ASSIGNMENT OF

STRATEGIC MANAGEMENT
TOPIC:
AMWAY ENTERPRISE

Submitted to: Submitted by:

Dr. Gurcharan singh tohra Iqbal singh
MBA-II (B)
18421054

School of Management Studies

Punjabi University, Patiala, Punja
 INDEX

Sr. no. Content Page no.

1. Amway Mission and Vision 3

2. Introduction of Amway 4

3. Profile of Amway 5

4. Products Range 6

5. Brands 7-10

6. Market strategies of Amway 11-14

7. Sales revenue of Amway 2019 15

8. Why decline sales revenue of Amway 16-20

9. India Huge Growth Driver 21

10. What is wrong with Amway sales? 22

Why Amway Lost $3 Billion Sales In 3 Year

11. 23

12. Amway, Failure By Design? 24

13. Amway Made China a Billion-Dollar Market. Now 25-29

It Faces a Crackdown

14. Conclusion 30

15. Bibliography 31

2
 AMWAY VISION
“Helping people living better lives. In all aspects of our
product business and social responsibility, we strive to make
a meaningful difference in the communities in which we
operates”.

AMWAY MISSION
“Through the partnering of distributors, employees and the
founding families, and the support of quality products and
service, we offer all people the opportunity to achieve their
goals through the amway sales and marketing plan.”

Amway
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  Introduction:

Amway, a subsidiary of Alticor, is the largest multi-level marketing (MLM)

organization in the world. Amway, an abbreviation of “American Way” was
coined in 1959 by the founders, Jay VanAndel and Richard DeVos. Amway is
about people connecting people to better way of life. Amway Corporation is one of
the largest Direct Selling companies in the world. It is a multinational direct-selling
company using multi-level marketing techniques that sells a variety of products,
primarily in the health, beauty, and home care markets. Today, Amway is a
multibillion-dollar international business representing freedom and opportunity to
millions of people in more than 100 countries and territories around the world. It
owns and operates 15 global manufacturing and process plants around the world.
Amway is a prominent and active member of the regional and national direct
selling associations worldwide. In the following decades, Amway Corporation
successfully established itself as a leading multilevel marketing business, built on
strong values and founding principles that continue to sustain the company today.

Amway is a pioneer in direct marketing and working on the faith and dedication of
the distributors by providing them free atmosphere and healthy incentive plans.
The company is engaged in selling product to the consumers directly with help of
distributors which is known as Independent Business Owners (IBO). This method
depends on multilevel marketing or network marketing model. This Independent
Business Owners develop a network of people by recruiting others under them and
expand a huge network. The IBO earns commission on the products sold. Further,
the ABO also gets commission for the sales done by other IBOs recruited by him.
This business model categorized the distributors on the basis of sales performance
of their entire team and therefore everybody’s commission will be differ
accordingly.

 Profile of Amway Company

Amway (short for "American Way") is an American multi-level

marketing company that sells health, beauty, and home care products. The
company was founded in 1959 by Jay Van Andel and Richard DeVos and is based
in Ada, Michigan united state. Amway and its sister companies

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under Alticor reported sales of $8.8 billion in 2018.Amway is one of the world’s
largest and most successful direct selling companies. It conducts business through
a number of affiliated companies in more than a hundred countries and territories.
Amway has been investigated in various countries and by institutions such as
the Federal Trade Commission (FTC) for alleged pyramid scheme practices.

Type – Private

Industry – Direct Selling

Founded – 1959

Founders – Rich DeVos and Jay Van Andel

Headquarter – Ada, Michigan, United States

Key People – Steve Van Andel (Chairman) Dong DeVos (President)

Products – Home care, Personal care, Nutrition and WellnessHealth care,

Agriculture products, General category products.

In company’s portfolio there are number of products which tested in research and
development department of the company regularly. All these products were sales
by train salespeople of the company which is known as Independent Business
Owners of the Amway. The product includes health care, beauty care, home care
and personal care.

The company’s existent in more than eighty countries with many products as per
the requirement of the country. Amway doing the business in different way with
help of think global and act local from last forty years.

The company also launched the attitude range of skincare products with extra
benefits in moisturizers, face wash and sun screen lotions. The company has signed
brand ambassador of bollywood actress Diya Mirza for their products at first time.
The company has planned to hire some research scientist to set up research and
development in the country for better production and to Company Profile 71
maintain quality of the product. In India Company’s market share is remarkable in
direct selling industry. Every year the growth of direct selling industry in India is
around 20 percent which is good sign for the country’s development. The report of

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Ernst and Young says that, the direct selling industry will estimated to touch Rs.7,
100 crore by the end of 2012-13. This will create the employment in the country
like India.

 Products:

The company offers more than eighty products in its portfolio in different category
like personal care, home care, nutritional, cosmetics, insurance and agriculture.
With some exceptional cases, all the products and bottles are manufactured in India
with world class quality. At the same time company is also giving hundred percent
money back guarantee to the consumers. In this case if, any consumer is not
satisfied with product, company will return the money with used products to the
customers. The product of Amway product is environmentally friendly and there is
no harm to consume the products.

The product range of Amway

 Home care products

 Personal care products
 Nutrition and wellness-Health care products
 Agriculture
 General Category Products

The above range of the Amway products is available and around eighty products
are there to sale in the market according to the need of the market. This Amway
business is based on direct selling format and multilevel marketing format which is
the success mantra for the people and Company Profile 75 distributors. Number of
people joins the business because they trust on the quality of the products which
Amway produced for the people’s betterment. There is different type of
information available in the market and also products are available on internet. So
people can give the ordered online and deliver at home. It will definitely save their
time and energy.

A Product-based Business:

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 Basically for every business there should be some product and services required.
The Amway business is based on its world class products and services rendered by
the company. The company’s number one brand is Nutrilite which is dietary
supplement with multivitamin. After that beauty care and home care products are
also demanded by the people at very much amount. In detergent liquid organic
cleaner is trusted brand of the company. The managing director of the company
says that, company offering thirty three products in the different category namely
personal care, home care, nutritional and well being and cosmetic products. After
that oral care products like tooth brush, face powder. The company is also
manufacturing the products in sachet for the every sector of the market that help to
people to purchase the products.

 Brands:
Amway's product line grew from LOC, with the laundry detergent SA8 added in
1960, and later the hair care product Satinique (1965) and the cosmetics
line Artistry (1968). Today Amway manufactures over 450 products, with
manufacturing facilities in China, India and the US, as well as Nutrilite organic
farms in Brazil, Mexico and the US (California and Washington State).Amway
brands include Artistry, Atmosphere, Body Blends, Bodykey, Body Works, Clear
Now, eSpring, Glister, iCook, Legacy of Clean, Nutrilite, Peter Island, Perfect
Empowered Drinking Water, Personal Accents, Ribbon, Satinique, Artistry Men
and XS.
In 2018, nutrition and wellness products were 52% of total sales, and beauty and
personal care products, 26%

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  Household cleaners
Amway is best known in North America for its original multi-purpose cleaning
product LOC, SA8 laundry detergent, and Dish Drops dishwashing liquid. In the
January 2007 issue of Consumer Reports, SA8 with Bioquest was rated the best-
performing laundry detergent.Consumer Reports did, however, criticize SA8's
pricing, a situation which was disputed by Amway. Consumer Reports conducted
blind testing of detergents in 2010 and ranked versions of Amway's Legacy of
Clean detergents 9th and 18th of 20 detergents tested. Consumer Reports program
manager Pat Slaven recommended against buying the products because consumer

 Health and beauty

Amway's health and beauty brands include Artistry, Satinique, Hymm, Body
Series, Glister, Moiskin (South America), Nutrilite, Nutriway (Scandinavia and
Australia/New Zealand), Attitude (India), eSpring, Atmosphere and iCook as well
as XL and XS Energy drinks. Other Amway brands that were discontinued or
replaced include Tolsom, Eddie Funkhouser New York, or beautycycle (Eastern
Europe).
 Artistry
Amway's Artistry products include skin care, cosmetics, and anti-aging creams and
serums. In 2011, Artistry brand reached sales of $2.8 billion.

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  Nutrilite

Amway's largest-selling brand is the Nutrilite range of health supplements

(marketed as Nutriway in some countries), and in 2008 Nutrilite sales exceeded $3
billion globally. In 2001, NSF International issued its first five dietary supplement
certifications to Nutrilite.
In 2011, Nutrilite brand of vitamins and dietary supplements led Amway's sales,
totaling almost $4.7 billion. According to Euromonitor International, in 2014,
Nutrilite was the world's No. 1 selling vitamins and dietary supplements brand. In
2015, it was reported that according to Euromonitor International, Amway was the
largest vitamin and dietary supplement vendor in China, with 11% of a market that
generated 100 billion yuan ($15.6 billion) in annual sales. In 2015, it was reported
that according to China Confidential consumer brands survey, Amway Nutrilite
was the most popular vitamin and dietary supplement brand in China.

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In January 2009, Amway announced a voluntary recall of Nutrilite and XS Energy
Bars after learning that they had possibly been manufactured with Salmonella-
contaminated ingredients from Peanut Corporation of America. The company
indicated that it had not received any reports of illness in connection with the
products.
In 2012, the Center for Science in the Public Interest (CSPI), accused Amway of
making unsubstantiated and illegal claims about Nutrilite Fruits & Vegetables 2GO
Twist Tubes and threatened to launch a class action lawsuit against the company
unless it took remedial action.Amway responded that the claims made about the
products were properly substantiated and that they did not plan to change the
product's labeling but nevertheless would review the statements that CSPI has
questioned. CSPI later reported that Amway had agreed to changing product labels
by the end of 2014.

 Market strategies of amway:

Serving more than 71 millions household since its inceptions, 1959 when it was
founded by Jay Van Andel and Rich DeVos as a family business the company is
world’s number 1 direct selling firm.

Amway continuously works to reduce the use of nonrenewable resources and

decreases greenhouse gas emissions by using sustainable building and agricultural
practices, and, renewable sources of energy as approximately 6500 Acres of
certified organic land is owned and operated by the company.

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  Segmentation, targeting, positioning in the Marketing
strategy of Amway –

To understand the customer demographic and geographic factors which can help in identifying

the potential customers, Amway uses a mix of demographic and
geographic segmentation variables such age, Gender, profession, region, income class etc.

Amway uses undifferentiated targeting strategy since most of its products are sold through cross-

selling and Upselling to the existing customers.

Amway has always been known for its unique business model and quality products. It uses
customer benefit and value-based positioning strategy to position itself as a quality brand in the
mind of the consumer.

 Competitive advantage in the Marketing strategy

of Amway –
Business Model: Amway operates with the business model of Multilevel and direct
selling marketing strategy wherein it enables its consumers to become band ambassador of the

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company and earn while referring products to new customers.  Amway has paid more than $ 56
billion since inception as bonus and incentives to these customers for referring. 

Manufacturing and R & D facilities: Amway operates through 18 manufacturing & processing

plants and 70+ R&D quality assurance labs globally across the major economies of the world
which covers America, European market, Asia Pacific and Africa.

 Distribution strategy in the Marketing strategy

of Amway –
Supported by 20000+ employees empowering the millions of customers popularly called Amway
Business owners (ABO) through seminars, entrepreneurship programs have helped the company
in making its products available globally

It addresses the needs of the region, distributor or customer through 720+ Amway experience
centers, distribution centers, and shops. Apart from this it also distributes its offerings through e-
commerce sites, resellers and wholesalers.

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  Brand equity in the Marketing strategy of Amway-
Amway has been ranked 35 in Forbes magazine list of America’s Largest Private
Companies. The brand has been valued at $ 8.8 billion as of Dec 2016 (market
capitalization value method) generating revenue of $ 8.8 billion.

 Competitive analysis in the Marketing strategy of Amway –

The number one Direct selling company in the world has a presence in more than
110 countries & territories globally, its operation and commitment to continue to
become a customer-centric organization is incomparable.The core competency of
Amway is its commitment to manufacturing quality & innovative products (holds
1150+ patients) and empower each of its business owners to propagate the benefits
through face to face interaction with other customers.

 Market analysis in the Marketing strategy of Amway –

In a traditional market wherein 3-tier or 4-tier supply chain entities are involved in
the consumer market, Amway works on a 2-tier business model of B2C (Business
to a customer) and C2C (customer to customer).

Amway faces bottlenecks in the industry such as the risk of brand

image deterioration due to a customer, government regulations imposing the
restriction on a business model, bargaining power of customers, rise of e-
commerce sites and changing a lifestyle of people.

 Customer analysis in the Marketing strategy of Amway –

Customers of Amway in a retail segment are in the age group of 20-60 years. Most
of the customers are acquired by the company through the positive word of mouth
of the customers. Customers play the critical role in the overall delivery system as
each customer of Amway Business owners brings in customer gets incentives in
return.

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Resellers, Distributors, Pops & mums store and e-commerce websites are the B2B
(business to business) customers of Amway.

 Sale revenue 2019 of amway

Company Growth Strategy Focused on Digital, Product Innovation and Business Owner
Compensation
ADA, MICH., USA (Feb. 24, 2020) – Amway, the world’s largest direct seller,
amway announced sales of $8.4 billion USD for the year ending Dec. 31, 2019,
down 5 percent from 2018 figures. China, Amway’s largest market, saw significant
declines in the overall direct selling industry, yet Amway was able to improve
market share and move up a spot to become the country’s number two direct
selling company.
“In 2019, we celebrated our 60th anniversary and now we are looking ahead to our
70th to unleash entrepreneurship for the next generation,” said Amway Chief
Executive Officer Milind Pant. “Amway is already aligned with some of the
biggest global trends, like the gig economy, increasing consumer demand for
product experiences that support a healthy lifestyle, and the rise of communities on
social media that connect people with similar passions and interests. Our new
multi-year growth strategy and investment plan will help ABOs capitalize on these
trends to support their customers.”

Amway is investing more than $500 million in 2020 in digital platforms, product
innovation and independent Amway Business Owner (ABO) compensation, all to
drive global enterprise growth and enable ABOs to better meet the needs of their
customers.

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 DECLINE IN SALES REVENUE OF AMWAY

ADA, MI -- Amway sales dropped more than 7 percent in 2016 to $8.8 billion,
marking a third year of revenue decline for the Michigan-based direct sales
giant.

The privately-held company, headquartered in the Grand Rapids suburb of Ada,

released its overall 2016 sales figure this morning -- showing a $700 million
decline from a year earlier. The last time Amway had sales in the $8 billion
range was in 2009.

But 2016 marked the smallest drop in sales of the three-year decline. Revenues
slipped 12 percent in 2015 and 8 percent in 2014.

The direct seller increased sales in seven of its top 10 markets, but had lower
revenues in China, its biggest market, for the third straight year.

"We actually think the numbers were pretty good," Amway Chairman Steve Van
Andel told MLive and The Grand Rapids Press. "If you look at the world for us,
it's primarily our largest market is going through a cycle."

With China's middle class on track to balloon to 550 million people by 2020,
Amway remains committed to growing its business in what is expected to be the
world's biggest economy.

"Everyone still says they are disappointed with China because their economic
growth is only 6 or 7 percent," Amway President Doug DeVos said. "That's still
pretty good. We see a lot of potential there. We are very confident in the market
itself and what is Amway China."

The top 10 nations for Amway in 2016 were China, United States, South Korea,
Japan, Thailand, Taiwan, India, Malaysia, Russia and Hong Kong.

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Amway sales were up double digits in nine countries. The company didn't
identify them and doesn't release sales figures for individual markets. The annual
announcement also doesn't reveal its profits.

ANNUAL AMWAY SALES

• 2016: $8.8B, down 7.4%

• 2015: $9.5B, down 12%
• 2014: $10.8B, down 8%
• 2013: $11.8B, up 4.4%
• 2012: $11.3B, up 4%
• 2011: $10.9B, up 17%
• 2010: $9.2B, up 9.5%

But Amway does break down sales by product category. In 2016, nutritional
supplements made up 49 percent of sales, up 3 percentage points from 2015;
beauty and personal care remained at 25 percent, durable products was 15
percent, down 1 percentage point; home care remained 7 percent while other
products accounted for 4 percent of sales, down 2 percentage points. The
Amway made products are sold through a network of more than 3 million
distributors.

"We are pleased to see the continued and growing relevance of the direct selling
model in today's marketplace as people place real value on personal
recommendations, and technology enables our distributors to connect with
customers at any place, at any time," Van Andel said.

He added the company planned to evolve the business in China by taking

advantage of technology to grow market share. Sales in China accounts for about
one-third of the company's sales. Amway's biggest market continues to be Asia.

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Amway remains the biggest player in the direct sales industry, which had sales
of nearly $184 billion in 2015, according to the World Federation of Direct
Selling Associations.

"Nearly 60 years after we opened for business by helping others open for
business, many things have changed - but the value of a business opportunity
that is open to everyone isn't one of them," DeVos said.

India could become the third largest market for Amway in a decade, as the direct
selling major embarks on a new omni channel strategy later this year, a top
company official said. China tops Amway's global market with USD 2.5 billion in
annual revenues, while India ranks seventh below Korea, the US, Japan, Thailand
and Taiwan."India is already a key market, but holds a lot more potential to grow.
We think it can become the third largest market for us in a decade," Amway global
COO Cazer, however, said despite the emerging significance of the digital space,
Amway's direct selling distribution model will remain as it is.
"Even for online sales, distributors' earnings will be protected. We will use a lot of
algorithms to pass on the benefits (commission) to the distributors, as they are the
core pillar of interface with customers," he asserted. Amway India's sales stand at
about USD 300 million, and Cazer exuded confidence that the top line could touch
USD .
ADA, MICH., USA (Feb. 11, 2019) – Amway today announced sales of $8.8
billion USD for the year ending Dec. 31, 2018, a two percent increase over 2017
sales numbers. Growth was broad-based across many of Amway’s top markets
including China, the U.S., Thailand and India, delivering an expected turnaround
as the company enters its 60th year of doing business.

“Amway’s growth in sales is a result of our sharp focus on the experience Amway
Business Owners and their customers have buying, selling and using Amway
products,” said Amway Co-Chairman Steve Van Andel. “We’ll continue to make
investments that enable every possible opportunity for ABO success.”

Amway attributes sales growth to significant investments in digital tools and

mobile experiences as well as product innovations that have helped ABOs attract
and retain more customers. This includes enabling more ecommerce and social
selling, connecting additional products with digital experiences, and personalizing
more nutrition and beauty products.

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The results of investments in ecommerce are most evident in China, Amway’s
largest market and a leader in the business’ digital innovations. In 2018, 70 percent
of Amway China sales were made through mobile orders.

“Amway is capitalizing on the world’s growing appetite for ecommerce,” said

Amway Co-Chairman Doug DeVos. “Momentum is building, investments in
digital and innovative products are increasing, and healthy, steady growth is
anticipated to continue for the foreseeable future.”

In addition to adding ecommerce and social selling capabilities, Amway introduced

a number of new apps and initiatives to help ABOs manage their businesses on the
go and enhance the shopping experience for customers, including:

 The Amway Business Center app available in the US, Canada and the
Dominican Republic allows business owners to monitor and manage their
business from the palm of their hand including registering, checking sales
volume, viewing action reports and more.
 Nutrilite’s Traceability Program, introduced in China, Japan and Korea, is a
unique differentiator in the marketplace that increases visibility into how
every botanical in Nutrilite vitamins and supplements can be traced along
every step of the ingredient journey showing the who, what, where and how
behind our products. This program will continue to expand globally in 2019.
 Artistry’s Virtual Beauty app allows users to ‘try on’ different Artistry
cosmetics and recommends skincare products. Approximately 260,000
people downloaded the app.
 Atmosphere Sky, Amway’s first connected device continued to rollout
globally and its app, Atmosphere Connect, provides users air quality data
remotely. In the US, units are being developed to be voice activated via
Alexa.™

The business also combined investments in digital with its expertise in health,
nutrition and beauty to leverage high demand for more natural and personalized
health and beauty products. In nutrition, this included:

 The BodyKey SmartLoss program in the U.S., a holistic, personalized

weight loss program that includes a new line of meal replacement shakes
and the BodyKey SmartLoss app that serves as a personal coach, helping
users achieve weight management goals and share their successes with
others.

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  Nutrilite Traditional Herbs launched in India, a mass-market priced line of
Ayurvedic supplements that attracted a majority of younger, newer repeat
customers.

For consumers looking for personalized beauty products that carry more natural
ingredients, Amway launched:

 Artistry Signature Select Personalized Serums, a customizable facial

treatment with up to three serums in one product that targets wrinkles and
fine lines, anti-spot, firming, brightening, hydrating or a combination.
 Artistry Signature Select™ Masks include five masks that use Nutrilite™-
sourced phytonutrients and is perfected by Artistry™ skin care experts with
experiential colors, textures and scents.
 Artistry Studio, limited edition collections of on-trend, lifestyle brand of
makeup and specialty bath and body products inspired by millennials
launched globally, tripling the number of Artistry customers under the age of
35 and selling more than the past five Artistry trend collections combined.

All of these products and launches led to Amway’s overall growth, especially in
the nutrition and beauty categories. Sales in nutrition and wellness were 52 percent
of Amway’s market sales, up three percent from 2017. Beauty and personal care
were 26%, up one percent.

“Amway’s innovative health and beauty products that are personalized and easy to
use are producing strong results for us,” said Amway Chief Operating Officer
Mike Cazer. “As we accelerate investments in these and other areas such as
ecommerce and integrated digital experiences, Amway will go far beyond meeting
consumer demand, driving continued growth well into the future.”

As Amway looks to 2019 and beyond, investments will increase in digital and
product innovations as well as data and analytics to provide ABOs more insight
into growing their businesses. Amway will also accelerate ecommerce capabilities,
expand traceability in nutrition, add more personalized products and experiences
and continue to review global operations to ensure investments and resource
allocations align with the business’ strategic focus.

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Amway’s cause of helping people build businesses of their own has never been
more relevant than right now,” said Amway Chief Executive Officer Milind Pant.
“People around the world like the idea of entrepreneurship and Amway will
continue to fuel the infectious humanity and passion they and Amway Business
Owners bring to their businesses each day.”

Expect India to be huge growth driver: Amway

US-based direct selling major Amway Inc expects India to be a huge growth driver
for the company and play a role in its global supply chain through innovative
herbal products, a top company official said Friday.The company also aims a
sustained double-digit growth in the next five years in India, a market which it is
expecting to break into its top-five global markets in the mid to long term.

"Of course we do. The size and the scope and the breadth of the Indian market, we
see ..He was responding to a query on whether Amway believes that India can be
among its top-five global markets. Currently, the country is ranked seventh after
China, US, South Korea, Japan, Thailand and Taiwan.Amway has already set a
target of USD 1 billion sales in India by 2025. In 2017-18, the direct selling firm
had sales of Rs 1,800 crore and expects to touch Rs 2,000 crore in 2018-19.

The growth will be driven by the company's existing products besides new
introductions such as the locally developed herbal range.He said some of the
markets like Thailand and Malaysia have already expressed interest in the herbal
products from India."Indonesia and markets in South East Asian region would be
very interested in products like these. We see India having a role in global suply
chain, not just India for India but for other markets as well," DeVos.

Last year, Amway India made a foray into herbal skincare products, positioning a
dominant number of items under its Attitude range.
Elaborating on growing expectations from India, he said: "We made investment in
manufacturing here and at that time, it may have been more India for India but I

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think as we talk about the innovation side, like the (herbal) products, we are trying
to use the resources that we have as a global company."

WHAT IS WRONG WITH AMWAY SALES?

If you see Amway or any other MLM business from 10000 feet, there is nothing
wrong with it. It appears to be any other business with some differences like you
don’t need to maintain huge inventories or invest high (I will talk about this later in
detail) but keep finding more and more people so that they also purchase products
and keep doing what you are doing.

So far so good, but as soon as you get into this business things are not that rosy as
they are projected in the beginning. There are definitely lot of things which are
wrong with Amway. I have mentioned some of them below and rest you can find
in detail on link below -

1. Expensive Products - Amway or any other MLM businesses claim that

they don’t need to spend money in marketing or distribution costs and
that’s what they pay back to the individual IBOs. This statement is
somewhat correct but given that these companies pay back close to 25%-
35% and also make their own profits, the end products are really
expensive. In today’s world when people have so much transparency
online and deals are available everywhere, it’s not easy to sell these
expensive products.
2. No competition means no benefit to consumer - When you go to
market and purchase products, you can always decide to wait or compare
products at different stores so that you get the best price. Because of
aggressive business strategies by stores and fierce competition, consumers
always get best prices. But in MLM or this business, prices are decided by
Amway and they can chose to price the item whatever they want. No
matter it’s July 4th or Black Friday, there are no deals and consumers end
up paying high prices through out the year.

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 3. Recurring expenses - It’s true that Amway business can be started with
less startup cost but overtime there is significant amount of investment
which are never highlighted by the up-lines. Up-lines somehow convince
people to buy these expensive products every month and are plugged into
the systems like BWW which has it’s own cost associated with it. People
are forced to attend weekly meetings, Quarterly functions, subscribe to
streaming, tech packs, tools etc. Combining all this easily accounts to
around $1000-$2000 per quarter.

 Why Amway Lost $3 Billion In Sales In 3

Year
According to Amway’s Business Brochure:

More freedom. More flexibility. An Amway independent business offers you a path filled with
possibilities, all on your terms. It’s a low-cost, low-risk way to start your own business
regardless of your professional background, life experience, or education.

You supply the passion and hard work, we’ll provide the training, support, inspiration, and
rewards be in business for yourself but not by yourself.

Fact is that if any business, as in Direct Sales, declines, is not very attractive for a business
builder.

Growth is what you need, momentum and a great compensation plan. Amway's official statement
about the decline is: Market conditions in China.

However, if you listen to former Amway diamonds and corporate executives, there is an other
important issue: the outdated Amway's compensation plan. In some countries Amway's presence
is almost already whipped out.

As one top earner point out:Competition is Amway’s problem. For so long they were the leader
in an industry with few competitors. Today, there are thousands of companies with highly
evolved and lucrative compensation plans, very favourable to distributors.

Changing products, branding, policies, marketing and other business strategies can all be done:

Changing a compensation plan to become more distributor friendly is almost

impossible once the structure is set. I believe what was once their strength is
now their Achilles Heel.

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 Amway, Failure By Design?

Many people, including Amway IBOs and prospects see the 6-4-2 plan or a similar
version when they are being recruited into the Amway business. The plan consists
of 79 IBOs,, all who actually earned a bonus with 1 person being platinum and the
rest earning significantly less. Now I can say with virtual certainty that nobody has
ever built a group with that many people who all went out and actually earned a
bonus. This is because most IBOs do little or nothing and many join and never
order a single product.

Thus we know that someone who actually achieves platinum would likely have
double (or more) of the amount of people in order to achieve a similar result (7900
PV). For round numbers, let's say an average platinum group has 150 IBOs.
Already we can determine that platinum is less than 1% of the Amway population
and the rest mostly earn little or nothing. While the platinum might earn some
decent money, hardcore dedicated platinum can still lose money because of the
"system" consisting of voice mail, CDs, books and functions.

Just by analyzing what I've discussed thus far shows that a platinum group would
typically consist of 100 or more (most likely more) Amway down lines and
therefore the platinum is firmly in the top 1% of IBOs. This demonstrates that
Amway is failure by design. If there are 2 platinum groups, then it's 2 guys on the
top each with a group of 100 or more down line making little or nothing. A
diamond consists of 6 of these groups with the diamond making good money with
hundreds if not thousands of down line making little or nothing. If some day, the
entire planet signed up for Amway, guess what? Nothing statistical will change.

When I used to see Amway announce 1000 new platinum’s, all it means is that
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there are 1000 new people with groups where the vast majority makes little or
nothing. Many people get excited about Amway thinking they will be the platinum
and "make it big" but even if they do, they have a group of down line making little
or nothing, and taking losses if they are on the system of CDs and functions. You
can have smart, motivated down line but it doesn't change the fact that Amway
leads to failure by design, as does most other MLMs where you are always
recruiting new people. Recruiting is priority because in order for you to reach the
top, you also need to find your 100 or more down line who make little or nothing
(or losses) in order for you to succeed.

Amway Made China a Billion-Dollar Market. Now It

Faces a Crackdown.
LANZHOU, China — Feng Gang stood in front of 150 people in a conference hall
in Beijing that Amway, the American marketing giant, calls its flagship
“experience center.”

Introduced endearingly as Big Brother, he pitched the company’s newest product

to an audience of recruits — men and women, young and old, one a street sweeper
still in his orange municipal jumpsuit.

Mr. Feng said Amway’s energy drink, XS, could reduce blood-alcohol levels by as
much as 70 percent. It could cure depression, he went on, or help someone who is
drunk drive home. His aim: to get the crowd to go out and sell the products.

For more than a decade, scenes like this represented a financial salvation for
Amway and other companies that use sales representatives to recruit others below
them in what’s called multilevel marketing.

Facing declining fortunes in the United States and elsewhere, they turned to a
ballooning consumer class in China hungry for new products — and susceptible to
promises of the riches to be had by selling them.

Now, the future seems less promising. The giants of multilevel marketing have
come under a dual assault, from regulators here and in the United States.

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Two companies, Herbalife and Usana Health Sciences, disclosed last year that they
faced investigations in the United States for their operations in China under the
Foreign Corrupt Practices Act, which prohibits American companies from bribing
foreign officials. Another, Nu Skin, settled a similar case with the Securities and
Exchange Commission in 2016, while Avon Products pleaded guilty in 2014,
resulting in a $135 million fine.

Amway, which is not public, has not disclosed any inquiries by American
regulators. In one Chinese province, however, the conduct of some Amway sales
distributors prompted an investigation, one that the victims say was squelched by
local officials, including at least one with ties to the company.

This industry is absolute chaos for China,” said You Yunfan, a former Amway
distributor who wrote a scathing memoir under the pen name Xiao Fei.

Noting that Chinese law prohibits many of the worst practices associated with
multilevel marketing, he added, “The root problem is that the government is
riddled with corruption and not doing its job.”

That may be changing. Four government agencies last year announced a

crackdown on the marketing model, which critics denounce as a pyramid scheme.

Turbulence in the Chinese market could be devastating for Amway, which has
relied on China for much of its growth over the last decade.

It is now, by far, the largest of the multilevel marketing companies here, with 1.5
million distributors, more than all the others combined, according to the Ministry
of Commerce’s records. China is now Amway’s largest market, accounting for
$2.6 billion in revenue, or about 30 percent of its worldwide sales, the company’s
president, Doug DeVos, told Reuters last year.

In a statement, an Amway vice president, Scott Balfour, said the company

welcomed the crackdown, saying it would distinguish pyramid schemes from
legitimate direct selling. Amway has not been singled out in the campaign, and it
has built an impressive brand here, operating gleaming showrooms in Beijing and
elsewhere and sponsoring the Chinese Olympic team. Yet it has been dogged by
accusations like those it has faced elsewhere.

Former Amway distributors have organized online to warn others of the company’s
model. Amway’s name in Chinese, an li, has entered the vernacular to mean to
“promote heavily” or to “be brainwashed.”
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Amway and others faced skepticism from the authorities nearly from the moment
they entered the market in the early 1990s. Multilevel marketing was officially
denounced as an “economic cult,” and in 1998 the government banned all direct
selling.

Only when negotiating entry into the World Trade Organization did China agree to
American demands to allow the companies in. Direct selling has been legal since
2005, though with restrictions intended to discourage the endless recruiting of new
distributors, a component of Amway’s model.

Enforcement of the laws, however, remains uneven. “It’s a gray area,” said Liu
Kaixiang, a professor at Peking University’s School of Law who conducts research
at the university’s industry-affiliated direct-selling research center. “The majority
of these direct-selling companies are right on the edge. If they were to completely
follow the law, there would be no market at all.”

The vagaries of Chinese regulations and an avaricious bureaucracy have already

ensnared others, like Avon, once the top direct seller here. In 2014, it admitted to
providing $8 million in cash and gifts like Gucci purses to Chinese officials.
Similar troubles caught up with Nu Skin, which settled a case by the Securities and
Exchange Commission in 2016 by admitting that it paid the equivalent of $154,000
to “a charity to obtain the influence of a high-ranking Chinese Communist Party
official” to resolve a potential fine. Herbalife disclosed in a stock filing that it, too,
was under investigation, while Usana Health Sciences announced that it had
alerted the Department of Justice about questions over “expense reimbursement
policies” of its subsidiary in China.

Amway said in its statement that it had not faced questions from American
regulators about its practices in China. Its business has nonetheless raised
questions.

In Amway’s Beijing center, a reporter with The New York Times listened as Big
Brother Feng detailed sales tactics that would violate Chinese law if used,
promising that new recruits could earn more as they recruited others.

A few days later, one of the recruits was out on the streets repeating the pitch as he
handed out fliers for the XS energy drink. The fliers said new distributors could
ultimately earn the equivalent of $75,000 a year.

In fact, 96 percent of direct sellers make less than $750 a year, roughly the average
monthly wage for private-sector workers, according to government statistics.
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In some regions, Amway in particular has come under focus.

In Lanzhou, a city of nearly 3.7 million along the Yellow River and the ancient
Silk Road in Gansu Province, dozens of former distributors have accused the
company of abetting extortionate practices that left them in debt. They accused
those above them of conning them into buying products they could not realistically
sell.

n training sessions, some of which he recorded and played for The Times, he was
told that the way to achieve success was by working under pressure. He took out
loans — first mortgaging his home, then borrowing from unofficial lenders
working, he and others said, with the local Amway staff — to load up on vitamins,
water filters and soaps. By 2014, he could not unload his merchandise and faced
$600,000 in debt.

“I was brainwashed,” Mr. Liu said.

The provincial office of the State Administration for Industry and Commerce,
which regulates businesses, took the accusations seriously. In May 2016, the office
sent a letter to complainants saying that there was evidence of wrongdoing and that
the region’s top two distributors, a husband-and-wife team, Tang Jinsong and Zhao
Yufang, “are suspected of operating a pyramid scheme.”

“To climb to the top, you need a team of distributors under you,” said Liu
Jianhong, another former distributor, who provided the letter to The Times. “It
forms a pyramid. We were at the very bottom.”

Mr. Balfour, the Amway vice president, said that the Lanzhou situation had
“involved a number of serious violations of our rules of conduct, as well as
violations of Chinese lending laws” by sales distributors, but that the company
itself had not been accused of wrongdoing.

In a second statement, Amway said that it did not endorse exaggerated claims of
distributors and that company policy prohibited obtaining loans to buy products.
Mr. Balfour said the company would investigate specific claims brought to its
attention.

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The regulatory office in Lanzhou gave enough credence to the complaints that it
referred the findings to the local branch of China’s main law enforcement agency,
the Public Security Bureau.

Then the investigation stalled.

Wang Xingwei, the administration official in charge of the initial investigation,

said in a telephone interview that he had been transferred off the case.

The former distributors said they believed that regional officials sympathetic to
Amway had quashed their complaints. They cited an instance when the state
television channel in Gansu, after interviewing them, received a directive not to
report on their case.

According to a journalist at the station, Gao Zenglei, the directive came from the
Communist Party’s provincial propaganda department. At the time, it was headed
by Liang Yanshun, who once participated in an Amway program that enrolled
officials in classes at Tsinghua University and Harvard University, according to
Harvard and his online biography. Mr. Liang did not respond to requests for
comment.

Ms. Zhao, one of the top distributors, dismissed the accusations and said she and
her husband, Mr. Tang, had done everything “entirely in accordance with the
company’s system, according to the company’s operating model and under the
oversight of the company.”

The aggrieved distributors, she added, were responsible for any debts they built up.

“Everyone should be responsible for their own actions,” she said. “If they don’t
know this, they won’t last in this world.”

The former distributors, by contrast, face financial ruin.

Liu Jianhong amassed $300,000 in debt. In China, that means she has been put on
a government list that prohibits her from flying, taking trains or acquiring new
credit cards.“I’m going to be dealing with this the rest of my life,” she said.

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 CONCLUSION

1. Amway is one of the world's largest direct sales companies Anybody involved in direct selling
should be fully trained and familiar with all aspects of.  products  Effective communication
atand customer needs.  Amway involves making prior decisions about who needs to receive the
messages.

2. The international presence of Amway shows that company is doing better and satisfied their
IBOs on the front of economic and social development. So people can earn extra income and live
better life. .

3. Assistance in Business Development and Job Security factors are the most significant
contributor, almost all the IBOs have given priority to the Assistance in their Business
Development (98.20%) and Business Security (100%) in Amway Business development. The
other parameters like Personality development, lifestyle and income enhancements have got
lesser importance than the aforesaid parameters.

4. It is also concluded that the opinion of IBOs towards different parameters from Pimpri-
Chinchwad and Pune area are quite similar. This inculcates that location doesn’t matter for
associating with Amway irrespective of gender, age, educational level and annual income of the
IBOs.

5. The IBOs have substantial growth within first three years of their tenure. This may be due to
rampant social networking, while it shows a steady growth after three years.

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 BIBLIOGRAPHY

 https://www.businessforhome.org/2014/06/amway-wants-to-shut-down-

amway-wiki/

 https://idoc.pub/documents/network-twentyone-amway-wiki-d2nvzgq5k9lk

 https://www.amwayglobal.com/our-story/

 https://www.yumpu.com/en/document/view/8026053/losing-weight-is-hard-

amway-wiki

 https://www.amway.in/business/amway-business-opportunity

 https://www.amwayglobal.com/answers/how-do-you-make-money-with-

amway/

 https://www.feedough.com/amway-business-model/

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