The Amway UK  new "Plan"
A site visitor sent me a few pages from the October 2007 UK Amagram describing the UK's new business plan.    Due to a government investigation in the UK, which was announced in May of 2007, Amway has undertaken measures they think will reform their business.   You can get all this information from the Amway UK website as well. 

The first thing that jumps out is that a distributor is not called an Independent Business operator (IBO), but now a Amway Business Owner (ABO).   So much about having an "independent" business.....

The second thing I could not help but notice is that the new Amway UK plan is kind similar to the "new plan" I suggested years back on my website.   My "new plan" focused more on giving the selling distributor a larger piece of the bonus pie.   A new distributor would potentially only make 3% on an retail sale (at distributor cost) at the beginning of their career.   The sponsoring distributor could make 21% or more of BV on that distributor's sales.    That is very little incentive to even try to retail.    To sell the already expensive products at suggested retail pricing would be even more difficult.   Especially when any potential customer could just sign up and get the "wholesale" Amway pricing for themselves. 

I had suggested a high retail bonus (20% of BV) financed from the normal 25% performance bonus.  That means the other 5% of BV would have been used to pass up to the upline for the "pyramiding bonus" part of the plan.  The new Amway plan in the UK pays 25% of the value of all orders the Business Owner procures (exclusive of VAT) once the minimum value of £100/€150 of product orders (inclusive of VAT) is reached in a given month.

It appears to me that the basic Amway pyramided compensation scheme is never the less still in tact in the UK, and only the prices might have been increased to cover the new 25% bonus.  This would enable the 25% bonus to be immediately paid without impacting the old Amway pyramided compensation scheme and Amway's profit margin.  Any site visitor from the UK who confirm that the old "distributor" cost has been marked up to the new price level, please write me.

The literature from the Amagram describes the typical Amway plan and it shows 9%, 15%, and  21% bonus levels like Amway had before.  It did not mention what PV levels have what bonus percentages.  If anybody has this information, please send it to me.

Distributors might however lose twice with with this new pricing plan as the "25% income" from personal purchases now becomes taxable income and the markup would be subjected to the UK's Value Added Tax.  Assuming the VAT is 17.5% in the UK, distributors would get the pleasure of paying an additional 4.3% in VAT tax on their personal purchases now being made at retail prices.   This would be a similar situation to US Quixtar distributors, who are billed sales tax on Quixtar's retail prices, when they in fact they only paid distributor cost. 

The next thing I noticed is that the Company will now require the distributor to take an online course and pass a test.   I made this suggestion years ago.    I wrote at that time:

"A big problem I see for Amway/Quixtar is that they have no minimum standards or training for their independent sales representatives. It is literally a free-for-all damaging the Amway/Quixtar reputations in the process."

"An ISB is allowed to prospect and sign up members and clients only. To qualify as an ISB the prospect must first be a member for three months and pass a Quixtar administered exam."

"The ISB must pass a more detailed Quixtar administered Broker's distributor exam "

The Amway blog also mentioned that recognition in the UK organization would be based on income and not just pin.   I made this suggestion in Dec. 2006 in a page on business measurements:

"the measurements of PV misses the end target of profitability by a long shot.  In fact measuring PV is a very poor way to measure a distributor's success, if profitability is the definition of success.  A better way to measure an IBO's success would be instead to measure their actual profit.  I would first suggest a pin system based upon the size of their Quixtar bonus check or better yet, a pin for the net profit reported on taxes."

And last but not least, Amway says they have lowered prices to make it easier to retail.   The high prices I saw in Amway as well as the lies told saying people would save money by buying through Amway was the main reason I started this website.  It is however hard for me to believe they have lowered prices and simultaneously pay a new 25% performance bonus.   If that is true, then Amway had fabulous profit margins on their products before this new plan. 

The most likely case is that they have actually raised prices by approximately 33% by eliminating the distributor cost pricing structure and replacing it with the previous retail price level.  A 33% price increase from distributor cost to suggested retail would be enough to cover the new 25% bonus.   For example.  Assume the product cost €15 before at distributor cost.  A 33% retail markup would put the product at €20 suggested retail.    A 25% rebate on €20, puts the real cost back to €15.   The €5 in imaginary income is burdened with    €0,22 in VAT and becomes taxable income assuming the distributor will report a profit on his taxes.   

At first glance it appears Amway in the UK has made major changes to their business, but at first glance it appears to me they have only raised their prices.  I would be curious to hear from distributors in the UK with pricing examples, before and after these changes.  Please write me if you have price lists.

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How an ABO makes money as a Retail Consultant

In essence the business opportunity is very simple, as a Retail Consultant an Amway Business Owner will get what is called a “Customer Volume Rebate“ (CVR) of 25% of the value of all orders the Business Owner procures (exclusive of VAT) once the minimum value of £100/€150 of product orders (inclusive of VAT) is reached in a given month.

For example:
  • if you have £0/€0 of product orders (including VAT), you will not receive any CVR.
  • if you have £99/€148.5 of product orders (including VAT), you will not receive any CVR.

But,

  • if you have £100/€150 of product orders (including VAT), you will receive a CVR of 25% of the total monthly order amount less VAT. If VAT is 17.5%/21%, then the total monthly order amount is £85.11/€123.97 and the CVR will be £21.28/€30.99.
  • if you have £150/€225 of monthly product orders (including VAT) you will receive a CVR of £31.91/€46.49.

and so on...

In addition to CVR, you may be eligible to participate in special Sales Incentive Programs that are designed to encourage and further reward your sales efforts.  These discretionary programs, and the terms on which you can participate, are communicated by Amway from time to time.

Additional Opportunities:
Certified Retail Consultant

Notice: Amway (UK) has extended the moratorium on sponsoring activities until further notice. This means that ABOs may not currently engage in any sponsoring activities until the time when Amway (UK) has lifted the existing moratorium on registering new ABOs in the United Kingdom and the Republic of Ireland. We are confident that we can count on your support and compliance until Amway (UK) accepts registration of new ABOs and informs you that you may resume sponsoring activities in accordance with the terms and conditions of the Transitional ABO Contract.

Retail Consultants who demonstrate an interest and ability to promote Amway’s products and services have the opportunity to become Certified Retail Consultants and to introduce and support other people as Amway Business Owners.  As a Retail Consultant, you will have the opportunity to register your customers with Amway, so that Amway can track their orders and provide you with additional direct marketing support.  Once you have 5 customers registered with Amway (Registered Customers) and achieved £200/€300 worth of Registered Customer Orders in a 12 month period, you are eligible to apply to become a Certified Retail Consultant.  In order to be authorized as a Certified Retail Consultant, you will be required to complete an online course and pass a test, as well as sign an addendum to your Amway Business Owner contract.  But Amway will not charge you anything to do this.  Your Sponsor can provide you with more information when you are ready, or you can call Amway’s Business Services department at 01908 629 400.

To maintain the Certified Retail Consultant status and to access the additional income opportunities available to Certified Retail Consultants, you will need to continue to find and develop customers and procure orders of Amway products.  If you are unable to do so, you will not benefit from being a Certified Retail Consultant.

Business Consultant

The main function of a Business Consultant (BC) is that of supporting activities of the Retail Consultants and the Certified Retail Consultants in their groups. 

In order to become a Business Consultant and maintain your status, you must achieve the Platinum level with a minimum annual Amway Income of £7.000/€10.500.   The minimum annual income can be met by Customer Volume rebate, Performance Leadership, Foster, Ruby, Emerald, Diamond, and Diamond Plus bonuses pin the the Performance year.  

A Business Consultant must participate in a face to face training session with Amway to become certified.   Once a ABO become a Business Consultant they are no longer required to maintain five ordering registered customers and £200/€300 in registered customer sales in a month.  If the minimum income requirement is not met, they fall back to a CRC or RC.