HOUSE FOR SALE
With Soap In Their Hands
Hope In Their Hearts
According to the local office of Amway India, about
six thousand five hundred Bangaloreans have already signed up to become Amway
These 6,500 people have paid the USA-owned Amway Corp. Rs. 4,200 each.
6,500 x Rs. 4,200 = (almost) Rs. 3 crores.
Cash up front.
And thats only in Bangalore.
A Bangalore company probably cant raise this kind of money in the
stock market in these days of tight money
But Amway did. Without advertising. Without the great dollops of press
coverage that even the launch of a new whisky usually generates.
Its all word of mouth, we are told. Word from the mouths of people
living abroad who have been told by Amway to call their kith, kin and caboodle in India.
Word is also to spam you on the internet. Spam is unsolicited promotional
material junk mail on the Net. Word is to send you cheap postcards. Calling,
writing, faxing or spamming people in India to tell them of the good news. The good news
is that they have the means to help you to change your life. To own your
business. To earn your freedom. To not just get a life, but get a
The subliminal message is: Stop being a loser. Whatever youve been
doing with your life, it is worth less than what you can do as an Amway salesperson.
When I put this last proposition across to an Amway sales person, his
response was this: Youve hit the nail on the head. Youre right. That is
He explained further: You dont have to give up your publishing
business (thank god!). Use your spare time profitably. What do you do when drive to work?
Nothing! What do you do in the evenings? Watch TV? Pah!
Right through this entire opening phase, something nagged me. There was no
mention of what Amway did. What was the word that this guy kept talking about.
What was Amway selling?
I asked him. The dream, my man, he replied his face aglow
the dream. Amway is not selling you anything. Amway is giving you a business
opportunity you cannot beat.
The business opportunity to do what? I asked, still
The opportunity to use world class products. The opportunity to get
others to use world class products. The opportunity to change your
What world class products?
Only the best.
Name one product.
Many products. 10,000 products. From shampoo to Chrysler cars!
I can buy Chrysler cars in Bangalore?
Not yet. But the day will come. Maybe not Chrysler cars but maybe
I can buy a Maruti through Amway?
Of course! When they tie up the deal.
Distribution deal. If Maruti is smart, they will understand that in a
few years, only multi-level marketing will survive. Even Bill Gates said it. The end of
retail selling is here. Amway will overtake them. By the year 2000, no one will buy
anything from shops.
Any shop. Every shop.
Nilgiris, Shoppers Stop, Folio and Bata will all close
Yes, of course. He sounded a little exasperated. Then he became
paternal. He employed the tone one uses to talk to a friends child. Are you
aware of Amway?
Yes, I replied I have read everything they gave another
salesman like yourself. And I went to an Amway meeting.
Then you have learned nothing, my friend, nothing! You must have
spoken to the wrong person. The world is going to change. Havent I already told you
that retail selling dead?
I did not give up. Where is this place where they stock 10,000
products. Id like to see it for myself.
Well, its not 10,000 products yet. But it will get there.
How many products do they have right now?
Thats immaterial. Youre just being pedestrian.
Tell me how many products do they have?
Six of what?
Detergents, a great Liquid Organic Cleaner which you can pour into
your plants after cleaning the floors and Dish Drops which will make your glassware shine
Before I could speak, he added: They also have a lotion and a shampoo.
But why am I telling you all this. The point is not the products but the opportunity. No
matter what the products are, the opportunity will make you lots of money. And then you
can retire. What is needed is not for us to quibble about details. Weyou, me and
everybodymust do all we can to make this succeed.
Then, totally pickled in his own sales pitch, he began to shout: GET
OFF THE POT! GET ON THE PHONE, MAN, AND SPREAD THE WORD!! USE YOUR MAGAZINES AND TELL
LAKHS OF PEOPLE THE GOOD NEWS!!!
So I got off the pot, picked up my phone and began to research the story.
How It Works
Amway's operations rest on what is called Multi
Level Marketing (or MLM). It has been called 'network marketing', 'pyramid selling' (a
phrase that inspires vitriol among Amway types). It has also been compared to a chain
letter or the buying of a lottery ticket.
How it works is both simple and complicated at the same time.
You try and sign up others as fellow Amway distributors. You get commissions
on whatever they buy. You also get commissions on the purchases made by the people whom
they in turn sign up as Amway distributors.
The more people you sign up, the more they will buy. The more they buy, the more money you
How To Become A Millionaire
Now I will explain the 9-6-3 scheme because every
Amway distributor talked about this.
Having signed up, you get 9 people to sign up. Next, each of the nine people
gets 6 people to sign up. Then, each of those 6 people gets 3 people to sign up.
Here's the calculation:
You = 1.
You x 9 = 9 people.
9 x 6 = 54.
54 x 3 = 162.
Total = 226 Amway distributors in your group.
If you achieve this target, you no longer 'belong' to someone else's group.
You become a 'direct'.
The next assumption is that each of these 226 people in your group will buy
an average of Rs. 1,500 worth of Amway products every month.
226 x Rs. 1,500 = Rs. 3,39,000 per month.
For every Rs. 1,500 worth of product purchase you get 50 PV (Point Value). It works out to
about 3.34% of the value of products bought. For every PV you get a commission. It's
There is a (telescopic) slab system to determine your bonus.
The lower the quantity of purchase, the lower the commission.
Till you reach the level of 200 PV (that's Rs. 6,000 worth of goods), you
get no bonus. With 200 PVs, your earnings (bonus for that month), will be Rs. 180. When
you (together with your group) buy Rs. 15,000 worth of products, you will get 500 PV. Your
bonus on this will still be 3% and your personal income will be Rs. 450 per month less
whatever is to be shared with the others in the group.
If you and your group members buy Rs. 3.39 lakhs worth of Amway products
every month, you will earn 11,300 PV. Your bonus on this will be 21% and you will earn Rs.
71,190.00. After sharing your bonus with the others in your group, you will be left with
|Amway Products vs. Other
1. G&H Body Lotion, 250 ml, Rs. 316.00
Nivea Lotion, 250 ml, Rs. 110.00
2. Satinique (shampoo & cond.) 250 ml, Rs. 314.00
Sunsilk (shampoo & conditioner) 250 ml, Rs. 85.00
3. Dishdrops (1 litre =4 litres), Rs. 420.00
Godrej Concentrate (1 litre=4 litres). Rs. 64.00
4. SeeSpray Concentrate, (1 litre=4 litres) Rs. 290.00
Colin Glass & Household Cleaner, 4 litres, Rs. 252.00
5. Amway Zoom Concentrate, 1 litre, Rs. 299.00
Robin Cuffs N Collars, 1 litre Rs. 128.75
6. LOC High Suds Organic Cleaner,
(1 litre=167 litres) Rs. 322.00
Teepol, 5.5 litres=167 litres, Rs. 352
(NOTE: I could not work out a way for people to spend
Rs. 1500 a month without wasting the product.)
At this level, the bottom 162 people in
your group make no bonuses at all because their PV is less than 200, having
bought only Rs. 1,500 worth of product. However, you have nothing to worry about. You will
make bonuses on their purchases because their PVs are counted in your tally.
Remember, you will earn this Rs. 40,500 a month only:
1) IF you get to sign up 226 people;
2) IF you make sure that each and every one of the 226 people buy Rs. 1,500
worth of products EVERY MONTH; and
3) IF every one of these 226 people has the ability and the desire to pay
Amway prices (see box) because Amway makes the claim that their products are "world
When you get 226 people in your group, you become a 'direct'. Your
commission drops to 4% on the purchases of the group.
Then what? Then you go sign up more and more people if you want to make more
If you want to become a millionaire, you will need to sign up several
hundreds of people and have them all buy more Amway products.
If you are the poor sod at the bottom of the heap, you will be told if
you work hard" you can sign up hundreds, why thousands, of people from anywhere in
the world to become Amway distributors and that , ie., by "working hard", you
can beat the odds and become a millionaire.
(When you become a millionaireby "working hard" in your
spare timeyou can buy the BMW they kept showing you in the promotional videos ...
the one that had the stereotype honey-blond draped over the dude who was playing golf.)
You are also being told that if you aren't making nice dollops of money, it
is because you aren't "working hard".
The definition of "working hard" is to get as many people as you can to pay
Amway Rs. 4,200 to become distributors.
There's another way. That is to sell products door-to-door or
person-to-person. You could do that too. There should be nothing to stop you from lining
up outside apartment buildings with the dabba distributors of Bangalore (see photo) and
sell Amway shampoo for Rs. 315. You could also be posh and invite the ladies of your kitty
party for tea and then sign them up or sell them shampoos or detergents.
The Positive Side To Amway
Let me say that the above is the positive side to
Amway. That is, the chance to make money.
It is the chance to get oneself involved in a trade as a side business,
specially if one is trying to recover from a failed (or failing business) or one has lost
one's job. To the extent that a few people will surely make money, the system works.
Alas, that's not where the story ends.
Because for every one who makes money, there will necessarily many who do not.
Indeed, as I went along from Amway distributor to Amway distributor, I found
myself vastly better informed than most of them, with the exception of one articulate
They spent over 2 hours with me, explaining the nitty gritty of the
commission structure, despite reservations. I thank them for this.
In direct contrast was my experience with the people at Amway's nice office
on Airport Road. (See box above.)
|Hiding From Questions
I spent 2 hours in the Amway office on Airport Road. The administrative manager, Arijit
Mitra turned out to be extremely personable and a gentleman.
However, he did say that he would not be able to answer any questions about the details of
the scheme and indeed, he wanted to know why I wanted to write an in-depth story. His
colleague, a lady that distributors speak to, first told me that she would come back in 10
minutes and then she vanished from plain sight.
After one and a half hours, there was no sign of her and Mitra kept me engaged.
Then another lady came out and told me that she was "very busy". I told her I
would wait indefinitely. Then Mitra reappeared from the bowels of the Amway office and
looked apologetic. He said his colleague would not meet me because she did not want to
meet me. He explained that she was not "authorised to talk to the press".
I tried to ask him to tell Vinitha not to hide inside the building and that my questions
were very simple. But no dice. I never got to ask questions of the very person who was
qualified to answer them.
Then I asked Mitra to call her superior (Gowri Someone) in Delhi so I could talk to her.
He did. He told me that she had told him the same thing.
Mitra asked me to go to Delhi and speak to someone called Steven Beddoe. He said there was
no one in Bangalore who was authorised to talk to the press.
I asked Mitra why Amway had people in Bangalore who were authorised to take money from
Bangaloreans but no one who could be accountable for this.
Mitra had no answer.
The Underside Of Amway
My basic problem with Amway is that I believe that
the success of some is dependent on the failures of others. That is:
1. Amway will make money; and
2. Some distributors will make money; but
3. Both will do so at the expense of the many that might not.
And those who don't will probably be middle income people for whom Rs. 4,200
is a major piece of investment. (My accountant spends less on school fees for his two
children for the whole year.)
As a quick aside, let me quote the 'zero sum theory'. For those who might
not know it, this is a theory propounded by the famous economist, Lester Thurow. His book
'The Zero Sum Society' explains it in detail with a lot of econometric models. It will
take me over a 100 pages to go into all that. Basically, Thurow said that for every person
who has made a certain amount of profit, someone else has made an equivalent amount of
This is like the horse races. Any Turf Club will make money. A small number
of bettors will make money. (One of them will hit the jackpot.) The only way that the Turf
Club can make someone rich is because thousands of hopefuls lose their bets and their
money. It is the losers' money which is collected and passed on to the lucky ones. The
lottery works in pretty much the same way.
I am not saying that Amway is like a horse race or a lottery. But the
overall money movement and the odds of someone becoming rich are startlingly similar.
This is better explained with numbers.
Remember how many people you need to sign up? I'll remind you225.
If you must get 226 people (including you) to sign up, then consider this.
6,500 people (in Bangalore alone) have already signed up.
Each one of them is a hopes he or she will make a lot of money.
It is reasonable to expect that if one Amway distributor stands a chance of
becoming a millionaire, then every Amway distributor should stand an equal chance of
becoming a millionaire ... otherwise it is exactly like a horse race.
So, if all 6,500 people adhere to the 9-6-3 formula, then hold on to your
hat when you read this.
6,500 x 9 = 58,500 Amway distributors
58,500 x 6 = 3,51,000 Amway distributors
3,51,000 x 3 = 10,53,000 Amway distributors.
That's Ten Lakhs Fifty Three Thousand (or 1.053 million) Amway distributors
for the city of Bangalore.
An employee of Bata Shoe Company, (the masters of retail selling), told me
they employ about 30,000 sales people in their 1,500 stores across the nation.
30,000 Bata sales people for the whole of India.
10,53,000 Amway sales people only for Bangalore.
The standard response to this is that all these Amway salespersons are not
necessarily going to be in Bangalore. You can pick up the phone and call someone anywhere
else in the world.
Therefore, you can call your cousin in Ooty and tell her the 'good news'.
She pays Rs. 4,200, then she will call her nephew in Raichur who will pay Rs. 4,200 and he
will call someone else who will pay Rs. 4,200 and so on. All this is done in the hope that
more sign-ups mean more people will buy Amway products.
So if not 10,53,000 Amway sales people, how many will actually operate in
Bangalore? Let's hazard a guess. Half ... 5 lakh salespeople? 2 lakh sales people? 1 lakh
sales people? Will there be any left at all?
Two days after my visit to the Amway office I received a call from the Amway
HQ in Delhi, from Steven Beddoe, GM, Distributor Services.
He told me that the numbers would never grow to what I have mentioned above.
Because I persisted, Beddoe suggested that the possible number of Amway distributors in
Bangalore would be about 1.67% of the middle class population.
Bangalore's population is about 5.2 million. Of this let's be conservative
and say that 25% are middle-class. That is 1.3 million of which 1.67% (21,710) would be
Amway distributors. Beddoe reacted again. He said he didn't think that the total number of
Amway distributors would be that many. (He even said that the number was less for a
certain South Asian country.)
I asked him if that number could be as low as 10,000. He said that was a
possibility. (10,53,000 to 10,000 and we still don't have a number.)
Then the chances of people making money is slashed because Amway themselves
are suggesting that each person will sign up less than 2 other people on an average.
Therefore, if some of them manage to sign up 226 people, many others won't
sign up people at all.
And if you divide this number10,000, into groups of 226, then the
total number of 'directs' in Bangalore will be 44.
10,000-44 = 9,956 Amway distributors who do not stand the chance of becoming
'directs'. Who will be among the lucky 44?
I asked Beddoe to help me with this puzzle and apart from giving me
philosophical discourse, he couldn't address the matter of numbers. All he said was that
Amway distributors should sign up more and more people.
Which brings me to me to my next thought.
Why Amway Will Make
Money Even If You Dont
Another interesting calculation: If 1.05 million
people sign up, Amway will receive Rs. 4,422 million (Rs. 442.26 crores or US$ 110.55
million) in up-front cash from this cash rich country.
They will have earned all this money without having sold a single one of
their very expensive products.
|What Is A Pyramid Scheme?
China recently banned direct selling. The Chinese government defended its move on the
basis that direct selling operations like Amway can easily turn into pyramid
scheme operations without thorough regulation.
In a typical pyramid scheme, people are obliged to buy over-priced products which they
cannot return. The only way that the company makes money is by bringing more and more
people into the network. The company makes money on their initial sign up fees.
Such companies would not care if products are not sold, since the pressure to move
products rests with the distributors. The distributors also are motivated to
sign up more and more people because thats the only way they can move any products.
The danger of the pyramid scheme is that those who join later in the scheme are stuck at
the bottom of the pyramid and have very little chances of making any money.
But no one wants to believe that he is at the bottom of the pyramid. And the effort to
sign up people far exceeds the motivation to sell others products from door to door.
The Federal Trade Commission of the USA ruled that Amway was not a pyramid. The basis for
its decision was that Amway encourages its distributors to sell products at a retail
But The Advocate newspaper in the US reported that these rules are not enforced, followed,
in fact, not even monitored.
Suggesting that Amway is a pyramid scheme evokes considerable ire among Amway people. All
of them parrot the standard Amway comeback that every corporation is a pyramid. The guy at
the top makes more money than the bloke at the bottom.
But in a commercial operation, that is any company, nobody takes money from all the
employees as Amway does from all its salespeople.
Then, by some chance, if all these people
actually manage to spend Rs. 1,500 a month on products, Amway will giggle into their bank
manager's sleeves having earned another Rs. 18,954 million (Rs. 1,895.40 crores or US$
473.85 million) on sales every year.
Surely, the numbers I have outlined above are absurd. No one supposes that
Amway will turn this kind of money around. But the significant thing is that these
calculations are based on Amway's numbers, not mine.
I seek to demonstrate from these numbers that no matter how many Amway sales
people there are and how much they buy every month (even if they do not buy anything),
Amway stands to make a lot of money from the initial sign up fees.
Because, for Rs. 4,200, you get about Rs. 2,000 worth of products. (It means
they have sold Rs. 2,000 worth of products for Rs. 4,200) The rest, they say, goes towards
giving you a 'business opportunity'.
In addition Beddoe informed me that each year, distributors will have to
"renew their contract". He wouldn't confirm the exact amount they will have to
pay, but said it would be in the region of Rs. 1,200. So, the existing 6,500 people will
give their American masters a revenue of Rs. 78 lakhs a year ... money for jam.
One Amway distributor told me that if he did not buy products worth at least
Rs. 1,500 every six months, he would be bounced out of the system. One Amway employee
denied this. Another distributor said that the distributor I spoke to was "a
bullshitter". (Frankly, I found it difficult to establish who should be believed.)
If this is true, Amway stands to make about Rs. 2 crores a year from this
minimum performance requirement.
Add to this the number of others (in the entire country) who may have signed
up and your guesstimate on Amway's profits is as good as mine.
They could recover more than their entire capital cost in a quick manner
with a hefty profit to boot, without any heartburn about selling products.
If they were keen on selling products, they would appoint a number of sales
agents who would knock on doors and sell individuals the Amway Dish Drops as an
alternative to Teepol. This is what the honest 'dabba distributor' does.
The cornerstone of my arguments is that this is a fair and just system only
if each and everyone of the Amway distributors stands the same chance of making the same
I wonder if those signing up realise that they will most likely be at the
bottom of the heap and may not make any money at all. Is Amway a pyramid therefore? Again,
time will tell.
To refute this argument, some Amway salespersons told me that there are no
guarantees in any business. Some will make it and some won't. This is the silliest
argument where Amway is concerned. In no other business is every buyer propositioned to
become a "distributor". And in no other type of business does the principal
company take capital deposits from every buyer.
If this mathematical argument is not clear in your mind and you still think that the
system will work for everyone who signs up, you must be the guy who gave all his money to
Mr. C. R. Bhansali.
How This Is Done At The
Expense Of The Middle Class
When I posed the absurdity of the numbers to a
distributor, he replied: "Yes, your calculations may be right, but quite definitely,
only a few people will succeed in the Amway business."
Here's another way of putting it: Most people will fail in the Amway
I have established that the only way to succeed in the business is to be
able to sign up vast numbers of people and make them use the products for themselves.
The other way is to run around peddling soap from door to door after having
bought it from Amway at a discount. I cannot see any of the Amway distributors I met,
ringing my doorbell to sell me Amway Gly-Honey hand lotion.
Selling soap is infra dig.
Selling hope is chic.
The effect that this has on the middle class is unfortunate.
Subjected to videos and presentations by the select few who have struck it
rich, they believe that they, too, can strike it rich. In response, Steven Beddoe said
that middle class people might have smaller ambitions (like buying a scooter or educating
their children) and Amway will make their humble ambitions (my expression) come true.
When I was waiting in the Amway office, I saw a lady signing up. The address she had
filled out belonged to a building a few streets from mine.
It was not a rich address, so I made a few enquiries. I learned that her
family income is about Rs. 5,000 a month. She had just paid Amway Rs. 4,200. Clearly her
monthly savings cannot be more than around Rs. 500 a month if she is lucky. And she had
just bought herself a shampoo for Rs. 315 among other delights.
She picked up her Amway cardboard-box of dreams and struggled down Airport
Road towards the bus stand.
I thought about the kind of individual who would sponsor a lady like this.
What would the sponsor have told her?
That she stood the chance of becoming a millionairess? That all she had to
do was to smooth-tongue nine others into becoming Amway salespersons? That her life of
abjection was over and that she now had the "chance to use world class
The barren truth is that what the lady had just bought gave her 'friend' 40
(I have heard of someone else who was diddled for a few pieces of silver by
a 'friend'. I cannot decide which is the greater greed, the greater treachery.)
Her Rs. 4,200 has gone into the Amway system. This has added to the kitty
into which the more fortunate will dip.
The fact is that in the USA, a more socially homogenous society than ours,
it is possible for any American, from whatever background, to approach another American
with a degree of confidence and talk about Amway or anything else.
In India, as we all know, things are different. The lady I speak about would
not be given the courtesy of a smile by most people I know.
Our class-conscious snobbery would prevent them from standing beside her
when the great achiever from the USA is shouting "Hooo Hooo Go Diamond!" into a
I imagine that she stands a snowflake's chance in hell of making it to the
top of the Amway heap. All she now has is a bottle of world-class indeterminate substance
which will make her glasses shine like crystal. And the dream that she is a favoured
participant in the great American, now Indian, dream.
So what if Bangalore is reaching saturation? All she needs to do is to pick
up the phone and call her cousin in Coimbatore to sign him up.
The trouble is that she does not have a phone. She cannot afford one.
It is from the money of thousands of individuals like her that the zero sum
society seeks its rewards.
So my opinion is that all of it falls to deception.
Because all Amway sales people are made to feel that they stand the chance of becoming
This was energetically contested by one salesperson. She said that in the
Amway sales meetings people are repeatedly told that some of them will not make it.
I asked the Amway people if they said this at the time of signing people up.
They said no. They were only an administrative people. Sponsors should take care of this.
There is a dissonance between what Amway says (in general) and what Amway
distributors say to their prospects. Steven Beddoe admitted there was this dissonance but
told me about the reams of literature which Amway calls its Code of Ethics. All this is
very noble, but Beddoe was not able to tell me exactly what mechanism Amway has to monitor
and enforce these ethics across so many thousand Amway distributors.
If things go wrong, Amway can hide behind their rule book and say that the
distributors were wrong. Even during my research, Amway company officials said several
times that I was "wrongly informed" by Amway distributors.
To my mind, this is a dissonance which is convenient to Amway.
But the greater dissonance is this: If Amway knows that only a few
of their sign-ups will succeed, they are doing the gravest injustice to the Indian middle
class by taking their money and in return, selling them a little more than a
|Typical Amway Defences
Amway will never saturate the
population. There are only 2 million Amway people world-wide. A fraction of the
(Why? Obviously this means that Amway have failed to sign up as many people as the 9-6-3
Amway is a billion dollar corporation. Whatever you might say, they are
successful.You can plug in to their system.
(Fact: Amway is successful by taking money from people. I challenge Amway to draw a
correlation between the money taken from sign-ups and the volume of products they have
moved through retail sales.)
If you have a bad impression about Amway,youve spoken to the wrong
(Right. Thats what Nazis say when denying the holocaust.)
Amway is perfectly legal
(So was C. R. Bhansali for a while).
Every major corporation is a
(See What Is A Pyramid Scheme)
I met so many rich people at Amway. Surely such a rich guy cannot be taken in by a
(Sure. And has it occurred to you that he may have become rich by taking money from people
So many Fortune 500 companies have formed partnerships with Amway.
(These are not partnerships. Pepsi Corp doesnt become a partner of Safina Plaza by
having a vending machine there. Amway only vends Pepsi. They have not signed a partnership
After all, Rs. 4,200 isnt such a great risk. You get products for Rs. 2,000.
(Not a great risk for whom? I would hate to lose Rs. 4,200. I would also hate to buy soaps
for Rs. 2,000 even if they are world class soaps.)
If you think Amway is so bad, what do you have to offer me thats better.
(Let me tell you. Work hard and get the hell out of everyones hair. My advise is
this: Go Diamond... go away!)
These are only some of the things that you may hear from the Amway crowd. The basic
defence from people appears to be that they do not wish to hear that they may not properly
assessed the significance of handing over Rs. 4,200 to Amway.
As for the people who work for Amway, they serve their American masters well. After all,
it does appear that we are genetically engineered to serve our masters well.
One distributor said to me that Amway gives him the
opportunity to help someone. "Even if all people do not become millionaires, it will
help at least a few. Some of them will make at least Rs. 1,500 a month. Won't they?"
I contest the viability of even as small a sum as this. To make Rs. 1,500, he or she will
have to sell at least Rs. 25,000 worth of goods.
At the level of Rs. 1,500 usage per month, the sale of Rs. 25,000 worth of
goods covers at least 17 families. Which means 17 more Amway distributors (unless he sells
the soap door to door).
Amway types often add product discounts to their potential earnings. It is
silly to count discount on forced purchases as cash in hand.
Therefore, my friend (who wishes to help the impoverished earn around Rs.
1,500 a month) must tell them that not only must they cough up the initial Rs. 4,200 but
they must get another 16 people to cough up Rs. 4,200 each. And get everyone to spend Rs.
1,500 every month.
This would be a considerable achievement for someone in an economic strata
where he or she needs to earn Rs. 1,500 a month. Not to mention all the lovely PVs that my
pal himself will collect from the person he is 'trying to help'.
I believe that my friend's deception begins with himself and therefore
spills over to his bottom dogs.
|And Who Is Bill Britt?
From the experiences of friends I spoke
with in the USA, what is more likely to appear on the Amway list of promises is
promotional cassettes and books rather than more products.
The promotional material is designed to help an Amway distributor "sell, sell,
sell." The basis for this activity is
propounded by American, Bill Britt. He and another American, Dexter Yager, run two of the
most successful 'systems' under the Amway banner.
It is said that about 90% of Amway's products move through these two systems. In India,
what is being discussed is the Bill Britt system.
The Advocate newspaper in the USA reported that to follow Britt's system is to spend
hundreds of dollars a year on motivational tapes. Amway distributors are told that
"spending money to buy these tapes is the key to building a large, successful Amway
Therefore, it is likely that new products peddled by Amway distributors will not be more
soap but more hope in the form of these motivational materials. One USA based distributor,
an Indian (who has since left the business), told me that these tapes were meaningless and
were sold to people by convincing them that weren't doing well enough.
He said that the tapes would become an item for sale and Amway distributors will be
selling them to each other in a self feeding frenzy.
I asked a Bangalore salesperson about this. He said: "Yeah, we've got that covered.
We will buy one set and make many copies of it and pass it around for free. This is India,
That is exactly my problem with a business which makes people hand over their savings to
Amway to buy themselves a dream and then try to create parallels between the growth of
Amway and the growth of the church to justify themselves.
Bill Britt is reported to be unashamed to use God to promote the Amway trade. He
reportedly said once that he sponsors a system set in place by Jesus. "There was a
man that sponsored twelve people 2,000 years ago and I'm in his group. Because he
sponsored twelve and he taught us sponsoring, he now has one-and-a-half billion people in
his organisation. So I think we have a pretty good precedent of what sponsoring is all
(All we have is the Shankaracharya who keeps to himself most of the time.)
Even with all the two- paise philosophy that foreign Amway distributors can throw at
Indians, it falls to the sensible ones to try and understand the hidden agenda and
separate the lure of lucre from the realities of returns.
That may happen, if not immediately, then later.
After all, this is India, man.
And What Of The Products?
Most Amway salespeople agree that the present range
of 6 products is not sufficient to generate usage of Rs. 1,500 a month. They expect more
products will be added.
I asked the Amway officials when they would release more products, what products and at
what price. One employee said he had absolutely no idea and wouldn't tell me anything even
in the vaguest detail because he hadn't been told anything himself.
I mentioned this to a distributor. It distressed him considerably and told
me that he would call Amway "and give them a royal bollocking." How could he be
made to wait to earn his PVs? According to the Bill Britt system (see box), he should soon
retire to his counting house.
Steven Beddoe contradicted his Bangalore office. He said that Amway plans to
launch new products every 3 months. By August, a laundry detergent. By October, a hand
cream soap. By December, a toothpaste. (Bye bye, Colgate Palmolive?)
Another Mathematical Conundrum
In the course of conversation, Beddoe mentioned
that Amway maintains Rs. 28 crores worth of product stock. I asked him how many months
worth of inventory that represented. He consulted with his finance man and said, nine
That works out to a sale of Rs. 3.1 crores per month. At the stated average
of Rs. 1500 per Amway distributor per month, it works out to 20,667 users.
A mere 20,667 Amway users for the whole of India? With many more people than
that having paid up the Rs. 4,200?
If all Amway did was to manufacture and sell their
products through door-to-door salespeople there would be no problem. The choice of
purchase is left up to the individual.
By asking for deposits from buyers in the beginning and again every
year it looks like Amway seeks to build a captive consumer base. Once someone has
paid Rs. 4,200 to Amway, he is naturally disinclined to buy Nivea hand cream instead of
Amway Gly-Honey hand lotion.
The element of personal choice is thus prejudiced.
By involving their "distributors" in a complicated system of down-the-line
commissions (which most of them showed no signs of comprehending), they are given the
impression that there is a limitless market for Amway products.
The truth is that the market share for Amway is as limited as the market
share for any other product. Traditional retail trade is not about to collapse. And
because of the expensive price structure, the growth of that market is restricted to the
Calling this "an opportunity to use world class products" is a bit
like calling the purchase of a Mercedes Benz for Rs. 25 lakhs an "opportunity",
when an efficient Maruti 800 for one-tenth of that price will do nicely.
With all these constraints, telling people of profit mechanisms tied into
several thousand people buying Rs. 1,500 worth of Amway soaps every month seems laughable
in a country where entire families lead their lives on less money.
Transplanting an American operation into India is downright dangerous under
The per capita GDP in the US is $26,980.
The per capita GDP of India is US$ 340.
(Source: Barclay's Bank Econ.Dept.)
The cost of becoming an Amway distributor in the USA is US$ 120. In India,
they have simply multiplied this by 35 and made it Rs. 4,200.
|I Have Seen The Light...And If You
Havent, Youre Not My Friend
The parallel with an evangelist (with the
light in his eyes who gives you unsolicited advice about Jesus,equally, the all-American
Hare Krishna selling you the Bhagavad Gita) is inescapable.
You can recognise him in a minute.
His opening lines run something like this: "I have a wonderful way for you to make a
lot of money with little effort." Tell such a person: "Oh, you're talking about
Amway, aren't you?" And watch his expressions fail him immediately.
He squares his shoulders and gives you complete attention. He is the Amway distributor.He
is IN YOUR FACE. He looks directly in your eyes and gesticulates in your peripheral
You can't look anywhere but at him.
Nothing matters to him but you. You are the next cog in his wheel of fortune. He expects
that you will be lured into his web of promises. The promise that he has the ability to
make you a millionaire. The promise that you will not just get a life but a lifestyle.
That your good fortune can be willed to your children and that you and your progeny will
live off what he will describe to you as 'residual income'. His evangelism is complete.
I overheard one distributor tell his wife: "I think so-and-so will soon become a
His ability to make money depends on your signing up. Your ability to make money depends
on who you can get to sign up and thus the web expands.
In Bangalore, the growing tribe of Amway salespeople have inspired all kinds of emotions
in non-Amway distributors. The 'I-have-seen-the-light' evangelism is all but alien to our
society and it inspires dread in many.
Writer Ajit Saldanha said: "When I see an Amway salesguy, I leap like a nimble
mountain deer out of his path."
Hotelier Rishad Minocher said: "I laugh at them. At least a few dozen people have
tried to 'convert' me."
A fashion designer said of her friends: "They get very excited about this whole
thing. But it's not for me. I will not be seen selling detergents."
Another lady working for a media relations company complained that one of her colleagues
has all but stopped doing any office work: "He uses the office phones to prospect for
Amway business and ties up all the lines. Normally a very dumb fellow, he is emotional
about Amway and his own livelihood matters to him no longer."
US$ 120 does not represent anything close to a risk
even for lower income Americans. Rs. 4,200 exceeds the monthly income of most Indians. And
a 250 ml shampoo for Rs. 315 is unspeakable for all except the richest among us.
One Amway employee said that they did not want the Indian middle class to
get hurt but that Amway could not possibly check into the economic background of every
Bullshit. Even small finance companies in India have the mechanism to look
into the backgrounds of their borrowers. That is because they themselves would get hurt if
the borrower failed. The reason Amway does not look into the background of their
distributors is because Amway will not get hurt if the distributor fails. (They are taking
his money up front).
Quite correctly, I think, Amway should not worry itself about the fate of
people who willingly sell the family silver to become Amway distributors. After all, who
is anyone to say that the Indian middle class knows not what it does. (Steven Beddoe made
the gratuitous offering that he felt Indians are not dumb people.)
And what Amway is doing is to tell all their prospects that they could make
pots of money. But with the full knowledge that many of them will not.
The Latin phrase 'caveat emptor' simply means 'let the buyer beware'.
But what if nobody is a buyer and everybody is a seller ... with soap in
their hands and hope in their hearts?