Amway is the granddaddy of all multilevel marketing companies. Technically, they specialize in cosmetics, health, and home products, but those categories are so broad it is probably is just as accurate to say that Amway specializes in multilevel marketing itself.
The company is very old by MLM standards: it was founded all the way back in 1959 and has incredibly survived until today. This alone is impressive, given how many network marketing companies go belly-up after only a few years.
So did I get on board? This explains everything:
Amway hasn’t made it this far without battle scars. The company has had more than its fair share of legal battles over its business practices. The key ruling happened in 1979, back before most MLMs operating today were even founded.
In a critical ruling, the United States Federal Trade Commission found that Amway’s business model was not a pyramid scheme, because it didn’t fit a number of the agency’s criteria for that definition.
Though the decision excoriated the company for its misleading information about the average earnings of its distributors, and for alleged price fixing, the core business model of the company was validated. This opened the floodgates for hundreds of MLMs to be founded in the years that followed, but Amway, the raison d’etre for the entire industry, survived the competition from all of them.
Given that Amway sells hundreds of products, it’s impossible to pick just a few of them to review. What Amway really sells, and what you as a distributor have to sell to your customers, is a lifestyle.
The benefits of Amway distributor status, or indeed even just customer status, are leveraged when you buy into the company’s convenience strategy. When you can get an auto-shipment of everything from your multivitamin to your shampoo to your laundry detergent, it has the potential to make your life a lot easier.
Each person who would use Amway would want a customized “plan” to solve the problems in their life. This might be a multivitamin plus a weight loss supplement plus a facial cleanse plus a moisturizer, and so on.
You can use your imagination to figure out what each person you’re pitching the products to would need, but this is definitely tougher and is going to take more work than an MLM that focuses on a specific niche.
The tradeoff is brand recognition. If you can become an effective ambassador for the brand, you don’t have to explain what it’s all about. You can focus on how the products will fit the needs of a customer.
This tradeoff also comes with the downside of serious, big-time market saturation. It is downright tough to get into being an Amway distributor pretty much anywhere in the United States.
What’s the real secret to getting in to Amway? Find a distributor who is getting out of the business, and pick up his or her customers.
Given how long the company has been around, the chain of distributors and the network market is extremely well-developed; it’s what business geeks call a “red ocean.” There are two ways to thrive in such an environment.
First, you could use a unique advantage (like a well-established distributor retiring) and acquire a large customer base immediately, or second, you could push into uncharted territory.
This is “blue ocean” marketing tactics. The only way to do this is probably in a different country. The opportunity for Amway distributors in developing markets could be much more rewarding for those in countries with a strong, well-developed Amway distributor network.
For an MLM that’s over fifty years old, Amway has a compensation plan that reflects the long history of the company.
While the basic strategy is the same as any typical MLM. Earn retail profits by buying wholesale and selling at retail prices, and earn bonuses from the purchases of your customers and the distributors underneath you, the full compensation plan is bloated with bonuses, incentive programs, fast-join rewards, and so on. There is less of a focus on direct percentage-based commissions from your distributor downline.
When you actually crunch the numbers and look at the Amway income disclosure statement, you find a middling result.
About half of all Amway independent business owners (IBOs in company lingo) are active, and of these, the average monthly income was $186 in 2014.
Company literature boasts about distributors in certain categories earning upwards of $50,000 per year, but the fine print notes that this group only represents less than one percent of all active distributors.
Amway, in short, sells a lifestyle, both to you and to the customers you’ll be selling your goods to.
For you, it’s the freedom of network marketing, but for your customers, you are selling the convenience and brand trust of getting all of your household, personal care, and personal health goods in the same place, shipped to you every month.
That’s the sales pitch you have to make, successfully and on a regular basis, in order to succeed.
Given how old the company is, and how saturated the marketplace is in developed markets, you have two shots to do well as an Amway distributor: the first is to scoop up the customer base of another distributor who is moving on to other things (bonus if you can get his or her endorsement; this will help you convert a lot more customers).
The second is to strike out into blue ocean territory, in a developing market where Amway does not yet have such a solidified presence.
If you’re set on MLM, it’s not terrible, but probably not the best, either.
If you’re doing it for the money, there are better ways to kill your day job. You might like our coaching because it shows you the good life without peddling products to your family and friends.