For a copy of the press release click here.

For a note from Quixtar on clarification of specific issues click here.

Total Amway product sales reported, which includes Quixtar sales, less partner stores, at estimated retail were 7.05 billion for 2000 versus $7.0 billion for 1999. It would seem the expected growth did not materialize.

Here are the raw data from Quixtar's fiscal year 2000 obtained from Quixtar press releases.

On the surface Quixtar's first year sales look quite impressive. Quixtar was only able to attain such sales by calling on hundreds of thousands of Amway distributor's to switch their businesses over to Quixtar. Once this fact is known, the sales number is less than impressive when compared to previous year's North American sales of approximately $1.28 billion. Quixtar's first days were marked with sales of about $1M/day. There was a dramatic increase to $1.5M/day (50% growth rate) during the 100 day to 200 day period. Despite a reported 100,000 influx of IBOs, the sales rate slipped to $1.16 million per day (using 7 days per week) in the latest reported period from 200 days to 365 days. The IBO distributor count increase amounts to a 25% growth rate despite that, sales/day decreased 22%.

Sales of partner stores were most likely only first mentioned in this latest period press release to cover the 22% drop in daily sales at the Quixtar WEB site. Partner store sales figures were never reported until this year-end press release. One cannot tell how the partner store sales were spread throughout the year. Adding the partner store sales now would tend to imply a more stable sales pattern, at least one with no decreases in the rate of sales growth. Quixtar would have needed $497 million in year end sales to have at least kept the same pace it had from day 100 to day 200. The sales data would imply a large season bias due to Christmas or a waning excitement level for purchasing through Quixtar.

Using Amway's old data that 41% of IBOs are active and using 400,000 as a base, the average active distributor made about $872 or $72.66/month. This is less than $2.40/day. This is only 83%% of the $88/month average reported by Amway as the income of an average active IBO.

The pay out/Quixtar sales ratio still stands at 32% and is probably so high since the partner store bonuses are included but the partner stores sales are not included. Included in this number is also the retail markup of the few "clients", which might shop on the site. Including the partner store sales the pay out ratio drops to 27.6%. It is not known how much of the $143 in pay outs came from partner stores. I estimate it to be only about $7 million, or 5% of the total pay out since the average partner store has $6.5 per PV point or $13 per BV point ratios. This would imply a partner store pay out ratio of 10%, and a Quixtar pay out ratio of 30.5%. The 30.5% ratio is very close to the 30% ratio of the first 100 days when Quixtar most likely had few partner stores who had distributed bonuses yet. This contradicts the long standing claim by distributors that Amway paid 60-70% of sales back to distributors.

In the end, the much ballyhooed Partner Store connection only contributed 14% of sales and 5% of IBO gross profit. The sales of Amway products still seems to be the bulk of IBO profit.

In 1998 Amway reported world wide estimated retail sales of $5.7 billion. Of this 30% was reported to be in the north American market of 750,000 distributors. Factoring for the 25% estimated retail sales markup this made estimated corporate sales of $1.28 billion. From this the following table is derived.

 *1976 data from the 1979 FTC case MLM Law Library (US sales of $169.1 Million, $60 Million paid to 360,000 distributors)

Quixtar's "stunning" success in its first year would not have been possible without the hundreds of thousands of Amway distributors who switched their business to Quixtar. Quixtar cannot be realistically compared to any other business startup as most other business start from scratch. Quixtar had the advantage of calling on hundreds of thousands of Amway distributors to be its first customers and just switch their business over to Quixtar.

The future progress of Quixtar can be observed by these simple ratios and facts.

Quixtar IBOs Drive $518 Million in Sales Through Quixtar

http://www.quixtar.com/

    GRAND RAPIDS, Mich., Oct. 26 /PRNewswire/ -- The outstanding efforts of
more than 500,000 Independent Business Owners (IBOs) affiliated with Quixtar
Inc. resulted in first-year sales of $518 million through the U.S. and
Canadian versions of http://www.quixtar.com/ .  Sales included $448 million at
Quixtar, plus an additional $70 million at Quixtar's Partner Stores.
Quixtar's first year ended Aug. 31, 2000.
    These sales firmly place Quixtar among the top consumer e-commerce sites.
The National Retail Federation's Stores magazine recently ranked Quixtar 7th
in sales based on a low estimate of first-year sales, and, compared to a
recent Internet World ranking of publicly traded e-tailers' sales, Quixtar
would place 5th.
    "First-year sales and participation blew us away," said Doug DeVos, Chief
Operating Officer of Quixtar.  "We are very confident in our business model
and have expected all along that Quixtar would be a success in the long run.
Our first-year sales, however, are very unusual in the highly competitive
consumer e-commerce industry."
    Quixtar features a blend of consumer shopping, membership benefits and
business ownership unmatched on the Web.  In particular, Quixtar's high-tech
business model benefits from the personal service of IBOs who provide the
"high touch" element missing from most other e-commerce business plans.  IBOs
perform Quixtar's marketing function and are rewarded with bonuses and other
incentives for sale of products and services made to Members (preferred
customers who purchase products at special prices) and other IBOs they bring
to Quixtar.  Last year, Quixtar IBOs earned $143 million in bonuses and other
incentives.
    "Quixtar's success is unparalleled in e-commerce, especially since we
don't advertise," said Ken McDonald, Quixtar's Managing Director.  "Our
business model focuses on the Independent Business Owner, and their
profitability is our first priority.  It's not just our business, it's their
business, too."
    At various times during its first year, Quixtar was ranked highly among
other e-tailers for traffic.  When comparing sales, however, Quixtar clearly
is among the very top Web consumer shopping sites.
    "We're less concerned with where we place in rankings based on unique
visitors than we are on those based on sales," said John Parker, Vice
President of Sales and Marketing for the company.  "Visitors are great, but
sales are the true measure of e-commerce success.  And our success is driven
by affiliated IBOs who earned $143 million in bonuses and incentives for their
business-building efforts."
    Top sellers at Quixtar were health and beauty products, led by
Nutrilite(R) nutrition products and Artistry(R) skin care and cosmetics.  One
of the site's biggest success stories for the past year was its automatic
replenishment program -- Ditto Delivery(SM) Service -- which now accounts for
nearly 30 percent of Quixtar's volume.  More than 180,000 Ditto Delivery
profiles were created in the past year, allowing Quixtar to automatically fill
orders for consumable products based on a schedule predetermined by Quixtar's
customers.
    "We've devoted a lot of effort to making the site faster and easier to
use," said Randy Bancino, Quixtar's Chief Information Officer.  "We developed
the site very quickly in 1999, and since then have improved search functions
and downloading speeds," he said.  "We're now recording downloads that are
faster than the average of the Keynote Business 40.  As we go forward, the
site will only get better in support of our IBOs."
    Based near Grand Rapids, Mich., Quixtar Inc. is part of the Alticor group
of companies.

A) Amway and Quixtar revenue totals were combined and totaled $5.1 billion for the recent FY. This was a slight increase from the previous year and the increase was the result of improved markets in India, China, Korea and of course, Quixtar. (50 million of the $5.1B as reported in a press release was due to Alticor business development income)

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