Friday, July 29, 2011

Is Amway An Economic Sinkhole?

First, a definition: Positive economic activity is that which makes more wealth in the world. To paraphrase P.J. O'Rourke, it "moves lower-valued resources to higher values". From our discussion above, it's activity which makes a bigger economic pie with more for everyone to eat.

Imagine we start with nothing, except that you live on a lot full of trees, sticks, and vines; I live on land covered with rocks and flint. We trade, do some work, and -- viola! -- we now have axes for ourselves and to sell to others. We're all just a bit richer, and our lives, just a bit better. We can trade with the fruit-people and eat. And we can chop down a tree or five, build shelters, and get inside, away from the cold. We're all richer, fewer of us are dying from exposure, and life is better all around.

We have made the world a better place.

Now consider Quixtar: In Quixtar, there are basiclly two kinds of economic activity. The first is that people buy a lot of stuff from Quixtar corporation. But this isn't generally a significant improvement, since people already had ways of buying similar or identical stuff -- either online or up the street. So the addition of that activity doesn't change the overall economic picture much. Nobody's really getting anything they didn't get before.

(But some of your money now gotes to Quixtar's owners, rather than the owners of your neighborhood stores, or Land's End, or whatever.)

BUT, the product costs must be increased slightly in order to pay bonuses back to the "uplines" who signed up each consumer. So, looking only at this part of the equation so far, people are generally paying more and getting less because of those bonuses. So that's a net negative effect. That part of the economic world is worse.

Now, what about the results of the upline payments? Well, this certainly generates some activity, too, doesn't it? The net effect of this activity is that IBOs, in order to position themselves to receive these payments at some point in the future, run around trying to contact their friends (and strangers), and spend their time, and their friends' time, telling them about this great new opportunity.

There are two things I'd like to note about this:

(1) Such meetings seemed designed to give as little information as possible. This means that people who are accustomed to knowing the cost of things before they buy them have to spend a lot of time, as I did, doing research in order to find out all kinds of things their sponsor already knows, but won't tell them -- or things their sponsor doesn't know, but really should.

(2) Then there are a lot of repeat contacts. Because the come-on is often mysterious, and doesn't mention the word "Quixtar", a person actually has to sit down with the sponsor to find out if it's Quixtar again. ("Oh, this sounds like Amway...")

Looked at as a whole, this is a very inefficient way to get the word out about Quixtar. A billboard sign and a few ad on TV would do the job much quicker and more cheaply and efficiently. (Why this is not done is explained here.)

So what value does all this activity generate? None! What new food or invention was available because Stacey called me to tell me about a "business opportunity"? I would have eaten lunch anyway, that day, but wouldn't have wasted the gas to drive to a lunch meeting I didn't enjoy. I might have just driven around the block a dozen times for all the difference it made.

Marketing, sales, and talk, on their own, don't make the world wealther. And this activity is all about talk. Remember, in the previous example, wealth (in the form of the flint axes) was actually created. But none of this activity creates wealth. It just burns it in a very inefficient manner.

In the end, the vast majority of Quixtar IBOs will drop out without ever having broken even. But consider what they could have done: If they really, really enjoyed it all, then it was no worse than a vacation. But if they could have worked elsewhere, then the world is definitely a poorer place, and we are without whatever contributions they might have given us with those hours.

(Imagine, for example, they'd decided to do community service instead. We'd have more, better playgrounds. Or imagine they'd done landscaping -- people in town would have had slightly better selection and quality when they wanted to landscape their yard.)

So, looking at the whole of Amway activity, nothing of significance is produced.

Wednesday, July 20, 2011

Double X Vitamins?

Check out this eye opening review:
Emphasis mine.

Let’s look at their flagship product… Double-X. No, it’s not the name of a late-night movie, it’s the name of their multivitamin.

You’re supposed to take all three pills, twice a day. Once in the morning once in the evening. Sounds delish. It is beyond me why they can’t just be like Costco and let you take one tablet per day in the morning for all your vitamin needs, but whatever. I’m not Nutrilite.

Unlike other leading multivitamins, a single serving of DOUBLE X is what you need your vitamin to be – 12 essential vitamins, 10 essential minerals, and 20 plant concentrates, giving you the antioxidant power of tomato, blueberry, broccoli, cranberry, pomegranate, and more. The B vitamins found in the NUTRILITE DOUBLE X Multivitamin unlock the energy in your food, and Double X contains more B6 and B12 vitamins than Centrum® Performance and One-a-Day Active® combined! In a clinical study, NUTRILITE DOUBLE X was shown to improve blood nutrient levels to provide your cells with the energy they need to support a healthy heart, brain, eyes, skin, bones, and immune system.

Hm… do you see a contradiction? In the directions, it says to take the three tablets twice daily… however, it says “a single serving of DOUBLE X is what you need your vitamin to be.” So why take it twice daily if a single serving will do the trick? Furthermore, most vitamins I come across are single servings daily. Also, look at the %DV of a single serving. Most of them are well over 100%, so why take it twice? The ones that are less than 100% are ones that you will get regardless unless you eat chalk for breakfast lunch and dinner.

Now, to tie it all up… the cost. Double X? $75 retail price for 1-2 months of consumption. Let’s say 2 months. So average cost of $37.5 / month.

Centrum Silver? Drum roll please… we have a whopping twenty bucks for 220 capsules… That’s almost $3 / month. Even if it’s two capsules per day, it’s $6 / month.

Monday, July 18, 2011

Get Paid What You Are Worth?

One of the things I saw and I believe is still taught today, is that Amway recruiters will talk about people's jobs and how you can only earn what the job is worth, and not what you are worth. Then they tell you to join the Amway business as a means to rectify that situation.

When you stop and really think twice about this, you have to wonder. If your employer doesn't pay you what you think you deserve, you are welcome to offer your services to a higher bidder. If you are unable to find a higher bidder, then you either need to increase what you have to offer, or you have overestimated your value as an employee. But at least as an employee, you have a paycheck that you can depend on, and more than likely, you know when your paydays are.

Now you get excited about being a business owner. Are you now paid what you're worth? Or at least, are you on your way to being paid what you are worth? Have you even asked or thought about what you are worth? Most IBOs, not counting the ones who "do nothing". end up moving 100 PV and getting $10 back from Amway. If they are on the system, they are likely to have spent over $100 a month to participate. Are you now "paid what you are worth?". You are in the negative, and even adding some downline is unlikely to change your situation significantly.

When you spend about $300 to make 100 PV, Amway gets paid. When you earn your 100 PV, Amway will give back about $75 in bonus money. Middle men in your upline take about $65, leaving you with $10. Are you paid what you are worth? Who did the work and who got the lion's share of the reward?

Let's say you worked really hard for a couple of years. You finally reach platinum and you earn $50,000 (before taxes). After taxes and business expenses, let's say you net $25,000. Have you now earned what you are worth? A platinum is in the top 1% of all IBOs and they net maybe $25,000 to $30,000. Are they paid what they are worth? If you can't answer yes to any of these questions, you have to ask yourself if the whole thing is worth it?

Tuesday, July 5, 2011

Is Network 21 (Amway) A Joke?

Heman on July 5th, 2011


I was foolish enough to attend the Canberra, Australia winter conference for Network 21, which cost me $170 plus fuel, food expenses.
The whole event was a joke, it was like a massive hypnotic session where “established” IBO’s would show case there holidays, cars just to further a)suck in the young one’s to train more suckers out there or b)put off people in the process.

People where dressed in there suits and Tie’s, gowns and dress just to add the glitz of the success. Noone was ever friendly except for those on your team or upline who only looked at you because your worth $$$$$$$$..

The number 1 guy for the whole weekend was Massimo Bini, who showcased his good life by ripping off others.

After that weekend went past, I now have cancelled all my associations with Amway, Network 21.

Beware it is a SCAM, I just had to pay a fortune to see the real light.

Never again AMWAY.. you losers.!!

Friday, July 1, 2011

Debunking Some Amway Arguments?

From another forum:
The majority of volume comes from the two major brands of Nutrilite and Artistry, both of which are generally cheaper than the competitors.

Not true. They are, in fact, far more expensive. Let's take Nutrilite: Their vitamin C tablets (300 tablets) cost -- are you sitting down? -- $52.49. Compare this to, say, Shoprite's vitamins which cost (for 100 tablets) $3.95, or about one fifth the price of Amway's stuff. This 5:1 price difference is typical of Amway products. Amway lies and says it's due to the products "superior quality" -- their Vitamin C is "natural" or "organic" or whatever (yeah, like the molecules give a flying duck!) But the truth is that it is more expensive because ca. 70% or so of Amway's sticker price is payments and commissions to the "uplines" in the pyramid. Except for, perhaps, other, even more expensive pyramid schemes (I presume that's who you mean by "competitors"), Amway's products are ludicrously overpriced.

The majority of Amway's members are not in the US. Amway is a business, not a job.

Actually, It is a job. Amway reps are salesmen whose sales pay for their upline, their upline's upline's, and so on, comissions -- just like a saleslman in a store pays for his boss, his bosses' boss, etc., salary. It is only a "business" in one sense -- you don't get paid. Unlike salesmen in stores or other places, Amway folks work on full commission, get no salary, health benefits, or anything else. Heck, they don't even need to be fired if they stop selling -- they fire themselves by not renewing. It's no wonder their bosses, the "upline", love them so much. They work for them for free!

Like any startup you will generally work for little or nothing for months or years to reach decent profitability.

Not really. Startups finally become profitable IF THEY SELL ENOUGH PRODUCTS OR SERVICES TO THE PUBLIC. Amway folks only become profitable if they GET ENOUGH PEOPLE BELOW THEM IN THE PYRAMID. Nobody cares about the product -- it's just an excuse that officially makes the pyramid legal. It's not as if anybody except for Amway drones, brainwashed by their "upline" to be "team players", actually buys a $52.49 bottle of vitamin pills -- of which $40 or so is pure commission to the upline, the upline's upline, the upline's upline's upline...

The rest of your "analysis" is based on this false assumption it's a job. Please compare to starting an running a business, with all the attendent strengths and weaknesses.

WHAT strengths?
It is a business selling incredibly overpriced products, where nobody has any contractual guarantee of any territory, and in which you are very strongly encouraged to RECRUIT YOUR OWN COMPETITION. If Amway were a business where the goal was to make money selling products, it is a suicidal business plan -- it's as if McDonald's priced their hamburgers at $100 a piece, and encouraged every franchise owner, not to sell hamburgers, but to recruit every customer to open another McDonald's next door in order to "join the great opportunity".

Amway's pricing and strategy of recruiting make it crystal clear that it isn't a business, but merely a pyramid scheme where the real, indeed the only, money is found by getting people "under" you to buy tons of overpriced stuff so you'll get a comission... just like YOU paid tons of money to YOUR upline buying tons of overpriced stuff so HE'LL get a comission.