not get in is greater than those that did get in since Amway has been around 40 years now. Secondly, what about all the doctors and lawyers that smoke? Are they telling us by their actions that smoking is healthy and that we should smoke too? I really don't think the fact that a few professionals are involved with AmQuix is of any matter. Logically, this position holds little water.

In the book "The Millionaire Next Door" this group of professionals are characterized as having very high incomes but also tend to have very poor money management skills and little or no business training. In my personal experience, observing a pyramid investment scheme a work, there were plenty of doctors, lawyers, engineers as well as factory workers who got sucked in to the scam. The only people who did not lose money in the scheme were those who were skeptical, tried to obtain more information and did not blindly accept what was said to them. Those not losing money did sufficient research to understand the investment scheme had no independently audited performance data and no explainable competitive advantage over other investments. The doctors and lawyers who did not research it, just got taken for more money since they had more to invest. To my knowledge no group of people, segregated by training, are immune to the effects of greed and easy sounding money.

"It's truly amazing how a supposedly intelligent medical professional (dentist) such as I could have been duped into believing this garbage!" Site visitor, former distributor

Lastly, professionals make good AmQuix customers. They have high disposable incomes and large amounts of consumption buying power that can easily be switched to the AmQuix network, once they buy into the "pyramid buying club" mentality. They also have little time and motivation to perform price studies to understand the true competitiveness of the business since, relatively speaking, money in these amounts is less important to them. Certainly if enough of these types of people get in AmQuix sales might actually start to grow at a healthy rate and this group of people would be a target market for recruiters.

In the end I would put my faith in what the market says about the opportunity via the sales growth numbers and not by the argument that anecdotally, some professionals are in the business. Once sales and bonus pay outs start to grow at a 20% annual rate in your country is when you should consider the business. This would be the time when the market is saying the AmQuix opportunity is doing something right for the economy.

If you look at AmQuix as a "Commercial Cult" then a few quotes from Steven Hassan's book "Combating Cult Mind Control" 1988 are relevant.

"...groups deliberately seek out people who are intelligent, talented, and successful, the members themselves are powerfully persuasive and seductive to newcomers" Page 41

".A cult will generally target the most educated, active, and capable people it can find. I hear comments such as "I never knew there were so many brilliant people in these types of groups.." Page 77

[Back to Index]

They will be paying PV and BV on tapes to us in January

A few site visitors have sent me this line over time the course of two years. Not one site visitor has sent me a commission schedule from their line of sponsorship as proof it is happening or about to happen. In my opinion, Diamonds and Emeralds cannot afford to slit up the tape profits much more. A quick e-mail to Quixtar distributor relations puts this rumor to bed.

Scott A Larsen <scott.larsen@juno.com> on 10/30/2000 11:24:22 PM

To: Jamie_Fellinger@quixtar.com

Subject: BV and PV on tools

Jamie,

I've had a few site visitors, such as this below, tell me that they will be receiving BV and PV on tools. Is this some sort of arrangement between the AQMOs and Amway-Quixtar or will they be "private systems" with their own "BV/PV" system? How will they get around the FTC issue of pyramiding when no "retail sales" are involved?

Regards,

Scott

Nothing in our house that that I'm aware of that we will be doing. But, while we are on this topic, I do sense a movement towards more equitable distribution systems of BSM money with some of the groups. We have noticed some efforts to formalize some of the arrangements that in the past were handled rather informally. As for the FTC I don't see where that is an issue. The leaders that use and promote BSMs are selling a product or service to people who voluntarily purchase those products and services.

There is no FTC issue. Hope this helps you to understand why we have the "Best Business Opportunity in the World". Talk to you later, JHF [Back to Index]

"It's not just the actual cash money, part of the attractiveness about this business is the "lifestyle" that can be achieved."

If you can take a trip cross-country, or to Hawaii, or wherever else you want to go, do some meetings to expand your business or speak at a seminar, and write off a significant portion as "expenses", are you not better off for it?

I guess it comes down to what is a legitimate business expense and what is not. Yes, travel to a far away place is a legitimate business expense but only for those days spent on legitimate company business. If you go to Hawaii for a 2-day conference but stay two weeks, your expenses outside the two days would be disallowed. So really how much business expenses can be carried over to your personal life? Sure a stapler here, an ink jet refill there. But you can't legitimately write off mileage going to the store unless you showed the plan on the way. If one followed the letter of the law the true overlapping expenses are small. Entertainment is only 50% deductible as a business expense. In a 28% tax bracket Uncle Sam only kicks back 14%, if the expense were legitimate .If I don't really value these "business" expenses in my personal life, I would probably be better off taking the cash, paying the taxes and spending it on something I really wanted.

I've also looked at the tax court records of IBOs and it seems those audited usually see much of their expenses disallowed.

From the Amway Quixtar code of conduct:

"8.3.9 Must not promote the enjoyment of tax benefits as the best or principal reason for becoming an IBO."

[Back to Index]

"There is no more Amway in North America. Quixtar has replaced it"

From Quixtar IBO relations: "North American IBOs can designate Quixtar or Amway as their primary business. However, Quixtar will be the company that services all IBOs whether they are affiliated with the Amway or Quixtar opportunity."

[Back to Index]

 

"You must be funded by Amway/Quixtar's competitors"

Let's look at the various motivations and risks for a competitor to fund me. First of all what does a competitor have to gain from eliminating Quixtar or Amway US. As percentage of any market Quixtar serves - selling soap for instance, P&G would eliminate a competitor with 1-2% market share, which is shrinking already. I doubt they would risk the public relations nightmare such a strategy would bring if it were exposed. Assume Wal-Mart is funding me. Again, the opportunity to gain such a small market share is not worth the risk of exposure. Your theory will soon be proven with the Schwartz, P&G Amway case. I'm sure through subpoena of financial records that no tie can be proven. If one competitor put Amway out of business the resulting share would be split among the existing competitors. So the one doing the funding, would also help his major competitors as well as well as take a huge risk of being exposed and losing 20-30 times the market share being taken over. I do not see a favorable risk reward ratio for any major player to fund such a site.

Secondly given the relatively low number of hits, 300,000 on my site in three years any company sponsoring me would find a very poor payback on their investment. Suppose I was paid $50,000/year. The sponsor has paid almost $0.50/hit and many of those are repeat hits.

Now let's look at it from my side. Given that I have done calculations on the number of potential former North American distributors to be about 8,000,000, there is a good probability that their are a few people crazy enough to do what I have done without being paid by any company. Just look at all the people who volunteer to pick up trash on the highway that lazy saps throw out the window. I think if someone feels they can help a lot of people with their effort then they are willing to give. That is how I feel. This is one way I can help people--make a better business decision about a topic where most people have lost money; for what ever reason. There is proof enough that most people lose money with their AmQuix businesses. And, it is supposed to be a proven Franchise as well!

My site is to help them lose less money. I believe I accomplish this goal. Site visitor feedback is overwhelmingly positive. If it were not, the negative feedback would be enough to get me to question what I am doing is wrong and give it up.

[Back to Index]

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