Amway, one of the best examples of Multi-Level-Marketing (MLM), is one of the oldest operational companies with a successful marketing model. Found in 1959 in the United States, with the principles of freedom, hope, and reward, it has become one of the world’s largest direct selling companies. It sells nutrition, health, beauty, and home care products to consumers in more than 100 markets around the globe.
Amway, an abbreviation of the ‘American way’, is more than just a company selling products. It is a concept that uses direct selling, that is, eliminating the middlemen altogether and hence making it a transaction between the company and the customer. Amway is family-owned, financially stable, and led by a diverse global management team that supports Amway Independent Business Owners and their goals. Amway is built on principles, people, and products that have touched millions of lives around the world.
Amway has more than 3 million distributors all around the world. The extended portfolio of Amway consists of more than 3000 products that are sold in more than 100 countries. It holds more than 800 patents. In the past seven years, the company has invested $335 million in Research & Development facilities across the Americas. In 2018, the company clocked sales of $8.8 billion, as per their official report.
Products Portfolio
Amway offers a broad portfolio of healthy products and solutions, with 350+ products that support the journey towards a healthier lifestyle. These products are specially designed to meet the individual needs for nutritional support, beauty, personal care, and home care. They offer high-quality, high-premium products through a range of well-established brands, namely Nutrilite, Artistry, Atmosphere, eSpring, Satinique, and Amway Home.
- Nutrilite: The world’s No. 1 selling vitamins and dietary supplements brand, featuring plant-based ingredients, many of which are made from plants grown on Amway’s nearly 6,000 acres of certified organic farmland in the U.S., Brazil, and Mexico.
- Artistry: Personalized beauty products infused with natural botanical ingredients and backed by Amway’s expertise in skin science.
- eSpring: The world’s No. 1 selling brand of home water treatment systems, providing clean drinking water to families around the world.
- Atmosphere: The best-in-class air treatment system delivers clean air to homes by removing allergens and other contaminants from air passing through the filters.
- Amway Home: A full line of environmentally sensitive cleaning products for the home that use biodegradable ingredients.
Apart from these brands, Amway has also launched Amway Queen in 2017 which is a premium cookware brand that set a record of crossing 100 crores sales mark within 10 months from the launch. Amway Queen enables cooking with much less water and almost zero-oil as compared to a conventional cookware range.
Amway Business Model
Amway follows a multi-level marketing model, which is quite different from the traditional marketing model.
In a traditional marketing model, a company has the supply chain, distributors (channel partners), retailers, and consumers. Brands spend hefty amounts on advertisements via various means, and customers demand and collect that product from the retailer. However, in Amway’s Multi-Level Marketing model, the middlemen are eliminated. Instead of having a few large distributors, the company deals directly with a person who works as a distributors-marketers-salespersons-delivery agent.
All the steps practiced in a traditional supply chain at various levels are practiced by these individuals alone. This eliminates increased costs from a model, transportation costs from one channel to the other that accrues in the traditional model, and the marketing costs. In this way, a company can provide the right profit margin to each individual, which makes it profitable for both Amway as well as distributor.
It works on a system of referral. The distributors call themselves Individual Business Owners (IBO); they refer the Amway product to people and hence attract sales by mouth to mouth convincing. The distributors also convince other people to become a part of this distribution chain. They, further, get incentives from part of sales done by their referred person. For instance, Amway appoints A, A makes his sales and also bring B into the same business. Similarly, B brings C into business, and C brings D into the market. Now, if B makes any sale, A will earn a small incentive from his sale as he referred him; similarly, B gets incentives from C sales, and the chain further continues. Incentives are revived apart from their sales, so it makes this a lot profitable for each person in the chain.
A trick here is that there is a monthly sales target set by Amway, and one must achieve that target to get the margins. Apart from this, the members of the Amway chain are generally obsessed with the Amway products, so each member of the chain ends up buying a reasonable amount of products for himself, which contributes to the sale of the company. So even if they are unable to attract new customers, the existing distributors who are part of the supply chain buy that much to run the company smoothly.
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Running into the allegations that Amway is a scam
No, it is not a scam. They are just practicing a unique business model that closely resembles an illegal marketing model known as Pyramid Scheme, but it is not that exactly.
Secondly, companies that tend to do a scam change business models from time to time and are comparatively new. However, in the case of Amway, they are on the same business model from 1959, and users are making reasonable amounts of profits too, which clearly shows that it’s not a scam. Most importantly, Amway does have a strong foundation. Generally, for any company, a strong foundation means the right product, and Amway does have that. The quality products that Amway offers are liked worldwide.
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