Amway
Amway
Amway
Private.
Headquarters Ada, Michigan, United States Area served Key people Doug DeVos Al Koop Russell Evan Revenue Employees Parent Worldwide Steve Van Andel (Chairman) (President) (Chief Executive) (CFO) USD 8.4 billion (2009) 13,000 Alticor
Introduction:
Amway is the largest direct selling company and manufacturer in the world that uses network marketing to sell a variety of products, primarily in the health, beauty, and home care markets. Amway was founded in 1959 by Jay Van Andel and Richard DeVos. Based in Ada, Michigan, the company and family of companies under Alticor reported sales growth of 2.3%, reaching US$8.4 billion for the year ending December 31, 2009.Its product lines include home care products, personal care products, jewelry, electronics, Nutrilite dietary supplements, water purifiers, air purifiers, insurance and cosmetics. In 2004, Health &Beauty products accounted for nearly 60% of worldwide sales. Amway conducts business through a number of affiliated companies in more than ninety countries and territories aroundthe world. It is ranked by Forbes as one of the largest private companies in the United States and by Deloitte as one of the largest retailers in the world.
Amway continued to expand, reaching past the borders of the US to offer the same opportunities in other countries: - Australia - 1971 - Europe and parts of Asia - 1974 - Japan - 1979 - Latin America - 1985 - China - 1995 - Africa - 1997 - India - 1998 - Russia - 2005 - Vietnam -- 2008 Critics argued that the model wasn't sustainable and that growth was mathematically limited. They cried, "Pyramid scheme!" Fifty years of steady growth has shown this criticism has no basis in fact.
In 2008, Amway (now technically, Amway Global) reported sales of 8 billion. The company is in 58 markets worldwide and manufactures more than 450 products. Amway Global does business in more than 98 countries. Rich DeVos is still alive, although he has passed the Presidency of Amway to his son Dick. DeVos was named one of the richest men in America by Forbes magazine, with an estimated 4.2 billion dollars in personal wealth (2009). DeVos owns the Orlando Magic basketball team among other assets.Jay Van Andel passed away at age 80 in 2004. Mr. Andel's place at Amway Global is now held by his son Steve. At his death, Van Andel's net worth was estimated to be 2.4 billion dollars. The company is still thriving and still offers opportunity to individuals who have the desire to build their own business. MLM is a proven business model that produces massive success for individuals.
Amway global sales were reported at estimated retail until 2000 when the holding company of Alticor was formed. This means theyre valued assuming that they were all sold at the full retail price, not at the price they were sold to distributors/IBOs. Alticor reports actual revenue sales at the base IBO price Ive converted the figures so they can be properly compared. Its important to be aware of this as many critics of the business (including some former Diamonds who you would think know about this) have in the past conveniently ignored the change in reporting standards and tried to claim Amways sales peaked in 1998. Note however that Alticor sales includes revenues from other sources such Access Business Group and Amway Grand Plaza. In 2007 this was reported as around $100 million, so by far the majority of the sales are through the Amway business opportunity.
Year
1961 1962 1963 1964 1965 1966 1967 1968 1969 1970
Estimated Retail Sales $0.5 million ? ? $21 million $25 million $38 million $40 million $50 million $85 million $120 million
Year
1971 1972 1973 1974 1975 1976 1977 1978 1979 1980
Estimated Retail Sales $165 million $180 million $210 million $230 million $250 million $300 million $375 million $500 million $800 million $1.1 billion
Year
1981 1982 1983 1984 1985 1986 1987 1988 1989 1990
Estimated Retail Sales $1.4 billion $1.5 billion $1.13 billion $1.2 billion $1.2 billion $1.3 billion $1.5 billion $1.8 billion $1.9 billion $2.2 billion
Year
Estimated Retail Sales $3.0 billion $3.9 billion $4.5 billion $5.3 billion $6.3 billion $6.8 billion $7.0 billion $5.7 billion $5.8 billion
Amway has grown fairly quickly since its inception. Its historic sales data at estimated retail prices is provided below from 1959 to 2000 (in 2000 Amway switch over to Alticor. At its peak in 1997 Amway estimated retail sales worldwide at 7 Billion USD. With the founding of Alticor, the report methodology was changed and the actual sales to distributors instead of estimated retail sales (ERS) have been reported since 2001. Taking the sales data published in 2001 report into account, the ERS values are about 32% higher than sales to distributors. The actual sales to distributors are marked with *. Until 1999 sales were reported at Estimated Retail. This is approximately 32% higher than actual sales revenues from sales made to Amway distributors.
VISION OF AMWAY:
Helping people live better lives. Showing where the business wishes to be in the future.
MISSION OF AMWAY:
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. Broad over riding statement of purpose. To facilitate best business opportunities. To deliver high-quality products to semi-urban and urban homes in diverse areas of insurance, home tech, home care, personal care, cosmetics and wellness.
GOAL OF AMWAY:
The development of new business opportunities. To increase the company's role in relations to social responsibility. To provide excellent customer service
for the Blind (AICB), in recognition for work carried out for the visually challenged.
The Indian Red Cross Society, Orissa awarded AOF a memento & certificate for
Oct, 2003, for the largest number of donors at a Blood Donation Camp (BDC) held by any financial and commercial institution and industry. The Mayor of Surat Snehlata Chouhan - presented a trophy and a certificate of appreciation. Social responsibilities performed by AMWAY: One by One Campaign for Children Amway Opportunity Foundation (AOF) National Project for the Blind:
Project Sunrise: The objective is to identify one orphanage/institution at each location where Amway has a modestly-large office (52 cities). On-going assistance to be provided in education, healthcare and vocational training under the following heads:
Health care
Education and vocational training .Safe drinking water Childrens Day and AOF Day celebration with Amway staff & Amway
Amway Products: Amway offers a range of exclusive, competitive brands that meet proven customer needs around the world. From nutritional supplements to water treatment, cosmetics to cleaning products, these brands are the solid foundation for a successful, independent Retail business. Active Lifestyle Artistry Atmosphere Beautycycle Body Series Boutique Dish Drops Eddie Funk houser Emma Page eSpring L.O.C. Gensona Glister Hymm iCook LifeStyle Balanced Solutions NAO Cosmetics Moiskin Skin Care Nutrilite Nutriway XS Energy Ocean Essentials Personalized Health Peter Island Protique Positrim Satinique SA8 Time Defiance Tolsom Trim
Nutrilite is the worlds leading brand of vitamin, mineral, and dietary supplements, grown harvested and processed on its own certified organic farms.
Artistry is one of the worlds top five largest-selling prestige brands of facial skin care and colour cosmetics. Our scientists and formulators have developed the complete line of cosmetics,
All products of Attitude contain Skin Vitalising Complex that synergistically combine to cleanse, Replenish & Moisturise the skin making it soft & supple.
Dynamite's range of male grooming products, formulated internationally is designed to deliver the ultimate grooming experience.
Glister Toothpaste is a revolutionary Multi-Action Toothpaste with Sylodent that offers seven benefits.
Persona Premium 3 in 1 Soap is a complete soap for the entire family promises refreshing confidence
Satinique Advanced Range with unique Ceramide Infusion System uses nature's own renewing technology to rejuvenate, strengthen and protect your hair.
SA8 Gelzyme is India's only 3-in-1 laundry detergent which pretreats, cleans and softens
G&H Range enriched with the goodness of Glycerine and Honey, deeply nourishes and hydrates the skin for a healthy glow
Dish Drops is a concentrated hand dishwashing liquid with a powerful "Triadic Detergency System".
Great Value Product Range offers you Great Quality, Great Performance, Great Price and a Money Back Guarantee!
Amways competitors:
1) Direct competitors: AVON MARY KAY SUNRIDER 2) Indirect competitors:
Local INDIAN companies.
Changing Political & Economic Atmosphere Products used as samples to persuade relatives and friends to join Amway
Focus shifted from selling products to recruiting.
Independent Entrepreneur is a business partner of Amway who is authorized to market and distribute products and services available from Amway. Different names are used in different markets.
Distributor - an older term for IBO PV Point Value is a value assigned to each product or service sold by Amway.
PV, the greater the percentage earned. In North America the Performance bonus ranges from 3% to 25%. In other markets it ranges from 3% to 21%. In India it ranges from 6%-21%.
Retail Profit is the markup earned by an IBO when they sell a product to a
consumer, either personally or through an Amway website. Recommended retail markup ranges from 20%-35%.
Sponsor is an IBO who refers (sponsors) a new IBO to Amway, although IBO's do
Silver Producer is an IBO who has reached the maximum bonus level for one
month.
Gold Producer is an IBO who has reached the maximum bonus level for three months. Platinum or direct is an IBO who has reached the maximum bonus level for six
months. In North America a Platinum is generating a minimum of approximately $30,000 in sales volume per month. Emerald a distributor with at least three legs generating Silver Producer volume for at least 6 months of a year. Diamond a distributor with at least six legs generating Silver Producer volume for at least 6 months of a year. Q-12 is a Platinum or higher IBO that qualifies every month for 12 months of a year.
Independent Business Owner (IBO):
An IBO is, literally, an Independent Business Owner: an individual or individuals who own and operate their own business, which is powered by Amway North America, formerly Quixtar. IBOs are the CEOs of their own businesses, and they make many of the same daily business decisions other business executives make. As independent business men and women, IBOs decide how active to be in their business, what products to sell and at what prices, who to sponsor, what hours to keep, and other important decisions. IBOs are independent contractors; they are not employees of Amway North America or Amway Corporation. As independent business owners, IBOs are free to make decisions many others in business are not free to make. Independent Business Owners Association International (IBOAI) : The IBOAI (IBOA International or Independent Business Owners Association International) is a trade association representing Independent Business Owners affiliated with Amway North America, formerly Quixtar. It is the primary advocacy organization for IBOs in North America. A trade association is an organization of business people who share common
interests or concerns, and who educate and represent their members. The IBOAI (or IBOA International) is one example. Role of the IBOAI Board: The IBOAI Board is the representative body of the Association acting on behalf of all IBOs. With IBO input, support, and participation, the IBOAI Board listens to ideas, proposes improvements, and advises Amway on the best way to move the business forward. Working closely with Corporate staff, the Board advises Amway on every facet of the business, from products and promotions to operations and business guidelines, as it has for 50 years. Together, they bring positive change to this business, to keep it moving forward and make certain the business is better for every generation.
4. John Crowe
5. Howie Danzik
6. Jim Dornan
7. Jody Dutt
8. Kanti Gala
9. Bert Gulick
10.Leif Johnson
11.Shivaram Kumar
12.Pedro Lizardi
Sales and Marketing Plan: The Amway Sales and Marketing Plan is a low risk, low start-up cost business opportunity that is open to everyone. It allows you to build your business through retailing products and sponsoring other people who, in turn, can retail products and offer the business opportunity to others. By passing your sales and marketing knowledge to your developing
team, you not only build your own business network but also enable others to build one of their own.
Marketing strategy: A strategy is a plan of action designed to achieve the goals of the organisation. In creating a marketing strategy for the Super Concentrated Cleaning System, Amway needed to set out the key objectives it wanted to achieve. The following objectives for the brand were set:
To increase distribute or profitability and productivity by providing a new and
Care.
Localization of employees Localization of production and Raw Material Localization of research and development Transparency and Credibility of companys management
Customer care: If you have a question about anything - like registration, renewal,
Business, or product information - our Customer Care Associates can help you.
Business management: You can manage your business, check customer Volume,
order, manages your customer accounts, and handles the shipping details.
Training: Online, video, and instructor-led training are some of the ways we can
brochures, and free websites you can personalize. And we help Build awareness of your products and brands with national advertising, promotions, and event sponsorship. Amway believe that quality improvement happens when people come together. This core belief is what all AOF initiatives are based upon and it holds true time and again. With a passionate and vigorous workforce ready to contribute their bit to the well-being of society, volunteering becomes a way of life in Amway. The 550,000 Amway distributors and 450 full-time employees are all considered AOF volunteers. At 56 Amway offices across India, AOF has formed a team of 6 or more distributors and employees to form a Local Implementation Committee (LIC). LIC takes ownership of being the face of Amways CSR at the location. They identify potential partners, form a project, and implement this with other volunteers. The LIC also plays a lead role in raising funds they wish to utilize. The beauty of this system is that the LIC raises the funds, and then decides how best to utilize this in their town or city.
Ownership of Amway:
IBOs and Customers: Amway services the needs of both Independent Business Owners and customers. IBOs build businesses that allow them to earn income based on sales made resulting from their efforts. To launch an Amway-powered business, individuals must register with an existing IBO. Customers pay no fee to shop from a large selection of products and learn from expert advice on health, beauty, home care, and other topics. Products are shipped to their homes and covered by Amway's Customer Satisfaction Guarantee. Customers must register with the identification number of their servicing IBO. If a new registrant Does not have a servicing IBO, Amway will assign them one..
Personal Referrals: Unlike most other companies, Amway's sales are not the result of advertising. The biggest chunk of Amway's marketing budget goes directly to rewarding IBOs for sales volume resulting from their efforts. Those efforts include registration of new Ibos, Members, and Clients, resulting in product sales. Amway's tiered compensation plan rewards the movement of product through an IBO's sales organization and their ability to train others to create their own successful organizations. When people visit Amway's site, it is the result of a personal referral by an IBO -not as a result of some advertisement they saw on TV.
Personal referrals have proven to be much more effective. Only 8% of respondents in the Edelman 2005Annual Trust Barometer study indicated that information obtained in advertising was credible, while 42% trusted information obtained from family, friends, and colleagues.
Buzz Marketing: Alticor pioneered buzz marketing through its person-to-person referral model. Some companies spend millions on strategies intended to get people to spread the word about their products. Through its Independent Business Ownership Plan, Am-way does the same by rewarding IBOs for spreading the word about the business opportunity and the exclusive products available through Amway. This is a much targeted market spend, since IBOs are rewarded only when their efforts actually result in product sales. Business Systems: IBOs employ many different approaches to build their businesses, typically involving training systems, motivational meetings and tools, and time-tested tactics to approach people and interest them in the business opportunity and products. When a person registers with Amway, it typically is the result of having been approached by an IBO already involved in one of several large organizations that provide training and support to IBOs. Often, a new IBO also will choose to attend optional and voluntary training sessions or purchase professional development materials provided by that organization - all covered by a moneyback guarantee.
Independence:
The beauty of Amway's business model is that there can be as many ways of pursuing the business as there are IBOs. If you're into health, you can focus on Nutrilit supplements and XS Energy Drinks.
quality Minimal start up costs gives strong base to the initiation of business. So everyone can participate in business. The person who wants do something can be make profit with investment of low cost. Products are easy to sell.
A business with national and international scope gives more opportunity to the
costumers.
The possibility of financial security and freedom of time to enjoy life.
WEAKNESS:
More power to IBOs gives critical structure to organization.
Initially high entry cost leads to somewhat restrictions for business development Rumors for direct selling operations. Focus shifted from selling products to recruiting.
OPPURTUNITIES:
Setup a manufacturing plant in all countries leads to better platform for company. Population of INDIA gives better opportunity to company to receive more profit. As the company name itself gives reliance and faith for the customer and buyer
produce greater opportunity for marketing which leads to decrease in total expenditure of company.
THREATS: Too much freedom to IBOs. Change in government policy may affect to the profit and freedom of company.
Competitors like AVON, MARY KAY; SUNRIDER creates lot of competition in
Finding:
Ive written about Amway based entirely on factual, confirmable sources. If youre researching Amway, especially on the Internet, chances are youve encountered people who claim Amway is some kind of scam business, its illegal, the products are poor quality, or some other information that has made you think twice about being involved. Skim through these finding and decide for yourself whether those kinds of opinions really have a lot of credibility in the face of all of these facts. Have all these major companies and organizations that have recognized Amway for excellence been conned? For fifty years? Or perhaps the opinions you read on the internet have been formed from limited or even no experience from encountering some new or inexperienced Amway rep that never bothered to learn how to act professionally or properly explain the concept, and probably never did much more than dabble for a few months. Or perhaps the experience was with just one of dozens and dozens of different Amway affiliated organizations, each with different ways of doing things that may not all appeal to everyone? Or perhaps their opinions driven by business interests working or being paid by competitors or potential competitors to Amway?
CONCLUSION:
Amway is which is one of the largest direct selling company in the world. The main objectives of Amway are to profit there distributers by eliminating the middlemen and provide the products to the distributers in cheaper price. The products of Amway are world class product quality. They are made up of natural a thing thats why they are good for health and environment. Amway covers a wide range of products from beauty care. Health care, to clothing, and daily use products etc. the products are costly as compared to other branded products available in market but if we compare the quantity while using the products require less amount and thus can be used for longer time. Successful business today depends upon a company's ability to quickly adapt to changes in the marketplace. At Amway, they pride it selves on knowledge of the dynamic networking market that is quickly becoming central to modern business. This knowledge, and its willingness to act upon it, has enabled us to become one of the industry's technological leaders. Through they continued pursuit of new product ideas, and by consistently refining our existing product line, they have become one of the top providers of cutting-edge networking products in the global market. If you're looking for high quality products and solid customer support at rock-bottom prices, then choosing Amway really does make sense.
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Annexure:
Amway India plans 170 new branches by 2013
Eyes 25% y-o-y growth for the next five years.
Amway India Enterprises Pvt Ltd, a major direct selling FMCG Company in the country, is
planning to open 170 new branches across the country in the next three years (by the year
2013). The company is also eyeing 25 per cent year-on-year growth for the next five years.
Presently, the company has 130 branches across the country. The company offers 115
products in five categories- Personal care, Home care, Nutrition & Wellness, Cosmetics and
Great Value products. Nutrition & Wellness segment contributes around 50 per cent of Amway Indias total turnover.
"With an aim to strengthen our network base, we are planning to increase the number
of touch points (branches) up to 300, by adding 170 new branches across the country in the
next two-three years. We are also planning to launch 6 to 8 new products every year,"
William S. Pinckney, MD & CEO, Amway India, said at a press conference during plant
With an aim to meet the market demand, the company has just tripled the capacity at
its contract manufacturing facility in Baddi (Himachal Pradesh) at an investment of Rs. 55 crore. "Amways focus in the past 2-3 years was to improve consumer access and awareness, which paid off handsomely. We have grown from Rs. 799 crore in 2007 to Rs. 1407 in 2009 crore over the past three years, essentially as the quality of the Amway pick-up centres has undergone a sea change, and are more experiential for the consumers. We are eyeing 25 per cent year-on-year growth for the next five years," Pinckney said.