Tuesday, July 12, 2016

Amway The Negative Sum Game?

To explain my blogpost, I will explain a zero sum game. A zero sum game is like a poker game. Say that you have 5 poker players who each bring $100 to a poker game. At the end of the nite, one player may go home with the $500 and the rest broke, or they may all go home even with $100 or other variations. But in any scenario, the total sum of cash the players take home will equal $500. A negative sum game would be perhaps a poker game where each player for example, pays $10 to "the house" before playing, thus the game with 5 players would have the house taking in $50 and the players competing for the remaining $450. In this second scenario, it is possible for all five players to leave the game with less than the $100 they initally came to the game with.

In the Amway global business, the business is run much like a negative sum game with Amway and the AMO's being "the house". Except in this game, Amway and the AMOs get most of the money and fewer than 1% of all IBOs being the "winners". Amway benefits from the IBOs who are taught to consume their 100 PV which is about $300 a month in sale for Amway, and the AMOs make their money by selling motivational materials such as seminars and cds. In Amway's case, at least an IBO might be able to return a portion of their goods for a refund, or they may be able to sell or use their products. In the AMO's case, most IBOs do not succeed as a reult of the tools, and the tools are virtually worthless outside of Amway, despite the fact that IBOs claim the tools teach them valuable principles. This is evidenced by the tools being sold, literally for pennies on Ebay or Craig's List.

In virtually every group scenario you can illustrate, the group as a whole will suffer losses because their sales do not cover the cost of overhead, and do not even cover the cost of the IBO's personal use items. IBOs need their jobs to continue to fund their purchase of Amway products and system tools. It is very very rare that you will encounter an IBO who sells enough product to cover his/her expenses and this is evidenced by Amway's own numbers that less than 4% of good are sold to non IBOs.

My conclusion based on the evidence is that the Amway Opportunity is a negative sum game where IBOs and IBO's jobs make Amway and certain select AMO leaders wealthy while the IBO population lives in poverty while thinking they are successful.

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