One of the things I was told, and was taught to tell all prospects whilst showing the Plan, was that you just couldn't lose money as an Amway distributor. Whilst we were taught that our distributorship was a "real business" and we should approach it as such, we were never given guidance about how to prepare a cash flow forecast, which is of fundamental importance to all business ventures. We were simply told to:

 FIND A DREAM, THEN GET A BIGGER ONE

SHOW THE PLAN

FOLLOW THE SYSTEM

BUY THE PRODUCTS

 And hey presto, the bonus cheques would come rolling in, and we would become financially free within 5 years!

 The system taught us that even in the very early stages of our distributorship when we had no downline, we would at least break-even by purchasing £200 worth of products each month. At this level of activity we would "make and save" £50 per month from retail profits, and from household savings from buying Amway's super quality value for money products. Therefore the system expenses would be more than covered. It was implied that by simply being a "smart consumer" who only bought Amway products and never showed the plan, one could still make more than sufficient "profit" to pay for the wonderful motivation of the system, which would be beneficial in other areas of life (including our J.O.B)

 I am convinced that a sizeable proportion of distributors I observed at functions were like this. They never brought a single prospect, never crossed the stage but were there every time. And if you recruited enough of these, I'm sure you could go diamond!

 So how do the figures stack up?

1. I doubt that many distributors regularly buy £200 worth of products in a month. I never did, and even my sponsors proudly claimed to have done so on one occasion.Of course the temptation is to buy stuff you don't need in order to reach a particular level. To be fair, this was not encouraged, but I bet it goes on!

Steven Reeves (see responses) has suggested that the average monthly purchases of a distributor in the UK are about £57, based on figures quoted by Amway (£2,000,000 shared by 35,000 distributors). My own experience was that unless you did a significant amount of retail, it was difficult to spend more than this on Amway products.
 
2. Do you actually "make and save" £50? Well, you might do if all your purchases were for retail. Even this is a bit generous, as whilst the profit on cosmetics is about 40%, it is only 22% for home care products, and a mere 16% on products advertised in the Amway Connections Catalogue: (thanks for these stats. Steve!). You may also incur distribution expenses getting the stuff to the customer, unless you are lucky enough to have your close neighbors as customers. I remember having to deliver SA8 to a customer 12 miles away in another suburb of London. Any profit was swallowed up in motoring expenses.

To genuinely save on purchases for self-use, it would need to be proved that you would spend 33% more by buying the same products elsewhere. Ie if I am only spending £150 on Amway products, but would spend £200 for equivalent non-Amway products, the "negative" products cost 33% more.
Having seen price comparisons on other anti-Amway sites, Amway products are shown to be more expensive than non-Amway products at distributor prices even allowing for their concentration. Even the Amway apologists were unable to refute these comparisons, and suggested that you also needed to take into account the convenience factor of delivery to your door compared to buying from a store. Although these studies were conducted in the States, I'm sure a UK price comparison would yield the same results: (any offers?). My wife believes that we are now spending less on household consumables since we quit Amway, and with only one or two exceptions, doesn't miss the products.
 
3. Even if you did make and save £50 a month would this be sufficient to cover the costs of the system? On an annual basis, this would produce a notional "profit" of £600. Now let us be exceptionally generous, and include a monthly bonus cheque of about £5 that one would receive for 200PV (a little more than £200 of purchases). This boosts the notional "profit" to £660.

As I am referring to "system" expenses only, I have not included the Amway starter kit costing £85. I have not mentioned baby-sitting costs, which could amount to several hundred pounds!

Therefore, far from covering the system expenses, an active distributor couple spends three times as much as the notional savings/profit they are supposed to make.

So that's how we lost over £2000 in our year and a half of activity.

 It is interesting to note that Amway UK suggests that expenditure on the "System" should come from business profits. In the absence of significant retail (please would you distributors tell me honestly how much retail you do!) or real savings from purchase for self use, exactly how does a distributorship generate sufficient profit to cover the £2000+ system expenditure each year? The answer is from bonus cheques. AFTER THEIR DOWNLINE HAS BEEN PAID, they would need sufficient PV to qualify for a bonus cheque of £167 each month merely to break-even.

Hence my assertion that the vast majority of distributors lose money, and a PV level of at least 15% is required to stand any chance of breaking even.
 
 

Go back to the index page access other pages
 
 

E-Mail me: