MLM Amway Story

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With Soap In Their Hands & Hope In Their Hearts RAMJEE CHANDRAN Bangalore Magazine June July 1998 Amway India Story



With Soap In Their Hands & Hope In Their HeartsRAMJEE CHANDRAN ( According to the local office of Amway India, about six thousand five hundred Bangaloreans have already signed up to become Amway salespersons. These 6,500 people have paid the USA-owned Amway Corp. Rs. 4,200 each. 6,500 x Rs. 4,200 = (almost) Rs. 3 crores. Cash up front. And thats only in Bangalore. A Bangalore company probably cant raise this kind of money in the stock market in these days of tight money conditions. But Amway did. Without advertising. Without the great dollops of press coverage that even the launch of a new whisky usually generates. Its all word of mouth, we are told. Word from the mouths of people living abroad who have been told by Amway to call their kith, kin and caboodle in India. Word is also to spam you on the internet. Spam is unsolicited promotional material junk mail on the Net. Word is to send you cheap postcards. Calling, writing, faxing or spamming people in India to tell them of the good news. The good news is that they have the means to help you to change your life. To own your business. To earn your freedom. To not just get a life, but get a lifestyle. The subliminal message is: Stop being a loser. Whatever youve been doing with your life, it is worth less than what you can do as an Amway salesperson. When I put this last proposition across to an Amway sales person, his response was this: Youve hit the nail on the head. Youre right. That is the case. He explained further: You dont have to give up your publishing business (thank god!). Use your spare time profitably. What do you do when drive to work? Nothing! What do you do in the evenings? Watch TV? Pah! Right through this entire opening phase, something nagged me. There was no mention of what Amway did. What was the word that this guy kept talking about. What was Amway selling?

I asked him. The dream, my man, he replied his face aglow the dream. Amway is not selling you anything. Amway is giving you a business opportunity you cannot beat. The business opportunity to do what? I asked, still confused. The opportunity to use world class products. The opportunity to get others to use world class products. The opportunity to change your life. What world class products? Only the best. Name one product. Many products. 10,000 products. From shampoo to Chrysler cars! I can buy Chrysler cars in Bangalore? Not yet. But the day will come. Maybe not Chrysler cars but maybe Marutis. I can buy a Maruti through Amway? Of course! When they tie up the deal. What deal? Distribution deal. If Maruti is smart, they will understand that in a few years, only multi-level marketing will survive. Even Bill Gates said it. The end of retail selling is here. Amway will overtake them. By the year 2000, no one will buy anything from shops. Which shops? Any shop. Every shop. Nilgiris, Shoppers Stop, Folio and Bata will all close down? Yes, of course. He sounded a little exasperated. Then he became paternal. He employed the tone one uses to talk to a friends child. Are you aware of Amway? Yes, I replied I have read everything they gave another salesman like yourself. And I went to an Amway meeting. Then you have learned nothing, my friend, nothing! You must have spoken to the wrong person. The world is going to change. Havent I already told you that retail selling dead? I did not give up. Where is this place where they stock 10,000 products. Id like to see it for myself. Well, its not 10,000 products yet. But it will get there. How many products do they have right now? Thats immaterial. Youre just being pedestrian. Tell me how many products do they have? Six. Six of what? Detergents, a great Liquid Organic Cleaner which you can pour into your plants after cleaning the floors and Dish Drops which will make your glassware shine like anything!

Before I could speak, he added: They also have a lotion and a shampoo. But why am I telling you all this. The point is not the products but the opportunity. No matter what the products are, the opportunity will make you lots of money. And then you can retire. What is needed is not for us to quibble about details. Weyou, me and everybodymust do all we can to make this succeed. Then, totally pickled in his own sales pitch, he began to shout: GET OFF THE POT! GET ON THE PHONE, MAN, AND SPREAD THE WORD!! USE YOUR MAGAZINES AND TELL LAKHS OF PEOPLE THE GOOD NEWS!!! So I got off the pot, picked up my phone and began to research the story. How It Works Amway's operations rest on what is called Multi Level Marketing (or MLM). It has been called 'network marketing', 'pyramid selling' (a phrase that inspires vitriol among Amway types). It has also been compared to a chain letter or the buying of a lottery ticket. How it works is both simple and complicated at the same time. You try and sign up others as fellow Amway distributors. You get commissions on whatever they buy. You also get commissions on the purchases made by the people whom they in turn sign up as Amway distributors. The more people you sign up, the more they will buy. The more they buy, the more money you will make. How To Become A Millionaire Now I will explain the 9-6-3 scheme because every Amway distributor talked about this. Having signed up, you get 9 people to sign up. Next, each of the nine people gets 6 people to sign up. Then, each of those 6 people gets 3 people to sign up. Here's the calculation: You = 1. You x 9 = 9 people. 9 x 6 = 54. 54 x 3 = 162. Total = 226 Amway distributors in your group. If you achieve this target, you no longer 'belong' to someone else's group. You become a 'direct'. The next assumption is that each of these 226 people in your group will buy an average of Rs. 1,500 worth of Amway products every month. 226 x Rs. 1,500 = Rs. 3,39,000 per month.

For every Rs. 1,500 worth of product purchase you get 50 PV (Point Value). It works out to about 3.34% of the value of products bought. For every PV you get a commission. It's called 'bonus'. There is a (telescopic) slab system to determine your bonus. The lower the quantity of purchase, the lower the commission. Till you reach the level of 200 PV (that's Rs. 6,000 worth of goods), you get no bonus. With 200 PVs, your earnings (bonus for that month), will be Rs. 180. When you (together with your group) buy Rs. 15,000 worth of products, you will get 500 PV. Your bonus on this will still be 3% and your personal income will be Rs. 450 per month less whatever is to be shared with the others in the group. If you and your group members buy Rs. 3.39 lakhs worth of Amway products every month, you will earn 11,300 PV. Your bonus on this will be 21% and you will earn Rs. 71,190.00. After sharing your bonus with the others in your group, you will be left with Rs. 40,500.Amway Products vs. Other Products 1. G&H Body Lotion, 250 ml, Rs. 316.00 Nivea Lotion, 250 ml, Rs. 110.00 2. Satinique (shampoo & cond.) 250 ml, Rs. 314.00 Sunsilk (shampoo & conditioner) 250 ml, Rs. 85.00 3. Dishdrops (1 litre =4 litres), Rs. 420.00 Godrej Concentrate (1 litre=4 litres). Rs. 64.00 4. SeeSpray Concentrate, (1 litre=4 litres) Rs. 290.00 Colin Glass & Household Cleaner, 4 litres, Rs. 252.00 5. Amway Zoom Concentrate, 1 litre, Rs. 299.00 Robin Cuffs N Collars, 1 litre Rs. 128.75 6. LOC High Suds Organic Cleaner, (1 litre=167 litres) Rs. 322.00 Teepol, 5.5 litres=167 litres, Rs. 352 (NOTE: I could not work out a way for people to spend Rs. 1500 a month without wasting the product.) At this level, the bottom 162 people in your group make no bonuses at all because their PV is less than 200, having bought only Rs. 1,500 worth of product. However, you have nothing to worry about. You will make bonuses on their purchases because their PVs are counted in your tally. Remember, you will earn this Rs. 40,500 a month only: 1) IF you get to sign up 226 people; 2) IF you make sure that each and every one of the 226 people buy Rs. 1,500 worth of products EVERY MONTH; and

3) IF every one of these 226 people has the ability and the desire to pay Amway prices (see box) because Amway makes the claim that their products are "world class". When you get 226 people in your group, you become a 'direct'. Your commission drops to 4% on the purchases of the group. Then what? Then you go sign up more and more people if you want to make more money. If you want to become a millionaire, you will need to sign up several hundreds of people and have them all buy more Amway products. If you are the poor sod at the bottom of the heap, you will be told if you work hard" you can sign up hundreds, why thousands, of people from anywhere in the world to become Amway distributors and that , ie., by "working hard", you can beat the odds and become a millionaire. (When you become a millionaireby "working hard" in your spare timeyou can buy the BMW they kept showing you in the promotional videos ... the one that had the stereotype honey-blond draped over the dude who was playing golf.) You are also being told that if you aren't making nice dollops of money, it is because you aren't "working hard". The definition of "working hard" is to get as many people as you can to pay Amway Rs. 4,200 to become distributors. There's another way. That is to sell products door-to-door or person-to-person. You could do that too. There should be nothing to stop you from lining up outside apartment buildings with the dabba distributors of Bangalore (see photo) and sell Amway shampoo for Rs. 315. You could also be posh and invite the ladies of your kitty party for tea and then sign them up or sell them shampoos or detergents. The Positive Side To Amway Let me say that the above is the positive side to Amway. That is, the chance to make money. It is the chance to get oneself involved in a trade as a side business, specially if one is trying to recover from a failed (or failing business) or one has lost one's job