Amway Review – Is It a Scam?
Note: We have no relationship with Amway
When talk of working for yourself comes up in conversation, one of the companies that is frequently mentioned is Amway. That makes sense; Amway has been around for more than half a century and they’re more or less the originators of modern, multilevel marketing as we know it. Amway is still viable in the twenty first century, but the company continues to be dogged by claims that they’re either a scam or some kind of pyramid scheme. Is Amway a scam? Or is it a workable moneymaking system? Read on for our full Amway review.
Amway was founded in 1959 and the company’s first products were vitamins, which eventually expanded into nutritional supplements, cosmetics, detergents and household items and even electronics. It’s a big concern today, with tens of thousands of Individual Business Owners, or IBOs, who between them generate more than ten billion dollars a year in gross revenue. There’s also a lot of money to be made with Amway; the company’s top earner in 2013 earned nearly three million dollars. So how does Amway work?
In short, Amway’s business model is direct-to-consumer sales of retail products. You can join as an IBO for a fee of $62 and then you can choose from the company’s extensive lineup of products to buy merchandise at wholesale prices. While the company has recommended retail prices, you are free to price the merchandise at whatever price you like, and when you make sales, you keep the difference between the price you paid and the selling price as profit. Amway intends for you to introduce their products to your friends, family, members of your church or whatever other groups you interact with socially as a way of expanding your business. This is a different model from opening a store and selling to the general public; Amway wants you to make your sales through personal interaction with people.
Amway’s compensation plan is more elaborate than simply “buy at wholesale and sell at retail.” The company’s compensation plan is also tied to recruitment of other people as IBOs, and when they make sales, you will receive a portion of what they earn as a bonus. The compensation plan is rather complicated, but it’s rather pyramid-shaped, which is where the company gets its reputation as a scam. You can earn money by selling Amway laundry detergent, but you can make more money if you can sell detergent and persuade someone else to sell it, too. And if they can persuade someone else to join as an IBO, you’ll make money from them, as well, and this extends to infinity.
Is Amway a Scam or Pyramid Scheme?
In the late 1970s, the Federal Trade Commission investigated Amway against charges that the MLM company was actually operating a pyramid scheme, which is illegal under US law. They came to the conclusion that the company was not doing anything illegal. While there is compensation for recruiting new members, the compensation of an IBO is not necessarily tied to recruitment, nor is recruitment necessary to earn money with Amway. You’re free to join, buy their products, sell them to the public, and do nothing else. If you can persuade others to join, and make sales, you’ll get compensation for that, but it’s not a requirement, nor is recruitment the primary objective, which is the defining aspect of pyramid schemes.
That said, can you make money with Amway? Well, there are people who do, and the company’s brochure hypes the fact that there are members earning six and even seven figures with the company. Of course, there is the matter of the fine print regarding that disclosure and that is this: Less than one half of one percent of Amway IBOs are earning in excess of $57,000 per year. That’s one out of every two hundred. The fine print goes on to disclose that the average monthly gross income for active IBOs in 2013 was a mere $202.
There have been lots of jokes over the years about people who signed up as Amway IBOs and are now stuck with garages full of unsold products, and there may be some truth to that. In Amway’s defense, they don’t spend a lot of time, as many MLM companies do, telling you that you’re going to become wealthy, nor do they spend a lot of time talking about the multilevel compensation plan. Their talk is mostly about how you can work for yourself and become your own boss and how Amway will offer you a chance to do that.
You can join Amway as an IBO for $62, which gets you membership and some printed literature. For an additional $83.99, you can purchase a product kit containing samples of some of the company’s most popular products, which will allow you to become familiar with them so that you can sell them more easily. After that, the amount you spend is largely up to you – you have to buy products at wholesale prices in order to sell them. The company does provide extensive training to help you learn how to sell their products, and of course, you’ll have help from whomever sponsored you to become an Amway IBO in the first place.
The Internet has changed the dynamic of how such businesses work and while it’s certainly still possible to walk door to door in your neighborhood, schmoozing with your neighbors while you talk about the benefits of Amway laundry detergent, the Internet offers you a better opportunity to reach a lot of potential customers in a hurry.
Amway Conclusion and Alternatives
Amway is not a scam; it’s a legitimate business opportunity. But it’s going to cost you money to join, and more money to buy products to resell. It’s not necessarily the best way to start making money if you’re a newbie and particularly if you’re a newbie on a budget. We’re so-so on Amway; it might work for some people but not others. A better alternative would be to learn how to sell products online, which you can do for free with a training course like Wealthy Affiliate. You can use the skills you learn with Wealthy Affiliate to either promote products as an affiliate, which would eliminate the need to buy products at wholesale and keep inventory in your home. Alternatively, you could use what you learned with Wealthy Affiliate as a stepping stone to promoting Amway online.
You can make money with Amway, but it’s not necessarily the best place to start.