AMWAY DIRECT SELLING

Reaching customers through direct selling

Introduction
For the modern business organisation, dee!o"ing goods or seri#es is not enough$ Goods must
a!so be aai!ab!e in the right %uantit& and at the right !o#ation in order to rea#h the #ustomer$ For
the organisations themse!es, distribution strategies shou!d neer be underrated$ dee!o"ing an
e''e#tie (a& o' rea#hing #ustomers ma& be the #ornerstone u"on (hi#h their su##esses are
'ounded$ Ta)e Reader*s Digest and the uni%ue (a& in (hi#h it se!!s "rodu#ts to its #ustomers$
What about +ision E,"ress and the reo!utionar& re'orms it has "rom"ted in the sa!e o' g!asses-
.ne reason 'or their su##ess is that the& rea#h their #ustomers in a better and more a""ro"riate
(a& than their #om"etitors$
This #ase stud& 'o#uses on Am(a& and the su##ess it has a#hieed using the o!dest 'orm o'
distribution / dire#t se!!ing$
Amway
Founded in Ada, Mi#higan in 0121, Am(a& has be#ome one o' the (or!d*s !argest *Dire#t
Se!!ing* #om"anies$ The #om"an&*s 'irst "rodu#t L$.$C$ (as one o' the ear!iest biodegradab!e
#!eaners and is sti!! mar)eted b& Am(a&$
Toda&, the #om"an& has dee!o"ed into a g!oba! #or"oration se!!ing more than 344 "rodu#ts and
em"!o&ing in e,#ess o' 05,444 "eo"!e, in oer 64 #ountries and territories around the (or!d$ It
manu'a#tures and mar)ets "rodu#ts, (hi#h range 'rom househo!d #!eaners, !aundr& "rodu#ts,
toi!etries, #osmeti#s and house(ares to itamins and 'ood su""!ements$ Am(a& a!so mar)ets
"rodu#ts on beha!' o' other manu'a#turers, su#h as Ta!)!and, 7os#h, 7!a#) 8 De#)er, 9en(ood,
:ierre Cardin, Ai(a and :hi!i"s$
Amway values
:artnershi"
Am(a& is bui!t on the #on#e"t o' "artnershi", beginning (ith the "artnershi" bet(een our
'ounders$ The "artnershi" that e,ists among the 'ounding 'ami!ies, distributors, and em"!o&ees is
our most "ri;ed "ossession$ We a!(a&s tr& to do (hat is, in the !ong/term, in the best interest o'
our "artners, in a manner (hi#h in#reases trust and #on'iden#e$ The su##ess o' Am(a& (i!!
re(ard a!! (ho hae #ontributed to its su##ess$
Integrit&
Integrit& is essentia! to our business su##ess$ We do (hat is right, not <ust (hateer *(or)s*$
Am(a&*s su##ess is measured not on!& in e#onomi# terms, but b& the res"e#t, trust and
#redibi!it& (e earn$
:ersona! Worth
We a#)no(!edge the uni%ueness #reated in ea#h indiidua!$ Eer& "erson is (orth& o' res"e#t,
and deseres 'air treatment and the o""ortunit& to su##eed to the 'u!!est e,tent o' his or her
"otentia!$
A#hieement
We are bui!ders and en#ouragers$ We strie 'or e,#e!!en#e in a!! (e do$ .ur 'o#us is on
#ontinuous im"roement, "rogress and a#hieement o' indiidua! and grou" goa!s$ We anti#i"ate
#hange, res"ond s(i't!& to it, ta)e a#tion to get the <ob done and gain 'rom our e,"erien#es$ We
en#ourage #reatiit& and innoation$
:ersona! Res"onsibi!it&
Ea#h indiidua! is res"onsib!e and a##ountab!e 'or a#hieing "ersona! goa!s, as (e!! as giing
044 "er #ent e''ort in he!"ing a#hiee #or"orate or team goa!s$ 7& he!"ing "eo"!e he!"
themse!es, (e 'urther the "otentia! 'or indiidua! and shared su##ess$ We a!so hae a
res"onsibi!it& to be good #iti;ens in the #ommunities (here (e !ie and (or)$
Free Enter"rise
We are "roud ado#ates o' 'reedom and 'ree enter"rise$ =uman e#onomi# adan#ement is #!ear!&
"roen to be best a#hieed in a 'ree mar)et e#onom&$
Direct Selling
The #on#e"t o' dire#t se!!ing is based u"on "erson/to/"erson re!ationshi"s$ The se!!er goes to the
#onsumer rather than the #onsumer to a sho"$ In toda&*s 'ast #hanging so#iet&, (here more
"eo"!e (or) and sho""ing "atterns hae a!tered, this t&"e o' sho""ing not on!& "roides
#onsumers (ith a##essibi!it& to a (ide range o' "rodu#ts but is a!so #onenient$
An organisation ino!ed in dire#t se!!ing #annot se!! (ithout a sa!es 'or#e> At the heart o'
Am(a&*s a""roa#h to dire#t se!!ing is the #riti#a! re!ationshi" bet(een Am(a& and the se!!er or
distributor$ There are more than ?$2 mi!!ion rene(ed inde"endent Am(a& distributors (or!d/
(ide, around 56,444 o' (hom are in the @9$ Ea#h o' these distributors is se!'/em"!o&ed$ An&one
oer 0A #an estab!ish their o(n business as an Am(a& distributor, either on a "art/time or 'u!!/
time basis$ Am(a& o''ers indiidua!s the #han#e to set u" their o(n business (ith !itt!e or no
e,"erien#e or #a"ita! inestment$ Wor)ing hours and '!e,ibi!it& #an be ad<usted to suit ea#h
indiidua!$
Indiidua!s ma& hae man& di''erent moties 'or starting their o(n businesses$ Some indiidua!s
strie 'or a#hieement and ma& hae tremendous energ& and #ommitment to su##eed$ .thers
ma& (ant inde"enden#eB to (or) their o(n hours and hae the abi!it& to ma)e their o(n
de#isions$ =o(eer, 'or man& others the 'inan#ia! in#entie is usua!!& re(ard enough to engage
in a#tiities, (here the& ma& measure their su##ess b& in#ome and standard o' !iing$
The ast ma<orit& o' ne( Am(a& distributors hae no "reious e,"erien#e running a business o'
their o(n$ :arti#i"ating in the Am(a& business has he!"ed them (ith their "ersona! and
"ro'essiona! dee!o"ment, a#%uiring s)i!!s in dea!ing (ith "eo"!e and dee!o"ing a (ider
business a#umen$
Am(a& "rodu#ts are so!d "erson/to/"erson, rather than door/to/door or ia "art& "!an$
Distributors earn their in#ome through retai! "ro'it on the goods the& se!!$ In addition, the&
re#eie a #ommission 'rom Am(a& based on the o!ume o' sa!es the& generate "ersona!!&, as
(e!! as those b& their o(n distributor net(or)$
Amway culture
Am(a&*s #o 'ounders, Ri#h De+os and Ca& +an Ande!, be!iee that "eo"!e eer&(here desire
the o""ortunit& to a#hiee and better their !ies$ Am(a& has dee!o"ed a series o' statements
(hi#h out!ine its #u!ture$ As (ith man& di''erent t&"es o' statements o' #or"orate "ur"ose, these
statements 'a!! into a hiera#h&D
Amway sales and marketing plan
The a#tiities o' ea#h Am(a& distributor are determined b& the Am(a& Sa!es and Mar)eting
:!an$ Am(a& "ra#ti#es dire#t se!!ing (hi#h is *A method o' se!!ing goods dire#t!& to the
#onsumer b& an inde"endent Distributor$ A Distributor #an then introdu#e 'urther Distributors
and generate in#ome 'rom retai! "ro'its su""!emented b& bonus "a&ments based u"on the tota!
sa!es o' the grou" bui!t b& a Distributor*$
In#ome is generated b& a distributor throughD
the retailing of goods to consumers. Retail margins (mark-ups) on the basic wholesale
price represent income to the selling distributor.
additional performance and leadership bonuses, paid on the volume of personal
business of the distributor and the business volume of the distributors he has introduced
to the business.
various levels of leadership bonuses, dependent upon the overall size and shape of the
business, paid on achieving different levels of business performance.
This "!an, there'ore, rests u"on the t(in 'oundations o' retai!ing and s"onsoring$
Retailing - the selling of goods to consumers on which retail margins are earned and
performance bonuses gained.
Sponsoring - the introduction of other individuals to establish and develop their own
independent Amwa distributorships.
Retai!ing enab!es distributors to "roide immediate 'inan#ia! in#entie re(ards$ S"onsoring
enab!es distributors to re"!i#ate the base (ith other "eo"!e, thus a!!o(ing the organisation to
gro($ Dire#t se!!ing ino!es sa!es "eo"!e sho(ing and demonstrating "rodu#ts to obtain orders$
The ob<e#tie ino!es mat#hing #onsumer needs (ith the "rodu#t$ The better the mat#h, the
more !asting the "otentia! 'or the re!ationshi" bet(een the se!!er and the bu&er$ The se!!ing
"ro#ess is aided b& Am(a&*s retai! strateg& to "roide high %ua!it&, readi!& "ur#hasab!e items
(ith a good enironmenta! "ositioning, o''ering #onsumers good a!ue 'or mone&$
As (ith a!! dire#t se!!ing a#tiities, the "ro#ess ino!es t(o/(a& #ommuni#ation and this #an be
time/#onsuming$ 7usiness su##ess and the resu!ting 'inan#ia! resu!ts are a dire#t #onse%uen#e o'
e''ort, #ommitment and "ersona! grou" motiation$ :ersona! #onta#t bet(een distributors at one/
to/one or grou" meetings "roides the o""ortunit& 'or indiidua!s to dis#uss strategies,
di''i#u!ties, !ee!s o' ino!ement and "!ans 'or the 'uture$ The in#ome ob<e#ties and indiidua!
targets ma& be determined b& ea#h distributor based u"on (hat he or she (ants to earn$
Distributors (ho dee!o" dire#t se!!ing businesses ma& #ome 'rom (ide!& di''erent ba#)grounds,
(ith ast!& di''erent !ee!s o' e,"erien#e and )no(!edge / the #ommon 'a#tor to their su##ess is
the desire to a#hiee$
Responsibility to Employees and customers
A!! organisations hae a res"onsibi!it& to sere their em"!o&ees and #ustomers, (ho are !i)e!& to
be a''e#ted b& the #onse%uen#es o' an organisation*s a#tiities$ In toda&*s business enironment it
is una##e"tab!e 'or organisations to ignore the a#tiities o' #onsumers and indiidua!s (ithin the
(ider #ommunit&$ For Am(a& this means doing business ethi#a!!& and ta)ing a stan#e on )e&
issues$ EEthi#s #on#ern the mora! "rin#i"!es or ru!es o' #ondu#t genera!!& a##e"ted b& members
o' so#iet&$ The& #onstitute a guide as to (hat shou!d or shou!d not be done, and ino!e (hat one
be!iees to be right or be!iees to be (rongF$
.er the &ears there has been mu#h #riti#ism o' i!!ega! "&ramid se!!ing and #hain !etter
inestment s#hemes$ These "ro!i'erated in the !164s$ =ard se!! ta#ti#s and te#hni%ues su#h as
*do(n !oading* E(here the "erson at the bottom o' the i!!ega! "&ramid bu&s ast amounts o'
un(anted and oer/"ri#ed sto#) (hi#h heGshe #annot se!!F, gae the (ho!e industr& a bad name$
Man& "eo"!e inested in su#h s#hemes and !ost mone& in dubious s#hemes (hi#h #o!!a"sed$
Business awareness campaign
Am(a& is a member o' the Dire#t Se!!ing Asso#iation EDSAF, the industr& bod& re"resenting
'ort& dire#t se!!ing #om"anies$ A!! member #om"anies hae to abide b& its Code o' :ra#ti#e
(hi#h is endorsed b& the .''i#e o' Fair Trading$
In Cu!& 011? Am(a& E@9F Ltd !aun#hed its 7usiness A(areness Cam"aign to "ersuade the
goernment to tighten u" the #urrent "&ramid se!!ing !egis!ation$
The #am"aign had three aimsD
!o upgrade the legislation and introduce further safeguards to protect both distributor
and consumer.
!o ensure that the legislation clearl defines the differences between illegal pramid
selling and direct selling and to changethe name of the legislation, so that ethical
companies no longer have the pernicious label "legal pramids"
!o educate the general public, as well as opinion forming bodies such as !rading
Standards #epartments and $itizens" Advice %ureau&, about the differences between
reputable direct selling companies and unethical ones.
The results
"With the full support of the Direct Selling Association (DSA), the industry body representing
direct selling companies, Amway has lobbied both MPs and opinion formers and achieed
e!tensie media e!posure, highlighting the need for the legislation to be amended"
As a result of these concerns, Sir #icholas Scott MP introduced a Priate Members $ill
tightening legislation % &he &rading Schemes $ill % which receied 'oyal Assent on ( )uly *++,"
&his Act will come into force following consultation on the regulations re-uired""
There are man& di''eren#es bet(een i!!ega! "&ramid se!!ing and dire#t se!!ing #om"anies$ For
e,am"!e, i!!ega! "&ramid se!!ing ma& hae the 'o!!o(ing #hara#teristi#sD
Payment of a recruitment fee Sellers receive a pament solel for the act of recruiting
new participants.
'Down loading' (articipants sell stock on to the ne&t person at a profit. !he process
continues until the final participants are left with stock which cannot be sold because of
the inflated price of the product.
Money matrix style structure !hese are often described as investment pramids, with an
absence of a realistic saleable product and where regular monthl paments are made
with the promise of an accumulated sum at the end.
Unusable stock (eople are encouraged to bu a large amount of stock which the
cannot sell and cannot return to the compan.
.n the other hand ethi#a! dire#t se!!ing #om"anies hae the 'o!!o(ing 'eaturesD
!here is no recruitment fee paid for the act of signing up another person.
All distributors pa the same wholesale price for products and sell to their customers at a
"suggested retail price".
!he product merchandise is of ke importance, with emphasis on the regular sale of the
product range. (!he Amwa Rules of $onduct recommend that ever Amwa distributor
should have a minimum of )* customers at an one time in order to receive a
performance bonus).
$ustomer return polic, Satisfaction +uarantee.
#istributor return polic.
!he (revention of stockpiling. Amwa stipulates that ,*of an product purchased in an
given month b a distributor, must be sold in order for the distributor to be eligible to
receive bonuses.
The personal touch
The su##ess o' eer& organisation de"ends u"on the satis'a#tion o' its #ustomers$ The Am(a&
"rodu#t range #oers man& #onsumab!e items (hi#h most "eo"!e hae in their homes$ The
%ua!it& o' its "rodu#ts is #onsidered to be the organisation*s driing 'or#e$ Am(a& is #ommitted
to ongoing resear#h and dee!o"ment$
The dire#t se!!ing industr& has gro(n ra"id!& oer re#ent &ears$ Changing !i'est&!es,
demogra"hi#s and e#onomi# re#ession hae a!! been 'a#tors in'!uen#ing this gro(th$ Am(a&
"roides "eo"!e (ith business o""ortunities a#ross the g!obe$ Dire#t se!!ing is not about *getting
ri#h %ui#)* it is about #reating re(ards 'or e''ort and initiatie$ With !o( ris) and !o( #a"ita!
inestment, Am(a& "roides "eo"!e (ith the o""ortunit& to a#hiee and to im"roe their !ies$
As a !eading "!a&er in the (or!d o' dire#t se!!ing, Am(a& is he!"ing to *#!ean u"* the industr& and
"roide a a!uab!e and a##e"tab!e 'orm o' "rodu#t distribution$ In an im"ersona! 'ast/moing
(or!d drien b& te#hno!og&, Am(a& "roides the "ersona! tou#h$