Amway - Distribution system
Since we cut out the middleman and don't have employees, buildings, and inventory, we can deliver products cheaper.
There are many variations of this statement. They all imply that the distribution system used by Amway can deliver products to your doorstep cheaper than purchasing them at a traditional retail outlet such as Wallmart or your local grocery store. Some distributors may also use a distribution model that shows products going from a manufacturer, to a jobber, to a wholesaler, to a retailer, and then finally to you the consumer and show how the Amway distribution system eliminates the middleman, which is supposed to result in savings to the consumer.
Consumers vote for the success of any distribution system with their dollars. If Store A has the same product as Store B and Store A has a cheaper price, Store A will typically get more customers to buy the product unless you have to drive a lot further to get to the store. So if the Amway distribution system is consistantly capable of delivering products to a person's doorstep cheaper, why are Amway's sales in the United States a tiny fraction of a percent of the U.S. economy after being in business for nearly 40 years?
Let's first look at the products produced by Amway.
Here they do cut out the traditional middlemen they talk about so that should result in lower costs, right?
Do your own price comparision. Don't just look at the product literature provided, look at the container, figure out how many uses there are in the container and then compare the cost per use to other name brand products at the place you currently buy consumables. On my price comparison page I have identified numerous products that you can use. Just print it off and take it to the store and see if you will be saving money or spending more.
I want you to this. I want you to factor in the concentration of the products and see what the per use/per gallon (whatever) cost is. In some cases, you will find that you will save money. Most of the time, however, you will find that the prices are not cheaper and, in many cases, far more expensive than name brand products offered through traditional retail outlets.
Of course, when faced with this information, many distributors will fall back on the concept that Amway's products are of a higher quality than those available from retail outlets and therefore they are worth the higher cost. Except --- Consumer Reports testing has shown that there are almost always some other product available from traditional retail outlets, which are just as good, if not better, at a much lower price.
Now let's look at the non-Amway produced products.
Every year, Amway does take a few hundred of the thousands of products in their catalogs and compares the prices to other high-end mail order catalogs. Some distributors use this survey to show how competitive Amway's prices are and that you can save money by buying from the catalog instead of going to a traditional retail outlet.
Let's see how objective this survey is: Amway picks the products to compare, Amway picks the competition which they want to compare to (only high-end mail-order catalog companies), and they don't tell you what products were used in the comparison. Hmmmm...
The reality is, that unless you do all your shopping via mail order catalogs, you won't save money. I would encourage you to take a catalog to a Walmart or a K-mart or any other discount store and compare prices. Many of the products, or the equivalent, that you will find in Amway's catalog can easily be found in these retail outlets and you will find that the vast majority of these items are less expensive at a traditional retail outlet. What does that tell you about the Amway distribution system? Is it really capable of consistently delivering a lower price? You be the judge.
I'm not saying that you won't find some good deals in Amway's catalog. However, for the most part, you will probably find that the vast majority of items offered are more expensive. In some cases, as with any catalog purchase, the extra cost may be worth the convenience of having the item shipped directly to your home.
Many distributors will try to explain away the higher cost by talking about Amway's Satisfaction Guarantee, which is unquestionably a good guarantee. But over the years I have bought ten's of thousands of dollars worth of merchandise at traditional retail outlets and occasionally had to return something for whatever reason. I have never had any problems returning merchandise. How about you?
But what about the things you buy frequently, such as paper products, over the counter medications, food items, and other consumables? You buy these things all the time. Concentration and higher quality cannot be used for these consumables and if you do a price comparision on these items, you will probably find that you will be spending about 30-40% more, even at distributor cost. Many distributors will tell you that if you're serious about building an Amway business, you'll buy from your own store even when the products are more expensive. But if you look at my "How Do I Do a 100" page, you will find that it is going to take anywhere from $300-$400 a month to personally consume a 100 points. Can you afford that?
And while you are looking at these price differences on these consumables, ask yourself this question -- how many people do you know who are willing to pay the price difference of these items to have something delivered to their door? How many people do you know who are willing to purchase a case of something because it can't be delivered in eaches? If your answer is few or none, then ask yourself how serious Amway is about you marketing these items, or are they just interested in you buying them?
Still not convinced? Then visit The Amway Distributors "Little White Lie" website. Here you will find an excellent analysis of the business and the products, along with many helpfull suggestions as to the kind of questions a business person should ask when entertaining any type of business opportunity.
