The Same Old Amway

I received a phone call last week from a guy was telling me he had a great e-commerce opportunity for me. Naturally, I was interested since that's what I do. But when I asked him for specific information, I received some vague answers and my scam radar activated. He told me that he really needed to meet with me personally and he would be in town in a week. He also sent me an audio CD via FedEx that he asked me to listen to.

Once I played the audio CD, I knew it was Amway. Since my last experience with them was over twenty years ago, I haven't kept up with the company. They are now calling themselves Quixtar. Their new marketing push is to sell products online rather than physically through distributors. They do it in a way that dumbs down what e-commerce really is and over simplifies consumer buying behaviors and market trends.

Many years ago, when I was in junior high school, my mother and step-father sold Amway products. If you are not familiar with Amway, its a company with its own line of products for just about everything. Their business model is pretty basic: you buy and sell their products while trying to convince your friends to do the same. If its operations were totally illegal, it would have shut down many years ago, but they seem to keep the pyramid scheme image alive by their very business practices. My parents ended up quitting after they crunched the numbers and realized that by purchasing Amway products exclusively, they were doing nothing but lining the pockets of their upline. They also realized that by signing up others, they were asking those individuals to do the same. Their conclusion was that Amway was a way for a large group of people to support a few leaders by purchasing exclusive products. In my opinion, it is a pyramid scheme, but if you know it is and you really, really want to do it anyway, then good luck. Maybe you will make millions, but I think your odds are better at a casino.

So I got on the Web and did a little research. I found this Web site: http://www.amquix.info, which provides an encyclopedia of information related Amway's history, legal issues, and a detailed business case for their business model. The one thing I read on the site was the same thing that my parents discovered many years ago:

There is no magic to the Quixtar compensation plan. It is a highly leveraged plan, paying those at the bottom almost nothing so that their effort is leveraged up to richly compensate the upline. Traditional businesses can't apply the same leverage since they must pay minimum wage and the employer's match of the Social Security tax. Traditional business owners could generate the same "time leveraging" for them selves, if they could just find enough people willing to work for $1-$2/hour, no benefits, and pay for their own training like Quixtar IBOs do for their upline Diamonds. Due to the low sales productivity, Alticor could never afford to pay IBOs even minimum wage for the inefficient way IBOs promote Alticor's products.

I proceeded to arm myself with facts and planned on meeting the the guy from Amway who didn't want to tell me it was Amway. Then I had a customer emergency. I had to cancel. In the end, the meeting wouldn't have been productive anyway. I had been to an Amway convention with my parents, I was very familiar with the model, and I watched my parents go into debt just to maintain a quota. While some things change, Amway/Quixtar is still using the same bottom-up distribution model to keep it's upline fat at the expense of people who are promised a franchise.

Ironically, the very technology Amway is trying to exploit is the same technology that helped me find http://www.amquix.info as well as other information on their lawsuits. Just do a Google search on Amway and Quixtar.

You can dress it up with a Web interface, but Amway is still Amway and a pyramid scheme is still just that.

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