Keep A(m)way !!

One of the prime activities of modern life is to accumulate money. Reminds me of what one of my friend used to say about lifetime goal. If your lifetime goal is to make the most money, it will keep you active throughout your life without having to think about the objective of life and other philosophical but yet answerless questions. I agree with that. But, the real question is, how to make money? We all know that there are numerous ways to make money. When it comes to making money, the prime question is, if it is worth the time and effort, considering the payout... There is some amount of self-dignity and principles that come into play while making these decisions as well. As usual, there is always a trade-off. But, is Amwaying/Quixstaring worth enough ?

When I started typing this blog, I was going to write about how Amway/Quixtar (AQ from now) folks make me frustrated. Then, I started thinking why these people do what they do. There has to be something that has attracted all these people. I tried to study the idea a little bit. Fundamentally, AQ is a distributed marketing procedure to sell products. The idea is that, if people sell products directly and serve as a channel for wholesalers, the middle man (in the form of department store) is avoided. The middleman is paid a commission to do this job. To spicen it up, AQ folks not only get a commission for the products they sell but also get a part of commission from people whom they brought into the network. So, if you have 100 people who joined through you, you not only get a commission when those hundred people buy stuff but also the people they refer to. One would hope that, if you have hundred people under your name and each of them have another 100 people each under their name, you will end up getting a lot of commission. Remember, the commission structure (bonus structure) does not go up linearly. There is no bonus till you accumulate a certain number of points and so on. The scam is just beginning.

If you were among the first people in the business, the AQ concept scales well. But, as there are more and more members, the income at the leaf level becomes significantly smaller. As in any business, there is a cost associated as well. AQ is supposed to have these sales tools called "systems" which you can use. They charge you around $3000 per year to use "systems" (typical amount quoted from web). In addition, studies have shown that, the price from AQ stores have around 20-30% markup on an average than similar products, given the collection of products that you will end up buying. Being an Amway member, you will be sucked into buying other stuff from AQ dealers. If you spend $200 on an average per month in a store, your markup premium will be around $1000 per annum. On top of this, the network sells "motivational tapes/CDs" which they promote and stuff it in to members (costs $10-$20 per tape). On top of all of this, one would spend atleast 10 hrs/week, which comes to around 500 hrs a year resulting in that much equivalent of oppurtunity cost (considering $8 per hr minimum wage, it is $4000 per year). Overall, a lot of these folks spend around $9000 per year just to be in the network. This would mean that they should earn an amount greater than that to break-even. To give a quick summary, $250 worth of buying will equal 100 points. In order to get bonuses/commissions (basic level), you will have to sell goods worth of 2000 points. Remember, the DDs (direct distributors) who are categorized under diamond and emerald categories are the ones who get the most bonuses and they form around 1.5% of all "business" folks in AQ. It is supposed to take atleast 10 years on an average to get to those levels and they earn around $25000 per year out of AQ bonuses.

Overall, you spend around $10000 out of your pocket every year. Buy stuff at a premium. Convince people, inspite of getting their yelling and rejections and sellling a lot of stuff to eventually get a meagre return. I really feel pity for these people. I understand that money can drive people to madness. But, these people, inspite of their education, backgrounds and capabilities, choose paths which statistically serves as a money "black hole" than an income source. At a superficial level, a lot of people get interested with the concept and are falsely led to believe that they can make a lot of money without any capital. But, only a very few get to break-even. I am obviously biased against Amway/Quixtar. To my defence, I went through published statistics from various websites into knowing that, it is indeed a negative-sum game and only a very very few (of the order of 1-2%) make anything, if at all, out of it. I now have a convincing answer why I want to keep Away from Amway.