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Is Amway a Pyramid Scheme? Here’s Why Most People Fail

amway review main

Welcome to my Amway review!

Chances are, one of your friends or family member invited you to buy Amway products and make tons of money with it.

I believe Amway needs no elaborate introduction, as it’s been around for more than 50 years. Yes, it’s one of the oldest MLM companies out there.

However, is the business opportunity as good as it sounds? Or is Amway a pyramid scheme? Let’s find out.

amway logoName: Amway
Niche: Household, Health & Wellness
Type: Network Marketing / MLM
Founder: Jon Van Andel & Richard DeVos
Costs: $62 Registration Fees + $99 Starter Kit (Optional) + Annual Renewal Fees

Best For: People who are good at recruiting members and face-to-face selling

 

Amway Review Summary

 

For those of you who want a quick Amway review, here you go.

Contrary to rumors out there, Amway is not a pyramid scheme. It is a legit MLM business opportunity that has been around for more than 50 years, and it’s possible to make real money if done right.

They have extensive product lines from health to beauty to household items, and they make real revenue from these products.

However, here’s the bad news – approximately 99.7% of all Amway distributors fail to make a sustainable income. This is not just Amway’s problem, it’s common for all MLM companies.

The reason behind the high failure rate is that people join the company without knowing what is required from them.

To succeed, you need to talk to a lot of people, do face-to-face selling, follow up with prospects, recruit new members, and coach them to do the same. This is how you expand your sales team and make more commissions.

A lot of Amway reps rely on just recruiting family and close friends into their network, which is not sustainable and destroys relationships. Don’t do this – it’s just not worth it.

If you prefer to work alone without recruiting anyone, there are much better alternatives out there to make a decent second income.

Here's My Top Recommendation

 

 

You are doing the right thing reading up Amway reviews and investigate this business opportunity thoroughly, because not everyone is suitable for this business model.

Since Amway is a network marketing company, you are expected to do the following once you join them as a distributor:

  1. Sell Amway products
  2. Attend meetings and conferences (which costs money)
  3. Recruit new distributors
  4. Coach your distributors to do the above

This is the same process no matter which network marketing company you join.

Some of the largest MLM companies out there (such as Melaleuca, Isagenix, and Shaklee) use the same process to expand their company.

If you don’t like to come up with a name list to contact and recruit, do face-to-face selling and follow up with your prospects, you will do better with a business model that doesn’t involve human contact.

In this case, you should look into affiliate marketing instead. This is how I make 4-figure side income per month using just my laptop, without meeting clients or recruiting anyone.

Of course, everyone has different dispositions, and works well for me may not be that fantastic to you.

I chose affiliate marketing over MLM mainly because I don’t like to recruit and sell stuffs to people around me.

It takes hard work to make money no matter what business model you choose, so you might as well choose one that suits your personalities.

With that said, if you are that confident you can make it big with MLM companies, let’s dive straight into our Amway review.

Table of Contents:

  1. Amway Review Summary
  2. What is Amway?
    1. Amway Products
  3. How Do Consumers View Amway?
    1. Challenges as an Amway Distributor
  4. Amway as a Business Opportunity
    1. How Much Does It Cost to Get Started?
    2. How to Make Money with Amway?
    3. Amway Compensation Plan
  5. Reality Check: How Much Do Amway Distributors Make?
    1. Why Do Most Distributors Fail to Make Money?
    2. Are You Cut Out to be an Amway Distributor?
  6. How I Make a Sustainable Income

 

What Is Amway?

 

Amway (known as American Way) is a U.S. company specializing in the use of multi-level-marketing model to sell health, beauty and home care products.

It was founded way back in 1959 by the pair of founders in Ada, Michigan.

amway founders

Jon Van Andel and Richard DeVos

Generally MLM companies that lasts for decades prove that they offer quality products that can withstand the test of time.

Amway has proved that their business model is sustainable (but whether it’s sustainable for you as an Amway distributor is a different story. We’ll go into more details later).

Even after 50 years in business, the company hasn’t stopped expanding. It went from the United States to Asia and Europe in the 1970s, China in 1995, and Russia in 2015.

The same goes for their product lines. At the time of writing, Amway has hundreds of products under different brand names.

 

Amway Products

 

The major product categories and brands under the Amway company are as follow:

  1. Nutrition
    Notable brands include Nutrilite, BodyKey and XS.
    Products that fall under this category include protein powder, dietary supplements, vitamins and wellness snacks.
    .
  2. Beauty
    There’s only one brand under this category – Artistry, and they sell skincare products and makeups.
    .
  3. Bath and Body
    Brands that are included in this category are G&H and Satinique.
    G&H sells bath gels and shower products, while Satinque offers hair products (shampoos, conditioners and treatment).
    .
  4. Home Products
    Brands include Atmosphere Sky and eSpring.
    Atmosphere Sky sells air treatment system, while eSpring offers water treatment solution.

 

amway nutrilite

Nutrilite is a major brand under Amway nutrition product line

Out of all the product lines, Nutrilite is perhaps the most popular brand of Amway. It makes up more than $3 billion of Amway’s $8.7 billion revenue in 2017.

And it makes sense, because nutrition and healthy living is one of the fastest growing industries globally.

There are many other MLM companies that focus on this industry alone, including Juice Plus and Isagenix.

Of course, if you become an Amway distributor, you are not limited to selling just Nutrilite alone. There are no lack of products to sell.

What really determines your success with Amway is the general population’s impression on the company.

If you are promoting products from a company that no one wants to associate with, you are doomed to fail before you even begin.

 

How Do Consumers View Amway?

 

As a potential Amway distributor, you need to know about the company’s products and reputation before you start selling them.

After all, your success hinges on:

  • Product quality. Are people going to keep buying from you?
  • Company’s reputation. Do people shun away the moment you mention Amway?

One of the best ways to find out is to look at existing reviews and comments about the company. What are the consumers’ impression of Amway?

I’ve collated some typical comments about the company here.

amway review 5 stars

Generally, people like Amway because they have dedicated distributors that help to solve problems, and they also have a lot of products to choose from.

There are also loyal customers that stay for good product quality. After all, for a company to survive so long, their products have to be decent.

Look through the positive reviews and you’ll realize most of them talk about the extensive product choices and ease of getting support.

This success can partly be attributed to the MLM business model, where passionate distributors are willing to go the extra mile to keep their customers happy.

 

Challenges As an Amway Distributor

 

However, this business model presents some other major problems as well.

amway review 1 star

When a company sells their products mainly through commission-based distributors, you will see a lot of hard-selling and pestering.

Understandably, most of the customers just want to buy products and be left alone. They have no intention of joining Amway as a distributor.

However, Amway puts a heavy emphasis on recruitment and rewards their distributors for doing it.

As a result, we see many distributors try to recruit close friends and family members into their sales team just to make more commissions.

Of course, this has resulted in soured relationships, and many distributors have lost friends because of this.

Another issue that comes with commission-based distributor is the inflated product prices.

Amway products are expensive because they have to account for the commissions of distributors.

The only way to pay commissions to the selling distributors (and generations of distributors before them) is to make more profit per product sale.

Unfortunately, this makes the products less competitive and harder to sell.

In summary, you will face the following challenges as an Amway distributor:

  • Negative public perception.
    Amway has had its fair share of lawsuits and FTC investigations, and it also doesn’t help that its distributors are generally found to be high-pressure salesmen. In many cases, the distributors are trained to NOT mention Amway’s name during their sales pitch.
    .
  • Inflated product prices.
    Amway products are generally more expensive than competitors because they need to account for distributor commissions.
    .
  • Extremely high failure rate.
    Studies of independent consumer watchdog agencies have shown that approximately 99.7% of all MLM distributors lose money after subtracting expenses.

 

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Amway As A Business Opportunity

 

For those who are looking to become an Amway distributor and make money selling Amway products, this section is for you.

We will go through the costs to get started, Amway’s compensation plan, as well as the different ways you can make money with the company.

 

How Much Does It Cost to Get Started?

 

The starting costs for Amway Business Owners (this is how they call their distributors) at the time of writing are as follow:

Registration fees: $62 one-time
Annual renewal fees: <$100/year
Starter kit (optional): $99 one-time

According to Amway, the annual fees to run your business as an Amway Business Owner (ABO) is less than $100. However, the exact amount is undisclosed.

When you sign up, your sponsor will most likely ask you to take up the starter kit, so you can experience Amway products before you start selling them.

Do keep in mind that the starter kit is optional. No one should force you to buy one if you don’t feel like it.

With that said, the pricing of this kit is pretty reasonable. With $99, you are getting:

  1. $245 worth of products – for demo or selling
  2. 10 mini catalogs with product and business information
  3. In-class training materials

If you are serious about starting the business and want to try out the products for yourself, it might be worth taking up.

 

How to Make Money with Amway

 

MLM structureAs with most other MLM companies, there are 2 ways to make money with Amway:

  1. Sell products and make retail commissions
  2. Recruit members into Amway and encourage them to do the same. You receive bonuses when you rise in ranks.

The main income potential lies in recruiting members and building up a sales team.

As you get more members under your name, you will need to coach them to make sales and in turn, recruit more members.

Theoretically, the distributors and sales in your team will grow indefinitely, and you can make more and more money through commissions.

Of course, this is overly simplified and idealistic. It doesn’t take into the account the hidden costs involved (such as official trainings and conferences), as well as the intricacies of recruiting friends and family members into your sales team.

 

Amway Compensation Plan

 

If you wish to get into more details, here’s the 56-pages long, complete Amway compensation plan.

To put it simply, there are a 23 ranks that you can unlock in Amway (which are called “pins”), from IBO pin all the way to Crown Ambassador pin.

When you first sign up to become an Amway distributor, you will start at the IBO pin level.

As you achieve certain monthly sales volume (calculated in terms of PV) and recruit members, you rise in ranks and earn higher pins.

As you recruit more members and rank up, you qualify for performance bonuses based on the group volume achieved.

The higher you rank, the more people you recruit, the more commissions you can unlock.

Such is the basic premise of the MLM game. This is what drives most Amway distributors to recruit new members.

If you operate on your own and only sell products (without recruiting anyone), your earning potential is going to become very limited.

Here’s the quick rundown on the ways you can save and make money according to Amway’s plan:

  1. Personal Consumption
    Amway encourages its distributors to replace their normal purchases with the company’s products. Many Amway distributors use the products themselves to achieve monthly requirements.
    .
  2. Retail Sales
    As a distributor, you can order Amway products at a cheaper price and resell them to your customers at retail prices. You keep the difference.
    .
  3. Team Commissions
    You make a cut on the commissions made by your sales team. This is what many Amway distributors refer to as “passive income”, and it is why having a large sales team is crucial in this business.
    .
  4. Incentives and Bonuses
    Amway offers one-time bonuses when you rise in ranks and achieve different pin levels.

 

Reality Check: How Much Do Amway Distributors Make?

 

amway income disclosure

Income statement included in Amway compensation plan

We can have a pretty good idea on how much Amway distributors make by looking at their income disclosure.

According to the compensation plan, the average MONTHLY gross income for active IBOs was only $207.

Keep in mind that this amount is before expenses that are typically incurred by an Amway distributor.

You need to deduct this amount with

  • Training and conference fees
  • Travel expenses
  • Marketing materials
  • Membership fees
  • Product purchases

This data is based on the statistics back in 2016. However, there is no reason to expect drastic differences in 2019 and beyond.

Here’s a detailed breakdown of the many costs associated with being a distributor. Even though the article was written years ago, it is still applicable today to some degree.

As a result, approximately 99.7% of all MLM distributors lose money after accounting for expenses (and this data set includes Amway).

 

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Why Do Most Amway Distributors Fail to Make Money?

 

To put it bluntly, no one joins MLM companies to make friends or to make money money for the company.

Every distributor joined at some point to achieve just a single goal – to make more money for themselves and for the people they love.

However, the odds are heavily stacked against you if you become an Amway distributor without the correct expectations and skill set.

Try asking someone who earns a commission when they make a sale at store (e.g. cosmetic shops). They’ll tell you it’s more difficult than it seems to close a deal.

In these cases, the customers in the shops are already interested in the products they are offering.

Now imagine how hard it will be to convince people to want your product in the first place?

This is the harsh reality faced by many Amway distributors. They are selling stuffs to people who are not looking for these products.

To make one successful sale, they may have to pitch the products to dozens of prospects, many of them close friends and family members.

Even if they do make a sale, it may be at the expense of a long-time friendship.

Things get even more difficult when it comes to recruiting members. Here’s the all-too-familiar story of damaged friendship due to Amway recruitment.

amway comment

Distributors are often instructed not to mention the name “Amway”

You can probably imagine why relationships can easily be ruined by friends or family members who vehemently try to recruit you into their sales team.

 

Are You Cut Out To Be An Amway Distributor?

 

When it comes to Amway, the money lies in recruiting members, and to recruit a lot of members at that.

It’s the reality of every MLM – the big money resides in recruiting a large following of members and keep motivating them to make sales.

Let’s do a bit of self-reflection on whether you are cut out for the network marketing business model:

  1. Do you enjoy talking to people and introducing MLM opportunities to others? Can you take rejections with a smile and keep on pushing forward?
  2. Apart from your family and friends, do you have other ways of approaching new prospects? Don’t make the classic mistake of losing family and friends over an MLM company.
  3. Are you ready to attend weekly or monthly meetings with your team and sponsor? Joining an MLM team is a commitment. You are expected to recruit new members and make sales, or you are a liability.

If your answers to all three questions above is a unanimous “YES!”, then you might just have what it takes to thrive in Amway and make it to the top 0.3% that really makes money.

I have been involved in MLMs before, and unfortunately, these were the top 3 reasons why I quit and looked elsewhere.

 

How I Make A Sustainable Income

 

If your answer to any of the questions above is a definite NO, you are probably not cut out to be a network marketer.

Fortunately, there are other avenues to make sustainable side income at home. One such methods is called affiliate marketing.

In affiliate marketing, you make a commission when you introduce relevant products and services to people who need it.

Most importantly, you don’t have to target the people around you. I’ve never recruited anyone or sold anything to people I personally know.

In fact, I’ve never met any customer or answer to anyone. This is the benefit of going online and leveraging on a website that works 24/7.

If you want to know how I got started, read about my story and learn from my failures. I also document how I made my first profit online, and how I made it into a consistent income stream.

If you are interested to get your hands on the same opportunities, I have a great recommendation to get you started.

Check Out My Top Recommendation and My Results Here

 

Do note that the article above contains affiliate links, and I’ll make a commission (at no extra costs to you) if you find any of the products useful and buy them.

This is how I make money with affiliate marketing, after all – by introducing people in need (such as you) to relevant and value-adding services (e.g. training to make money from affiliate marketing).

I hope this in-depth Amway review has been useful to you. Do leave a comment if you have any questions or MLM experience to share, I’d love to hear about it!

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7 Comments

  1. Henry

    Hi! Thank you very much for this very interesting review about Amway. Can you believe I didn’t know Amway stranded for “American Way”?

    Amway has been a long time around. And recently a friend subtly recommended it to me. These two factors motivated me to research a bit about it. And I’m glad I found your excellent post! And as you have stated, I hate recruiting! So thank you very much for also mentioning affiliate marketing.

    • Edward

      Hi Henry, thanks for dropping by.

      I believe most people don’t like recruiting, they joined MLM because they don’t know there are ways to make money without meeting anyone. 

      And that’s why I’m glad I found affiliate marketing.

  2. rmjia

    I have friends and relatives being Amway distributor and it seems to me that most of them ended up buying the products for own use as there is a lot of hard selling involved. Sometimes losing friends too. I have avoided that path since I’m not good with face-to-face selling.. For affiliate marketing, what happens if we are not able to generate sales? For example, I have tried with Amazon before but I was not able to generate sales within a stipulated time that my account had to be terminated. Any advice you can share?

    • Edward

      If you’re an Amazon affiliate and you can’t generate sales within stipulated time, you can submit an online application and get your account reactivated. There will be no fees involved (keep in mind that you shouldn’t pay anything to promote a product for any company).

      With that said, I’ll recommend that you learn getting traffic for your website first before attempting to reopen your Amazon affiliate account.

  3. Lok Which

    I have a cousin that works with Amway and his report has not really been encouraging in the sense that if you cannot convince people to recruit them or be an extrovert you might not make a headway. In my opinion I still think the best way to make money is to create a sustainable successful business online and earn passively from it even while asleep.

    • Edward

      That’s actually very common in MLMs, where distributors can’t recruit members or even get people interested in their business opportunity. That’s why many of them get desperate and try to rope people in with tactics.

  4. Richard

    Anyone who is familiar with the term Pyramid scheme has hear of Amway as their name is synonyms with it. I have had the experience where a friend started with NutriLife which is the exact same product suit and market strategy. She ended up losing a lot of money and it was a complete failure.

    In my experience, any company that requires you to recruit friends and family to sell their products, stay away from as you will be wasting both your time and money on it.

    Rich

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