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The rumors of early January, 1999 have been confirmed. An Amvox transcript of a message from Ken McDonold (an offical at the Amway corporation) that was sent to emeralds and above, was recently posted on Amway's business network. The entire transcript is posted below.
There are several interesting things in this transcript that confirm the rumors that we had heard in late December/early January.
The first rumor that this transcript confirms is that the new e-commerce venture will be a new company. They have not yet published the name of this entity, but it will be owned by the Devos and VanAndel family, Amway products will still be distributed, the Amway Corporation will still be the servicing corporation that will provide all the catalog items, the compensation plan will be similiar to Amway's,
Maybe I'm being too simple, but why don't they just call it "The Amway Mall?" After all, many distributors go on and on about how great a reputation the Amway Corporation has and how well respected the corporation is. Maybe it's because of the "negative, pre-conceived opinions" that the majority of the population has about Amway distributors. Several million ex-distributors might want to call it something like the Amway Network Internet System (ANIS) or the Amway Internet Distribution System (AIDS), or the Amway System Serving Hopefull Optimistic Loyal Entrepreneurs (you can figure that one out).
Since this is a new company being formed with a similar, but different compensation plan, this implies that Amway distributors must sign-up for this e-commerce business. Unless Amway is being extremely generous, this implies that there will also be some kind of sign-up fee and possibly an annual renewal fee. How much is unknown at this time since Amway has not released any numbers. Of course, that hasn't stopped distributors, who are frothing at the mouth to get people signed up for something that doesn't even exist yet, from saying anywhere between $40 -> $165 to get started with an annual renewal fee of anywhere between $10-$30. It is also unknown if a person must sign up as an Amway distributor to be involved in this e-commerce venture or whether a person can choose which kind of business they want to be involved in.
The second thing this transcript confirms is that this e-commerce venture will depend on Amway distributors giving their access codes to customers. It has not been confirmed yet whether the URL of this I-mall will be registered with search engines. We have heard that it will not, which makes sense. If a netizen is surfing the net and finds this I-mall, they wouldn't be able to purchase anything without knowing an Amway distributors access codes.
Having to pass out access codes will severely limit the customer base that any distributor can have. The greatest potential with e-commerce is that ANYBODY who has an interest in your product or service can visit your website and possibly make a purchase. As long as the website is properly registered in search engines, the business owner doesn't need to go out and snare customers. The customer comes to the business owners website when they have an interest to get information or make a purchase. Since the visitor has an interest in what you're selling, this increases the odds of a sale.
With Amway's I-Mall, the Amway distributor must find a person who has access to a computer and the internet and give them the URL and the access code just to get in. Of course, distributors can put up a website and register it with the appropriate search engines, but Amway's rules clearly state that passcodes cannot be posted on a webpage for anyone to see. If the distributor follows the rules, the visitor must send an email to get the passcode and then wait for a reply before he/she can get into the I-mall.
And can you imagine 1000's of websites of Amway distributors registered in search engines trying to sell Amway products? Only the first few will ever get any hits from surfing netizens.
Once all the hurtles of a customer getting into the I-mall has been eliminated, the big question becomes "Will Amway's suggested retail prices, on the goods and services they provide over the internet, be competitive?"
That's hard to say...of course distributors will say they are. But they say that now and price comparision after price comparision has shown that Amway's suggested retail prices, are for the most part, far more expensive than local retail outlets. If they aren't competitive, how can Amway distributors persuade customers to buy from their I-mall when many of them can't or won't retail products to their family and friends?
One good thing that will come out of this I-mall venture is that Amway will have accurate records of who is ordering products from each distributor registered in the I-mall. They will know how many customer sales and the total amount of customer sales that each distributor makes.
Since Mr. MacDonald states the bonus plan will be similar to Amway's, we can only assume that it will be a Multi-Level marketing type plan. If that's true, Amway will have the information required to enforce the Retail Sales Rule that virtually no one in Amway enforces (See Amway - All we do is buy from ourselves for links to the MLM Law library that explains why performance bonuses must be tied to retail sales).
Will this venture turn out to be another "All we do is buy from ourselves and find other's who do the same" business or will it be a true Multi-Level Marketing business with bonuses dependent on customer sales, a standard that other MLM's are held to (See The Legal Principles of Multilevel Marketing at the MLM Law Library)? Only time will tell.
There is one other comment in this transcript that I would like to point out.
We're also planning to offer a family-friendly Internet service provider that will filter out all those "bad-guy" Web sites you want to keep from invading your family's PC.
Apparently, stripping distributors of their constitutional right to sue isn't enough .. it looks like Amway is positioning itself to attack the First Amendment and play big-brother and control what distributors read. Obviously it is in their best interests to block access to sites like mine, but what else will they block? Will they decide what is "decent?" Will they decide what news sites you should have access to? Will they decide what entertainment sites you should have access to? Will they decide what information sites you should have access to? How far will they take it?
Look out Ken Starr!
AMVOX? Leadership Hotline
Transcript on E-commerce
message date: January 21,1999
Hi everybody, this is Ken McDonald with a message to Emeralds and above. The topic today is e-commerce.
Beginning on September 1, 1999, we're taking this business into a whole new realm with the launch of an exciting new e-commerce opportunity. Many of you have heard about this, and many of you think you know all about it. But we want to make sure you have all the right information, so we're going to start sending you these e-commerce updates on a regular basis. And today's message will probably be in two pages because there's a fair amount I want to tell you, and I'm going to focus on three things: the economy, why we are positioned perfectly, and some of the details of the upcoming e-commerce business.
First, let's take a look at the marketplace with five amazing statistics about Internet commerce.
In 1998, in the U.S. alone, online sales were 4 1/2 billion dollars, and that's triple the amount from the year before.
Researchers predict that online shopping is going to increase by 800 percent to 35 billion dollars by the year 2003, which is just around the corner.
More than 17 million people in North America have already made purchases online. .
By the end of this year, that number will more than double to 36 million people.
And this past holiday shopping season was a milestone in retail commerce across North America. Why? Because sales at traditional stores were just so-so, while sales at shopping sites on the Web more than tripled.
We, and especially you, are perfectly positioned to leverage the dynamic business power of the Internet. Traditional e-commerce entrepreneurs have a bunch of constraints that are similar to traditional retailers. They've got to worry about things like huge investments and programming, and then warehousing and staffing and a full-time commitment. But we're breaking the mold once again, and we're going to enable anyone with an online PC to start and build a Web-based business of their own. We'll build the technology, and you guys invented the personal touch in business, and together you're going to have a high-tech, high-touch opportunity that is second to none anywhere out there.
What I'm going to do now is give you just a few tidbits about this business, and as we get more developed, we'll send more out to you.
First thing we want to tell you is that this e-commerce venture is envisioned as a new company with a new name, but it will be linked to Amway in three basic ways. One, it's being started by the DeVos and Van Andel families. Two, it will share a similar compensation plan that includes additional revenue streams. And, three, in addition to hundreds of new top-quality brands, it will feature many of the high-quality brands that are manufactured by Amway and that are well known for their high-consumer loyalty-brands like NUTRILITE?, ARTISTRY?, and SA8?.
We told you that we envision it as a separate company with a separate name. We told you that the launch date for this new venture is September 1, 1999. But we haven't told you the name of it yet. That's because we don't know. You'd think it would be easy coming up with a name, but it's not. We are going through the trademark registration process on several names. It's not enough just to get the domain name, the name of the Web site. In order to protect this business for you folks for the future, we need to have trademark registration in the appropriate categories for every name we pick in order to do business in all of the different ways we want to do business. So we are working on it, and as soon as we get the name of our new e-commerce opportunity, we'll let you know.
We have assembled a highly skilled Web development team - the Internet Business Group. They have the expertise and the experience necessary to design and build this e-commerce venture, and they're working hand-in-glove with many respected external technology resources as well. In fact, to make this e-commerce opportunity as exciting as possible, we are working with multiple, major technology firms. We have entered into confidentiality agreements with these folks, and we are working on the rest of our contracts with them, but they have hit the ground running with us, and we will be making official public announcements about the alliances with these major technology partners in the future, and I'm going to be sure to let you know before we go public. In fact, we're going to do a total communications campaign that includes Diamond Club, where we're going to talk about e-commerce to the leadership.
Participants in this new e-commerce venture are going to be able to access four different categories of products. They'll be able to access quality Amway-manufactured products, catalog merchandise, and services. But, in addition, we will be partnering with many well-known stores and brands that provide online ordering capability, quality distribution, and high-level customer service. We currently envision 12 to 100 of these merchant partners with smaller amounts of PV/BV compensation flowing upline. We're also planning to offer a family-friendly Internet service provider that will filter out all those "bad-guy" Web sites you want to keep from invading your family's PC.
So to sum it all up, this new e-commerce venture will not be just another me-too virtual mall with a confusing number of stores. It's going to be a unique digital destination with all kinds of exciting features, including exclusive products, select shopping partners, "way-cool" benefits for members, valuable business management services and, most importantly, an enhanced opportunity for independent business owners.
Well that's a bite-sized, or maybe I ought to say megabyte-sized review of where we're headed with e-commerce. We are moving at warp speed here at Amway and working with some of the major distributor leaders out there to build this new opportunity, and we'll continue to send you updates to make sure you're up to speed with everything that's happening.
Thanks for listening, everybody, and I'll be talking to you again real soon.
Here is a quote from an email a distributor used in pitching the virtual mall.
We've contracted with a successful Multi-Billion dollar corporaton that is putting together the largest most comprehensive on-line interactive Virtual Shopping Mall. People currently have opportunity to take advantage of creating continious profits from this mall by using it themselves and refering others to it. The Principal owners have currently contracted with over two hundred "Fortune 500" companies, as well as thousands of other smaller manufactures. [...] Now, we have contracted with the Amway corporation to use their compenstion package because it is patented, copyrighted, and has passed all Federal Trade Commission reviews. Although we will be making changes in the verbage. Also they are the only corporation that has the infastructure in place to handle such large orders with a 98% delivery rate. Don't misunderstand me, this is not a re-packaging of the old Amway. E-Biz is a totally new entity with new partners, new ownership, and new managment. The Amway Corporation will continue to do business in their traditional manner, manufacture fine products and have lines of sponsership to create Amway Distributors. We will have nothing to do with that. Amway will only have one store amoung our current total of 1200 in our Virtual Mall.