Friday, 1 April 2011

It's Amway which makes money, not distributors

One of our readers Mr Nikhil Bhatia writes:
I recently joined two MLM Speakasiaonline and Amway.
I have done a research on both of them.
Speakasiaonline looks fraud to me but Amway is not at all looking like a scam to me. 
Also I bought a few products from Amway and those were nice. I have doctors in my family and they too are saying that Nutrilite is a good product and they too recommend to their patients but till now they have not joined Amway business. Some of my friends are using Amway products but they have also not joined. These are the people who like the products and soon they are coming as my downlines.
I came to your blog and I want to know the truth that how selling products can be a scam because I surely don't want to be a part of scam.
Many people are willing to join me but before I do that I want to have a word from you.
1) Why it is a scam and tool scam exists in india or not?
2) Any pointers to people in India who got bankrupt through this business?
3) Is my money being taken from me and given me back? Till now I only see I am paying for the products 
4) Many BIG people are in this business from lawyers, industrialists, vice-presidents of reputed companies. If it is a scam then what is happening?
5) Are the Amway Diamond salaries reported by Amway in their business kit fake? If not then where is the money coming from? I think it's the product flow.
Do reply to me.
If its really a scam i am going to RIP my uplines.
Nikhil Bhatia

Hi Nikhil
Let me congratulate you first for finding out Speakasiaonline is fake and they are only paying you back your own money.
It seems you have not sufficiently investigated or thought well over the Amway scam. 
I would like to know whether you have read the judgements of Andhra Pradesh High Court regarding the business model of Amway India. The High Court categorically held that the business model of Amway India is illegal and it is making easy and quick money. If you have not read the judgement, go back to the old posts to read it. Of course there is also toolscam but the business model of Amway itself is illegal.
Secondly, more than 90 per cent of people who joined Amway India discontinue within a year because they keep on losing money buying products and never make money by selling products. These products are exorbitantly priced and unsaleable in the market. One must purchase products worth Rs. 2,000 to be in the list of distributors to be eligible for payment of commission. So in a year, you would be losing at least Rs. 25,000 and the next year you have to pay Rs. 995 for renewing your distributorship.
Thirdly, exactly Amway India is only paying some of the money looted by it to the distributors in the name of compensation plan while retaining sizable amount itself. 
Fourthly, many people are carried away by their friends and relatives about the 'good business opportunity' and 'total financial freedom in 2-5 years'. If they know that the business model of Amway India attracted the provisions of Prize Chits & Money Circulation Schemes (Banning) Act, 1978, they never join such schemes and never recruit others also. Under this enactment, they would be imprisoned for three years for joining and making others join such schemes.
Fifthly, almost all Amway distributors lie about their real income. Nobody knows exactly what they earn. There is no way to verify the veracity of their claims. They sell a Rs. 16 worth Glister toothpaste for Rs. 100 and line their own pockets. Nutrilie is also exorbitantly priced and similar product could be found at one third of its price. It is Amway India which makes money all the time and the upline members get peanuts with which they are happy.
Nikhil, try to understand one point clearly. There is nothing like easy and quick money and all these home-based business opportunities are out to cheat you. 


Nikhil Bhatia said...

Thanks for a feedback.

But I am using Amway products and if I like them then I don't think it is a scam.
My aunt is using Amway products for more than 4 years and she only joined becuase of the products. She is not building any tree.

If you say Amway diamonds lure people, let me tell you no one can lure me. Infact if products were not good quality I would have never joined Amway.
It's only because I like the products I joined and I liked the MLM concept of giving back the end consumer what he deserves.

Gillete Razor in india costs Rs16 and so does Amway razor. Now wholesalers are distributing for Gillete what an Amway IBO does for Amway. Gillete is not giving be 60% money back because that has already gone into distribution but Amway is giving me that money back because I am the distributor.

If Gillete starts a MLM like Amway they too can give money back because the actual cost of the Gillete Razor is not Rs16.

I don't get it what is the problem with this concept?

Do you mean to say if today I start selling razors at the same price Rs16 through MLM then I am also involving a scam? It's a NO with a common sense and besides Amway I am thinking of doing it.

Why should the end consumer pay more for his products?

If you look around yourself; every product in your home tshirt, jeans, reebok, nike, adidas, puma they all are priced high. When they ship out of the factory they are priced 60% low. If today Amway also start giving me shoes at Rs5000 like Nike, whats the problem? Nike is not giving me money back but Amway is giving money back because end consumer has now become the distributor too.

My common sense fails to understand what you have written.

And if today you all people are going to close Amway give your best shot at it and if you succeed then you need to put your best foot forward to stop my company which is going to sell razors at same market price Rs16 but through MLM so that people get their money back.

Why the hell wholesalers exists in this world?

Simply because people like us give our 60% money to them for bringing products to our doorstep. That is not common sense at all.

And people who hate to give 60% money to wholesalers they are the one who join Amway MLM.

Amway is one MLM which is not a scam.

It existed for 52 years and is not going anywhere for the next 50 years.


And yes I strongly beleive in what Napolean Hill says
“The majority of people who fail to accumulate money sufficient for their needs are, generally, easily influenced by the 'opinions' of others. They permit the newspapers and the 'gossiping' neighbors to do their 'thinking' for them. 'Opinions' are the
cheapest commodities on earth. Everyone has a flock of opinions ready to be wished upon anyone who will accept them. If you are influenced by 'opinions' when you reach decisions, you will not succeed in any undertaking, much less in that of transmuting your own desire into money.”

Go gossip as much as you can my friend my common sense cannot fail to understand this simple concept.

I know if today I start selling Razors at Rs16 through MLM you people will again start gossiping that its a scam; although it would be not. The problem is - you are not approaching something with an open mind.

If you do we can DELETE the entire wholesale market and in future the products would be damn cheap until you want your children you buy Nike for Rs5000 which is actually Rs1000.

Choice is yours, success is by choice not by chance and guess what I am going DIAMOND!! thats the confidence I have at 0% in this business!!

Nikhil Bhatia said...

Ok so I called my upline and he showed me his first cheque from AXIS bank + also his statement of profit from this business.

Really there is nothing to hide and I will soon forward my first cheque to all of you who are so against this business.

As far as tool scam is concerned, nobody is forcing me to buy books infact I get all the knowledge from my uplines by mouth and I have been myself a reader of Think and Grow Rich for past 10 years; so really all those Amway books only talk about how to be positive and that motivation I have a lot inside me.

I can stand in front of anybody and motivate them to go millionaire!! and this thing I have been doing over many years.

Amway I joined only a month ago.

My downlines are going to get all the help from me and they do not need any books for it. I am the ONE!!

I will only recommend them Think and Grow Rich and nothing else.

Open your eyes to a new revolution; this is not a scam. Educating people to live a better life is not a scam.

Nikhil Bhatia said...

corporate frauds watch said...

This type of liars we come across only to induce us to become Amway IBO. My dear fellow citizens! Do not fall for this lies. Amway is a scam.

Dan said...

With e-commerce a lot of manufacturers of products are able to sell them directly to the retail buyer. So the 60% margin of distributors is bullshit.

FMCG goods of the kind that Amway peddles are actually very low margin products - besides there are overheads to running any business. You do not calculate the profit margin of the distributor as final retail selling price minus the manufacturing cost! Thats simply stupid nonsense coming from Amway.

The manufacturer hands over the product to the country distributor with a small mark-up. The country distributor pays for the transportation, storage, etc. (which are the overheads) and puts a small mark-up for himself before handing it over the state / city distributors. Next is the area distributor. And finally the retailer!

Each player adds a very small margin after deducting the actual cost of the product that they incur plus the overheads!

FMCG goods are fast-moving goods and the real money comes from the volume and not the margin, which are very very slim!

Companies like Amway target foolish people who lack business acumen and business sense, and try to day-dream them into becoming businessmen.

The reason why Amway's products are very high priced are because along with all the overheads at every level, Amway has to spend money paying commissions to the distributors in the entire pyramid.

So if a product should actually cost Rs 100 in a competitive market, it would make 2-5 rs for each of the players involved in the chain.

With Amway, the product is priced 200 - 300 rs. The Rs 100 the actually competitive price, and the rest to the money to pay commissions to distributors and the rest (a huge chunk) for Amway to keep!

And foolish people like Mr Bhatia think they are getting their money back because they are distributors!

Davie Boy said...


good that you are doing good in AMWAY ..

you will come across a lot of posts saying Amway is a fraud. I would say it is anything but fraud.

The people who say that AMWAY is a fraud, its just a opinion because they haven't seen Amway like I did. Just ask them if they have any proof that AMWAY is a scam . they may point to another website which is again another website having their own opinion about AMWAY. They havent doen the bsuiness , if they did join amway , they havent done it the right way , when they fail they say its fraud and stuff like that. Ask for evidence, proof that AMWAY has scammed people. AP has shut down Amway because of PCMC aact which is an age old act. If you notice AMWAY is still operational in remaining states in INDIA, also it is operating in 90+ countries around the world. There are 20 lakh successful AMWAY distributors all over INDIA, you cannot fool all those 20 laksh people, if this was a scam, you cannot fool all those 20 lakh people ( who are silver and above). Don't listen to people who are having a word of mouth opinion. If you want facts, AMWAY is investing 500 crores in Tamil Nadu, the Govt. Has given them the permission and the necessary Land to open a new facility.

read the research reports of Boston Coinsulting Group - they are known for researching a business model and company and they have rated and awarded the best in the business model.

If you do this business the right way, you can make so much money that you can retire. I am not just saying, \I can show you examples of lots of people who have retired. They didn't do any scams. they WORKED hard. and their rewards they have reaped. Trust me Nikhil, do this business the right way and become successful. Dont read posts from idiots like corporate fraud watch and form opinions.

Unknown said...

Only those people would say that is a scam, who have never succeed in their life and they will never ever succeed, as they have blocked their mind and cannot see any new opportunity. They feel jealous of those who are making good money from this business model. We should ignore those people with negative mindset. Yes, it is true that there is no shortcut to make money and you have to do hard work. These people are afraid of doing hard work and that is why business opportunity to become multi-millionaire is looking scam to them.

The Banker said...

hy, dear friends,

as amway is a scam said, firstly
1) do they have amway buz.
2) if they than they can go to court, if they paid anything wrong.
3) it is IDSA which is taking care of that. for more knowledge pls check IDSA.
4) if u dont know stop blogging.

regards shekhar.

Varsha said...

Dear friends AMWAY is not a fraud first you try the product and see the result if you want to change your lifestyle join AMWAY business and follow the uplines guidence and see the result
..Dont say its fraud...It will change our life fully....

ASD said...

I have read all the above posts and I want to add that just like any other profession, you need to work hard in business as well.

Just like any other job, you need to educate yourself about how to excel at network marketing.

If an entire class of students fail in their Maths exam, then it is reasonable to say that the teacher must have been at fault.
However, if only 5-6 students fail out of 40, then you cannot blame the teacher; it is the students' fault for not studying hard enough.

It is these 5-6 students who bad-mouth the teacher even though they are fault, and the same holds true for people who fail in Network Marketing as well....

Shyam Sundar said...

Varsha and ASD, read the latest post in this blog to get disillusioned with the quality of Amway products.

Shyam Sundar said...

ASD, Working hard means to rope in as many as possible into the network. Is it right? Don't you see that it is an infinite chain which is just impossible. This is called mathematical impossibility. In India it is also called illegal money circulation scheme. In the USA it is called Ponzi scheme.

ASD said...

The only products I use from Amway are home-care and Nutrilite. I do not use any other since I have no interest in them, so I have no idea about the other products.

Home-care: They are actually the cheapest cleaning liquids in the market since they are sold in concentrated form. We simply add water in the required ratio to get the desired solution.
And a trivial information, Amway claims these products are "environment-friendly".
I did not believe how a detergent could be environment friendly, so I poured the detergent liquid of a famous brand which I had collected from the ejection pipe of my washing machine, and poured half-glass of this into a money-plant pot.
The next day I used the Amway liquid solution for washing clothes, and again poured the same amount of liqiud in the pot of another money-plant. Results--First money-plant lost about half of its leaves but is still alive, second money-plant lost no leaves and is still alive.

Nutrilite: I use the Daily tablet and Protein powder regularly, and my parents (both aged at 50) use an additional calmagD tablet. I have seen little effect of these nutritional supplements on my body since I am at the peak of my health.
However, the results on my parents are astonishing. They don't "look" tired anymore. My mother used to take a calcium supplement prescribed by her doctor for pain in her thighs, but never got any relief even though she spent a lot of money. Just one month after regularly taking Nutrilite calcium, she has seen lots of improvement and relief. These are the results I have seen with my own eyes. None of us have suffered from any side-effects till now, so naturally we are impressed by these supplements.

Now for your comments Mr. Shyam Sunder
I understand your concern for the people of our country and am glad that such people are around to protect us from corporate frauds. But just try to take a look from my perspective; my parents health has improved in just one month. For me this is irrefutable evidence. I cannot ignore the happiness my parents get when the are able run anytime they want instead of just walk.

Also I totally agree with the infinite chain proposition, since the world population is limited this cannot go beyond a certain limit.
About the illegal money circulation or ponzi scheme, here I will disagree.
In a money circulation are ponzi scheme, you get the money which comes from getting more people to invest in such schemes by your referral. Such schemes have no product or services, and the people in the lower rungs simply have to rope-in more people to get their money back.

ASD said...
This comment has been removed by the author.
ASD said...

You will see that this holds true for every medicine.
Every year people die of cancer. I am talking about the ones who are able to pay for their treatment. Most of them die. But nobody complains.
My grandfather suffered from cancer THREE TIMES! The first time he had blood cancer. Doctors did chemotherapy and got normal blood results.
Next he had a cancer in his jaw. His entire right jaw was removed.
Next he had cancer just above one ear. This time he simply refused for any treatment.
We took him to an ayurveda center. They prescribed about 22 medicines, most of which can be made at home, and some of his medicines have go-mutra (cow piss) as their base. His cancer has not vanished, but he has no pain, his reports are normal, and he is not lying on his death-bed.
The result? None of us will ever go to a doctor to get cancer treated. We will got to an ayurveda center.

Sir, these are my personal experiences, and even you know that everyone learns from their personal experiences as well as knowledge from the world around them. But when these are in conflict, what do you expect me to believe in?

Do you still expect me to get disillusioned with quality of Amway products?

Do you want me to tell my parents to switch over to their old medication, which gave them no relief and took a lot of money out of their pockets?

I will not comment on the business model, but I will defend the product quality because I have seen with my own eyes how wonderful they are. My parents are happy now with just one month of Nutrilite, and believe that they have finally discovered a medicine which gives them value for their money.

Sir, I really thank you for your concern, but I am not getting disillusioned by the quality of Amway products.

Vienova said...

Hi Shyam Sundar,

I want you to type FICCI and Amway in Youtube. You will get the FICCI direct selling meet video. You can see our Consumer affairs Minister Mr Ram Vilas Paswan and the Hon Secretary of for consumer affairs both saying that Amway and other companies under IDSA will not be governed by Chit Fund act anymore. Also you can see KPMG report on the same which projects direct selling industry or MLM will be 65 billion plus business in India in next 10 plus years. So you mean to say all these people (FICCI, IDSA, CONSUMER AFFAIRS MINISTRY AND KPMG) are getting together discuss how to make a ponzi scheme bigger?

Also for your United States reference. You can call the "BETTER BUSINESS BUREAU" (which is a government organisation of US) of united states and ask them if Amway is a illegal business. You will get the answer. Also in US companies like IBM, DELL, OFFICE MAX and tons of other companies are tied up with Amway to distribute their products through Amway. Do you think you have more knowledge then all their legal teams put together? Amway operates in all the developed countries like UK, JAPAN, SINGAPORE, AUSTRALIA, CANADA etc from several decades. So you mean to say you are smarter than all of these governments?

Well I feel sad that educated people like you dont take time to study the business model and make comments which is hindering someone elses growth. Open philip kotlers book and see how many times he takes the name of this company AMWAY in that. Do you think you know more than Philip kotler about marketing.

One last thing. I have always learned to check the fruit on the tree before you believe someone. Can I know how many businesses do you run? What is your educational background? How successful are you in what you are doing? Without knowing that how can I believe what you are saying is right? Internet is like a wall in public toilet and anyone can write anything. But if you want to add credibility show us your illustrious background or some successful person who has said Amway is a scam.

Shyam Sundar said...

Vienova or whatever you are. Have you read the AP High Court judgement against Amway India's business model which said that it is illegal. You need not believe what I am saying. Just read the judgement which is available in this blog and come to conclusion whether it is illegal or not.