Is Amway a Pyramid Scheme?

An unexpected call or message from an old friend comes right at an unprecedented time. Most will ask how you have been this past few years, slightly getting in contact with you after some time and getting that relationship back eventually. Yet, as days go by, they share a business strategy with you where they promise that you will become wealthy in no time – it seems inviting but then you realize it’s oddly realistic.

Most of us have been there. People get in touch with you and then offer you a business solution where you can gain financial freedom by just recruiting business owners and selling products for you. Whether this may be real or not, somehow we just feel that something’s off, and if you’ve ever heard of Amway, then you just might want to rethink signing in a contract with the old pal and getting into a business with them.

What is Amway?

Founded in 1959, Amway, short for “American Way” is a multi-level marketing business that models itself as a brand that sells health, beauty, and home care products. It garnered attention globally, recruiting resellers starting from the United States and to different continents, where it took off and became a global phenomenon.

As a multi-level company, Amway has various products which are distributed to the registered distributors, and then, later on, sell them to consumers. Distributors earn by incentives and commissions once they get a business partner to sell the products for them; basically, the more products sold, the bigger the incentive that they get. This also calls for financial freedom when it comes to the business model Amway uses, in a way that distributors can move products through retailers doing the selling for them.

Nevertheless, Amway has risen as one of the top brands for health, beauty, and homecare essentials. As it has expanded globally through the years, it has garnered visibility and popularity among those who want to earn more even when at home, where the company also holds conferences and training occasionally to further boost distributor and seller engagement, coaching them to become better entrepreneurs as they move the products to their consumers.

Is Amway a Pyramid Scheme?

Incentives, commissions, and recruits – these are typically what a Pyramid Scheme is all about. While Amway structures itself as a brand that does a multi-level marketing strategy, it may be a Pyramid Scheme disguised as an MLM after all.

First and foremost, Amway has physical products that they give to distributors and sellers. Yet, you still cannot be a registered entrepreneur under their umbrella if you haven’t signed up. Upon signing up, you’ll be asked to pay registration fees and buy their products, for you to become an independent business owner who will become a legal counterpart of the business. By then you’ll also recruit other sellers, and then the money flows upward as your downlines, or say recruits which you acquired, get working for you, and so on. Later on, you’ll get commissions, and create a network to a passive flow of income as more and more people under you are recruiting other downlines as well.

Yet, even when they can produce products for distribution and selling, most people don’t even get a break-even for the products sold. This entails that even though commissions are thereupon sold, not many people are enticed to use Amway products more than any other leading healthcare, beauty, and household brands out there. Nonetheless, it is inevitable to say that the real money does not come from the products themselves, but it all boils down to generating recruits from conferences or just having a little chitchat with your pal over coffee who gives in to a seemingly desirable business platform they think they would able to earn easily from.

Moreover, while products are not very sellable as other brands, Amway is still able to make money – this is done through registration fees for conferences, and selling business materials as a guide on how distributors would eventually be a powerhouse of selling in line with the “strategy” the brand is suggesting. Hence, even though Amway presents itself as doing a multi-level marketing business model, very little revenue comes from direct selling marketing but with fees on materials that can seemingly make them financially independent as they recruit more and more people doing the job for them.

Correspondingly, Amway might have physical products in stock distributed, it is somehow similar to pyramid schemes as most of the revenues come from enrollment fees and not from selling products initially. It is still necessary to remember that although products are there, Amway creates better revenue in fees rather than the preference of their products among the masses.

The Verdict

Therefore, it oddly positions itself as a multi-level marketing business but inadvertently does a traditional pyramid scheme disguised otherwise. Amway may be registered as a legitimate business, however, it is somewhat close to the pyramid scheme with how it works. Without fees, it is inevitable for Amway to go bankrupt; products are just another cloak to let people think they’re another MLM company and not doing a pyramid scheme.