Pyramid selling has developed a bit of a bad reputation over the years. Many experts view this type of business model as a type of scam. It needs to be said that some pyramid selling enterprises are better than others. By far the most well known and successful seller that uses this technique is Amway. This company was set up back in 1959 and is hugely successful. It currently employs about 13,000 people and makes about $9.2 billion each year in revenue.
So What is Amway?
It is a type of multi-level marketing business that works like a pyramid. The company tries to distance itself from the pyramid selling label, but essentially this is a fair description of it. If somebody wishes to join they need to be sponsored by an existing member. They are then expected to pay a joining fee and a yearly fee to remain a member. They can then make commission on selling products but the big money is made by those on top of the pyramid. This is similar to how pyramid schemes work.
In the Amway pyramid the different levels are referred to as pin levels. The fact that it is a pyramid means that the higher an individual’s pin level the more people they will have working under them. These pin levels are given names based on precious materials such as diamond and platinum. Those who make it to diamond level can make a very good yearly salary while platinum level should provide enough earnings for people to live on. Of course the lower the level the less money members will be able to make.
Amway focuses mainly on health, beauty, and home care products. Those actually doing the selling are called Independent Business Owners (IBO). All the products sold by Amway have a point value and this amount determines how much commission the IBO can make. This point value actually works like an international currency because it is the same in all Amway operations no matter where they are situated in the world. Business volume is the amount of product sold in a given country. This number is used when determining the price of an item in a local currency — it also is used to help determine how much the IBO will make from a sale.
Criticisms of Amway
Like other types of pyramid selling there has been some criticism fired at Amway. It doesn’t have as poor a reputation as some pyramid schemes. There are definitely people who become members and go on to earn a lot of money. One of the main criticisms is that Amway makes a lot of money from members rather than from actually selling products. They do this by selling books, audio, and video products to members with the promise that these will help them become a better seller. The company has also had allegations of tax and custom fraud. Despite these criticisms the company continues to make a lot of money and this shows no signs of changing soon.