In 1999 the founders of the Amway corporation launched a sister (and separate) internet-based company named Quixtar. Both Amway and Quixtar are owned by Alticor. Quixtar took over the North American business of Amway in 2001.
Anybody can become an Amway distributor; distributors may purchase products from Amway at a rate published as wholesale price.
In the United States, up to 30% of these monthly purchases may be used for personal consumption, the rest has to be sold to others. (In most other countries, how much is used for personal consumption and how much is sold to others is entirely a matter of personal preference). If a distributor can convince a new participant to join the system, the distributor becomes the new person's sponsor, or upline. Amway distributors receive monthly payments based on the amount of sales their group generates; the group consists of all people sponsored by the distributor, and all people sponsored by those, and so on. It is not possible to join without a sponsor, and one has to purchase an "Amway Opportunity Kit" in order to become a distributor. Amway claims to have 3 million distributors worldwide, including 500,000 in the U.S. A very fast growing market is Japan with 1 million distributors. Recently, they received permission to establish a network in China.
The AMOs offer free motivational speeches for people who have not yet joined
the Amway system and sell motivational seminars, tapes and literature to Amway
distributors.
Amway employs a system of "levels" to reward successful distributors; higher level distributors act as mentors to newer distributors, organize regular meetings of their group and derive most of their profit from the sale of motivational tools to them. The highest level is Crown Ambassador, but with only two Crown Ambassadors in the world at present (one of them Dexter Yager, a legend in the Amway organization), most distributors aspire to the level of Diamond.
Amway Corporation has often been identified as supporting the US Republican Party and other right-wing causes, but this is not strictly accurate. Amway Corporation, as such, supports no political party. It is true that the co-founders, Rich de Vos and Jay van Andes, are strong supporters of the Republican Party, but this is a personal position, not a company position per se. Many of Amway's best-known distributors, including Dexter Yager, are also self-declared Republicans. Perhaps paradoxically for an organization so widely regarded as right-wing, Amway touts the environmental benefits of many of its products, and in June 1989 it was recognized by UNEP's Regional Office for North America for its contributions to the cause of the environment.
While supporters of the system point out that Amway is an easy way to earn money on the side and that it makes sense to buy products for personal use "from your own business" wholesale, critics charge that even the wholesale prices published by Amway are often higher than retail prices elsewhere.
Many of their products such as cleaning solutions are highly concentrated,
and therefore may still be competitively priced when that is taken into
account, and the manufacturer generally claims that their products are of
higher quality than less-expensive similar products.
Like many multi-level marketing operations, Amway has been called a pyramid scheme. Critics point out that participating in the system is not free, that AMOs often emphasize the recruitment of new participants over selling products and that many distributors spend little time actually selling products to others. It is also alleged that the above-mentioned "70% rule" is not sufficiently emphasized to new recruits, and that few products are ever sold to people outside of the Amway organization. There is considerable variation, however, among the different Amway "groups". The Dreamchasers group, led by Peter Maddison of Australia and very active in Australia, New Zealand, Malaysia, and Greece differs from many of the other groups in that it discourages people from joining Amway unless they are prepared to make the effort to market Amway products among non-Amway consumers. Consequently, a much higher than average percentage of their income is from people outside of the organization.
Another criticism is that more than half of the distributors do not make any money at all, with the average distributor making less than $100 per month. Amway supporters reply that the organization does not have fixed working hours, and that how hard a distributor works (if at all) is a personal choice. The implication is that those who do not succeed in Amway are simply lazy. This charge is resented by former distributors who say that they got nothing for the sacrifices they made. It could be that an individual's personality and people skills are factors, as are such external circumstances such the state of the economy and the receptivity of the market, factors which vary considerably from one place to another.
Accusations that AMOs target psychologically vulnerable people and that some distributors have become alienated from family and friends who did not support their activity are rejected by Amway supporters as exaggerated. Such behaviour is prohibited by the Amway manual, but in such a large organization comprising such diverse individuals and groupings, there is always the possibility of certain individuals abusing their power over their "downlines." Amway supporters see such abuses as the fault of the individuals concerned, rather than of the organization.
In a 1979 ruling, the FTC found that Amway does not qualify as an illegal pyramid scheme since the main aim of the enterprise is the sale of product. It did, however, order Amway to change several business practices and prohibited the company from misrepresenting the amount of profit, earnings or sales its distributors are likely to achieve. Amway was ordered to accompany any such statements with the actual averages per distributor, pointing out that more than half of the distributors do not make any money, with the average distributor making less than $100 per month. The order was violated with a 1986 ad campaign, resulting in a $100,000 fine.
In 1983, Amway pleaded guilty to tax evasion and customs fraud in Canada, resulting in a fine of 25 million Canadian dollars, the largest fine ever imposed in Canada.
The system
Political causes
Criticism
Legal rulings
External links and references