In their rebuttal,
Amway had extracted a few words instead of the entire para. For this rebuttal to be read
in the proper context, you will need to read the story again. Because we cannot either
link or reproduce the entire paragraph/s in question, we give their rebuttal in full, with
Ramjee Chandran's comments in bold text, following each para of rebuttal. The rebuttal has
not been edited. (Any typos are inadvertent).
Multi Level Marketing is not network selling, pyramid selling, a chain of
letter of a lottery ticket. Multi Level Marketing companies sell products through
independent distributors as an alternative to the traditional approach of hiring staff,
advertising etc. distributors in turn train new distributors to expand the marketing
network, offering personal service and demonstrating products to consumers on an
individual basis. Amway has been endorsed by US Federal Trade Commission. It has been
acknowledged by govts. across the world as a role model of Multi Level Marketing. The
hallmarks of a Multi Level business like Amway are: Equal opportunity, irrespective of
when you join; distributorships are not for sale; product training provided by the
company; no need to maintain inventories; low start-up costs; pay only on product sales in
direct proportion to effort; buy back both stock & sales kits; success earned by
repeatedly retailing products to consumers, sponsoring others to do the same; Offer
international quality products; Follow World Federation of Direct Selling Associations
(WFDSA) Code of Conduct. In sharp contrast, pyramid schemes: Offer unequal opportunity;
Sell distributorship; require large inventory purchases; involve high initial costs; pay
for recruiting; dont buy back stock or sales kits; solicit people to buy success by
buying inventories/titles; offer questionable products; will collapse when no more people
can be lured.
A brochure from their local office says their scheme is
network selling. Not explained: The basis of the pending lawsuit against Amway
in the US? (Source: The Advocate.)
In Multi Level Marketing business like Amway, there is no top/bottom.
Performance alone dictates distributor status. working hard is not just
sponsoring new distributors. It is that + selling products. The article itself says
the lower the quantity of purchase, the lower your commission.
Most salespersons in the city say that if you sign up you
dont really need to sell soap. Not answered: My earlier question to explain the
criterion to determine minimum sales to avoid becoming a pyramid.
Success depends on performance, on sponsoring and retailing. On people
helping others help themselves. The opportunity is equal for all. But as in any human
endeavour, there will be success and failure.
They have only repeated what I have said. Not answered: Why
do they take capital deposits from everybody?
An Amway Distributor can sponsor people anywhere in India/the world. He/She
is not limited to one city.
Not answered: Except for the very rich, who can do this?
Amway has made no such comment. Chance to make money depends on
entrepreneurial drive, personal skills/ability and initiative. Amway offers an opportunity
to be exploited. It is up to the individual to chart own course.
Is the Amway GM now denying that he told me the max. no. of
distributors would grow to around 10,000? Not answered: By how much will the 9-6-3 scheme
grow from the present level of 6,500 salespersons?
The Rs 4200/- charged for every Business Kit covers a variety of costs: the
products, dispensers, forms. literature, business newsgrams, Amagrams, training
programmes, subscription cost for 18 months. Production & mailing of monthly
statements, courier of cheques. Amway has already invested over US$ 25 million in India
and is scheduled to invest US$ 20 million more. Money has gone into setting up 3 local
manufacturing facilities with state-of-the-art technology. Hiring a staff of over 200,
operating in 5 metros, servicing 150 towns, sponsoring community development programmes .
Any marketing company has these expenses. Which other company
takes money for stationery?
All Multi Level Marketing companies sell business opportunities to
distributors unlike companies, which merely offer employment. Amway salespeople are not
employees. They are independent entrepreneurs. Multi Level Marketing companies like Amway
appoint Distributors who sell through a network of people they know on a personal basis.
Specious argument. The comparison with corporations was from
Amway salespeople. Not answered: How exactly is retail sales encouraged?
This is an unfair and incorrect assumption. Over 3 million distributors and
450 products are proof of the viability of the Amway business. The majority of Amway
distributors sell products.
I maintain that if they say only a few will
succeed, it means that most will fail. Not answered: Will Amway make
public its ratio of directs to total numbers of distributors?
This is a wrong allegation. All Amway distributors are explained the
business opportunity; they set their own goals, decide their own workplans and reap
benefits on that basis. No one is promised millionaire status, everyone is appraised of
the business potential and the way it operates.
It was no mere allegation. I repeated exactly what I heard.
But Amway distributors said materially different things to me and since they are the
people talking to prospects and that is mainly how the scheme gets explained. This is the
dissonance I imagine is convenient to Amway.
All Amway Distributors are accountable to the company. They are mature,
responsible, trained adults. At the time of adopting the Amway opportunity, they sign and
agree to abide by our rules of conduct and code of ethics. Rules are enforced by a variety
of measures, upto and including, termination of the Distributorship. Amways Rules of
Conduct are aligned with WFDSA Code. Amway is a founder member of the Indian Direct
Selling Association (IDSA). One of the IDSAs objectives is to Protect and
promote the interests of consumers. The IDSA has appointed Justice Rege of the
Bombay High Court as its Ombudsman & Code Administrator.
Not answered at all: Does Amway have a mechanism to monitor
and enforce the Code of Ethics? One ombudsman will do all that?
Amway is a serious, viable business opportunity. The Amway business plan has
evolved over 35 years and the Amway sales & marketing plan has revolutionised the
direct selling industry since 1959. The essential attributes of an Amway distributor are
an entrepreneurial spirit and a desire to work hard towards achieving goals. Prospective
distributors are encouraged to make an informed choice before entering the business.
(Emphasis ours). Distributors enjoy a high degree of support from the company as well as
their sponsors. In addition distributor interests are safeguarded at all times. Those
wishing to discontinue their relationship with Amway, can do so at any time. If this is
done within a 90 say period from the date of joining, they receive a refund on the
investment of Rs. 4200/-. It is easy to get in/get out of the Amway business. The Amway
business opportunity offers maximum flexibility to distributors.
Who encourages prospects to make an informed
decision? Not their distributors from what I witnessed and heard from first-hand
sources. Then why did hundreds of people call to say that they had not been told what I
had written in my article?
To buy or not to buy a product is a matter of individual choice. How can
purchase of a particular product prejudice personal choice? On the contrary one prefers
one product over the other by exercising personal choice.
Once someone has paid a hefty capital deposit, will he/she
buy a product other than from Amway?
This statement contradicts the one made earlier ...the only way to
succeed is to make vast numbers of people use the products for themselves. An Amway
distributor has to sell. It is incorrect to imagine that a company as large, and as
diversified as Amway, could sustain itself for almost 40 years, operate in more than 80
countries, match stringent and diverse government regulations, sustain over 13,000
employees, invest in over 450 products, and progress in its career without a strong accent
I have not denied that Amway Co. will be profitable. In fact,
it is on that very basis that I made the statement that the fortunes of Amway, and the few
distributors who make it, are at the expense of the many who might not. Amways
statement is not a rebuttal. It is a confirmation of my stand. I must thank Amway for
Amway is a people centered business which touches millions across the globe
everyday. Yet our company and the industry are not fully understood. Whilst we are
supporters of expression, we are anxious to see the same standards that society applies to
other media, applicable to the Internet as well. The Internet remains an open platform,
which is often misused to address personal agendas. If an individual is serious about
forming an opinion independently, and not being fed on others interpretations he/she
should also visit the Amway sites on the Internet. The Amway Global site can be accessed
at www.amway.com. This will present Amways perspective.
Clearly, what I asked readers to do would lead them to the
Amway site. After so many years and touching so many people (an expression
which I consider apt), if they are still so misunderstood, it tells you something about
Amway products are not expensive. All Amway products are defined by their
highly concentrated formulation and multi-purpose usage, which promises value-for-money,
the high quality standards of Amway products exceed consumer expectations. Comparable
products do not exist in India. The comparison is meaningless. Besides world class
quality, another unique feature of Amway products, which no company in India offers, is a
customer refund policy. An example of Amways customer service is that all products
are delivered and demonstrated in the comfort of their homes.
Comparable products do not exist in India? Is a 250 ml
shampoo for Rs 315 not expensive? And "Comparable products do not exist
in India" ... is this some commercial arrogance?