The following is a great analysis titled “Amway is not a scam – but you can still be scammed”. I got it from somewhere and it explains why a lot of people have mixing views on Amway and other brands. In my humble opinion, there are only two types of MLM: first one is Amway and the other one is non-Amway. In terms of products, the MLM market is neither a competitive market nor other types of market that you read in text books because demand largely driven by agents themselves. In fact, they form a perfect competitive market for hopes and dreams to become wealthy. This is why mlm market produces externalities such as below:
1. Ignorance, confusion, and misconceptions about MLM
The first is essentially ignorance or misconceptions. MLM suffers greatly by the fact that virtually all illegal pyramid scams claim to be MLMs. When they inevitably fail or are closed down by the government, the meme that “MLM=scam” is reinforced. In reality this is poor logic. The very reason the scams are claiming to be MLMs is because MLMs are legal, legitimate businesses. Nevertheless, the effect on public perceptions is a daunting problem for the legitimate companies.
Associated with this are many misconceptions about how legitimate MLMs operates. Many folk believe we make money by recruiting others, and “smart” people know that means the model will inevitably “saturate” and you can’t make any money since there’s no longer anyone left to recruit. Of course, this isn’t MLM, it’s an illegal pyramid. We don’t make money by recruiting, we make money through sales volume. MLM isn’t really a business model – it’s a marketing strategy with the aim of increasing sales volume. Indeed, in general for any given level of sales, the more people you recruit to achieve it, the less you make on it. It’s no different to owning say a traditional retail store selling clothes. You could sell them all yourself, and keep the whole profit, or could employ some other sales staff. They’ll cost you money, but you hope that the increase in sales will offset the increase in costs.
These types of misconceptions abound, with people concerned about the legitimate problems inherent in illegal pyramids, and believing they exist in multi-level marketing.
2. Scammers can scam you with Amway
The second area that seems to influence people is their own personal experiences, or those of people they know, or, increasingly, experiences of others they read on the internet. The interesting thing is when you delve into the problems with those experiences, they very rarely have anything to do with Amway or multi-level marketing per se, and they have to do with how some people operate their multi-level marketing businesses.
You can be scammed in any business. A car salesman can knowingly sell you a lemon (if you read “The Market for Lemons” written by Nobel laureate George Akerlof). A teacher can “force” you to purchase a substandard text book they’d written and printed themselves. An Amway business owner could sell you Double X by telling you it cures cancer, or you can be a millionaire with little work.
In each case you’ve been scammed, but the scam had nothing to do with the car industry, or the medical profession, or teaching, or Amway. It had to do with those individuals (and perhaps some of their associates) and the way they were behaving.
The multi-level marketing strategy, and Amway as its largest representative, is a brilliant way of doing business which allows anyone to start and own their own business, of which ever size they desire, with little financial risk, and without having to pursue it full-time. Just like in any other industry however, you can be scammed, and if you’re so inclined, you can scam people, but like any other industry, the scammers rarely last long.
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