Numbers Don’t Lie…Or Do They?

UPDATE: As of today, May 13, 2016 (Happy Friday the 13th!), Amway has not updated their website to provide the 2014 numbers, as well as 2015, and the fiscal year ended last September, so that’s almost 6 months! —> https://www.amway.co.uk/about-amway-new/amway-community-1/how-it-works#tab=2 My opinion is the UK didn’t fare too well the last couple of years, and was one of the countries that made up for Amway bragging about increasing in volume a couple of years ago! This information was court-ordered, see paragraph 57e: BERR_vs_Amway_UK_-_Judgement which states, “(e) Amway will publish earnings information prior to allowing the recruitment of new ABOs. Amway has some experience of this having been the subject of a Commission Order of the United States Federal Trade Commission in 1979 requiring it to make such disclosures in that jurisdiction. Amway’s evidence in fact resisted the idea of unilateral income disclosure (ie that Amway should do something that other direct sellers were not compelled to do): and the unconditional offer of income disclosure was in fact only made at trial. Its form was set out in a draft undertaking.”

Did you ever wonder how Amway would work if there were no tool scam, selling products was required before sponsoring anybody, and there was no renewal fee? Wonder no longer, that’s how Amway works in the UK, ever since the 2008 smackdown: If you don’t know what the  Amway Tool Scam is, see http://www.stoptheamwaytoolscam.wordpress.com for more information. The UK court ordered Amway in 2008 to disallow any profit from the upline tools, require retailing to non-distributors before allowing an ABO to sponsor, and eliminate the renewal fee. So, how is this forced experiment coming along? We now have data from several years, and the results indicate all is not well in this alternate Amway business model, although it is FAR more fair and less deceptive than the Amway model in other countries, such as the U.S., where all 3 factors above are present. Open the document below in a different tab for reference, or use the “plain vanilla” document further down, for reference.

Earning Disclosure 2008-2013

Category 2008 2009 2010 2011* 2012* 2013*
Retail Consultants (Retail only – have always kept RC status, even if not qualified)
Total RCs 5,582 9,777 13,270 16,287 28,696 30,415
RCs earning CVR 2,384 4,313 5,522 6,582 9,161 11,616
Ratio of RCs vs. earning a CVR 0.427 0.441 0.416 0.404 0.319 0.382
Average Monthly CVR (£) 47 43 42 41 42 42
Highest CVR (£) 732 491 976 556 1,496 1,090
Lowest CVR (£) 21 11 14 20 18 17
Certified Retail Consultants (Adequate retail to sponsor)
Total CRCs 3,888 3,211 7,640 10,043 12,544 13,141
CRCs earning CVR or bonus 2,053 2,811 6,211 7,585 8,742 8,231
Ratio of CRCs vs. earning a CVR or bonus 0.528 0.875 0.813 0.755 0.697 0.626
Average monthly CVR or bonus (£) 92 126 114 109 111 108
Highest monthly earnings (£) 2,683 4,350 4,200 3,222 4,515 3,984
Lowest monthly earnings (£) 18 4 5 6 4 5
Business Consultants (Platinums and above)
Total BCs 98 36 50 62 76 81
Average annual income (£) 9,960 22,644 27,600 26,856 23,088 21,048
New BCs N/A 3 12 13 21 14
Minimum annual income – Platinum (£) 7,000 7,000 7,000 8,750 8,750 8,750
Minimum annual income – Emerald (£) 15,000 15,000 15,000 18,750 18,750 18,750
Minimum annual income – Diamond (£) 50,000 50,000 50,000 62,500 62,500 62,500
Number qualified at Platinum 90 33 45 58 71 74
Number qualified at Emerald 7 2 3 3 4 6
Number qualified at Diamond 1 1 1 1 1 1
*ABOs automatically renewed, even if person stops doing anything

The table above would, at first glance, appear to be a pretty good story. But the astericks, comments in parentheses, and closer analysis of these numbers tell a very different story.

Amway decided to not demote RCs who weren’t qualified at the end of the  September 1 fiscal year to be customers.  In other words, just like the LCKs assuming “once an Emerald/Diamond, etc.,” a similar policy in the UK was introduced “once an RC, always an RC.”

In countries where the ATS is present, such as the USA, the ATS (see http://www.stoptheamwaytoolscam.wordpress.com for information on the Amway Tool Scam) drastically impacts the business model. My former Diamond Bruce Anderson told me he was only a Diamond for a year or two, but he had at least twice as much ATS profit coming in compared to Amway profit, so he lived a Diamond lifestyle while only an Emerald.

However, even an ABO who stops buying products for their own use, let alone selling to others, is counted as an RC. Even an IBO who is attacked and becomes a human vegetable in a coma is counted! Only those who notify Amway they quit aren’t counted, but since there is no longer a renewal fee, very few probably bother with officially quitting by submitting a resignation form/letter. In other words, RCs are mostly the ACCUMULATION of RCs, not the actual number of ACTIVE RCs.

On top of this, starting in 2011, Amway decided ABOs would be automatically renewed. As noted above, since there is no renewal fee, virtually every ABO would “renew” under these conditions. Keep in mind there is FAR more churn at the lower levels, so renewing the few dozen Platinums and above isn’t the issue, it’s the CRCs and RCs, particularly the RCs, that are impacted by this 2011 policy change. Note the large increase in RCs between 2011 and 2012, yet the number for 2013 isn’t much larger, and the same flattening out is apparent with CRCs. While some of the flattening out of CRCs is due to falling out of qualification, and either quitting or operating as an RC until they are requalified, the minimal increase is dramatic, and could go negative in 2014, much like the number of CRCs earning a CVR or bonus decreased between 2012 and 2013. Will 2014 show another “flat-line” or even decreasing numbers? Time will tell, but it appears Amway is beginning to fall apart in the UK, and enquiring minds will find out in less than a year.

Even though the turnover is highest at the lowest levels, although hidden as described above, there is considerable turnover at the Platinum level as well. Ignoring 2008 as a unique “restart” number and assuming nobody achieved Emerald in less than 1 year, the new BCs should be able to be added to the BCs from the previous year, with the difference being the churn. Here’s the churn for the past few years, which has an upward trend, some of which, but not all, is caused by the increasing number of BCs (as shown by the normalized results), and is probably mostly at the Platinum level:

2010: -2 (doesn’t make any sense, but that’s how the numbers work out)

2011: 1 (normalized to total BCs: 1)

2012: 7 (normalized to total BCs: 5.7)

2013: 9 (normalized to total BCs: 6.9)

Also, note the RCs who earn any CVR, for even one month, are counted as “RCs earning CVR,” which makes the ratio higher than it is in any individual month. Even so, the ratio is falling, probably because of the accumulating RCs who aren’t demoted to customers, as they normally would be, if they don’t meet the volume requirements. Also, the average RC CVR is about double the minimum, making the maximum amounts true outlyers.

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