Amway Business Model and Their Strategy

The Amway business model is the epitome of the MLM business model. When one represents Amway, they are selling products that people use every day. Things like soap and deodorant might not be appealing in a conversation to others, but these consumables mean that people keep coming back for more. Amway rewards representatives by paying commissions, offering monthly performance bonuses, and an extensive downstream.

Many downstreams in the MLM world will only offer a certain percentage of each rep’s sales to the sponsor or leader of the group. Amway emphasizes the downstream a little more than others. There are monthly and yearly leadership bonuses that are available, plus ongoing incentives that offer cash and other bonuses based on group and individual performance.

There Are 3 Ways To Earn Money With Amway

To start working for Amway, an individual must sign up to become and Individual Business Owner. This is because workers are essentially independent contractors. You can set your own hours, represent the products that you can sell the best, and earn money based on the amount of hours that you wish to work during the week.

There are three ways that IBOs with Amway typically make money.

1. By earning the retail margin percentage that is on the products directly sold.
2. Monthly bonuses that are based on sales performances, both individually based and within the downstream.
3. Growth incentives that encourage hard work and innovation so that more money can be earned faster.

To get started with Amway, IBOs need to pay a $62 registration fee. This is direct profit for the company, but it also comes with a 100% satisfaction guarantee for the first 90 days. The fee provides a welcome kit that helps to get new representatives up-to-date with the various product lines that are offered. Those who are just starting are also recommended to purchase an $83.90 product kit so the items that Amway sells can be sampled and sold with authenticity. The product kit contains $160 worth of full-sized Amway products to try.

Amway Offers Numerous Brands For Sales Opportunities

As with other MLM brands, like Avon or Herbalife, there are several different brands that are available for IBOs to sell. There are also partnerships in place for IBOs to receive discounts at some of today’s top retail brands, such as Apple and Best Buy, that are only available by joining Amway. With exclusive products, IBO rewards, and one of the world’s top selling brands in Artistry, there are plenty of ways to begin making money with Amway.

Making Money With Amway Can Be Difficult

The problem that Amway faces is the same problem that many MLM programs face. Eventually the market becomes saturated with sales reps who are all trying to offer the same things to the same customers. Add in the fact that shipping costs on Amway products can be pretty high, sometimes equal to the products being purchased, and that discourages a purchase.

Representatives are also encouraged to attend sales meetings, purchase materials from Amway on an ongoing basis, books to help with selling, and tickets to seminars that Amway sponsors. This is where a lot of the money can be earned for the company. The money for the IBOs, however, comes from points that are accumulated through the purchase, selling, or consumptions of Amway products.

It’s also important to remember that IBOs are trying to establish a downstream, but they also have an upline that is going to put pressure on them. The moment a meeting is missed, promotional products aren’t purchased, or sales aren’t as good, then the pressure comes to work harder and longer.

There Are Minimums In Place That Must Be Met

For new IBOs, the low overhead of the Amway business model seems to be an enticing way to build a business. For some it is, but being involved with the marketing system is what pays the upline and that means consuming products. There is a minimum of 100 PV that must be consumed every month in some way, either through personal consumption or through sales. The numbers of sales to non-IBO customers, in fact, is a very small percentage of Amway’s business.

This means most of the products that are being purchased through Amway are by business owners who are signing up to sell them to others. The cost of 100 PV can be $300-$500 per month. That’s a lot of cash to invest into a business when it’s inventory that is being moved. An entire family of four would need to be taking vitamins on a regular basis and drinking energy drinks every day to fulfill the minimums.

Are these minimums optional? Yes. Are the selling tools optional as well? Yes. The pressures that are placed on new IBOs, however, make it seem like this isn’t always something that is possible. People are told to attend sales meetings or events. They will be “strongly encouraged” to use integrated tools instead of their own tools to sell.

You Are Not an Independent Contractor With Amway

Although there are components of being an independent contractor as an IBO with Amway, this isn’t really the case. You don’t own your own business because you’re not allowed to sell products in any way that you’d like. Because there are certain procedures that must be followed, this makes IBOs a salesperson that is paid on commission only.

For those that do get involved with Amway, the key to a successful opportunity has to be in the building of the downstream. Because most products are purchased by IBOs, the only way to really make a profit is to start your own group, become an upline representative, and start earning commissions on the required minimums that are in place. The pressures are simply passed on down the chain of IBOs to use and consume Amway products.

Is Amway a Good Business Opportunity?

When working appropriately, the Amway business model is one that can work. The tiered levels of sales representatives in each upline can all help other IBOs succeed. The unfortunate fact, however, is that many representatives get involved thinking that they can start their own business for a small price and very little overhead. The reality is that Amway is just like any other business opportunity, but with a small twist – sales reps don’t actually have their own business.

For those that are good at sales and love to be social with people consistently, then the Amway business model presents a tremendous opportunity for success. The failure rates of IBOs are high, however, because there just isn’t enough cash to meet the minimums, the training material needs, and every other upline sponsored event that occurs.

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