Most of these issues apply to most other MLMs as well:
1. The small scale of manufacturing results in high prices – It’s economics 101 that producing more of something reduces the per unit cost. Whether a company manufactures their own products or outsources it, the result is the same.
2. The claims of “magic products,” or “high quality products,” can only support high prices so far, and ends up painting the MLM as a scam. It was reported Amway UK product prices were reduced by as much as 80% as a result of the UK lawsuit, but the Channel Islands (tax haven) prices are much lower than in the UK and listed alongside the UK prices, which makes for a very difficult selling proposition. Here’s an example, for a Double X one month supply:
|UK price:||56.65 GBP|
|Channel Islands price:||47.21 GBP|
In dollars, the UK retail price is $93.03, Channel Islands is $77.52, compared to the U.S. price of $84.70.
As another example, XS Energy drink, case of 12, the UK prices are:
|UK price:||18.30 GBP|
|Channel Islands price:||15.25 GBP|
In dollars, this is $30.05 and $25.01, and is $27.60 in the U.S.
At least Ireland has a separate website, although it isn’t hard to take a peak on the UK site, and the same 2 products cost 54.40 €, or $73.61 for the Double X and the XS Energy is 23.45 €, or $31.73, which means the Double X is less expensive than in the U.S., but XS Energy more expensive.
3. Greed on the part of the MLM company and high level distributors also results in higher prices.
4. Most prospects don’t want to sell, but selling the opportunity to other prospective distributors is far more attractive than selling products to retail, non-distributor customers. Since UK ABOs now must sell to non-distributor customers before they can sponsor others, this makes for an added barrier. The requirements are selling to at least 5 people, and a total of at least 200 Pounds (£) within a 12 month period. One Pound is about $1.64, (January 2014, see this link for the current exchange rate: https://www.google.com/search?q=pound+dollar+exchange+rate&rlz=1C1SFXN_enUS500US501&oq=pound+dollar&aqs=chrome.1.69i57j0l5.4776j0j4&sourceid=chrome&espv=210&es_sm=93&ie=UTF-8), so this is, at the current exchange rate, about $27.37/month on average, although one would expect the sales towards the end of the 12 month or less period would be greater than the earlier months. The amount of products isn’t a very high bar, but finding at least 5 different customers is a challenge. There are easy ways to get around this, such as having friends and/or relatives “buy” the products and then use them for personal use. I’ve even talked with IBOs in the past about shipping the products to the friend/relative’s house, then pick them up for personal use. In fact, the entire culture and foundation of Amway isn’t retail focused, which makes this a much larger challenge than it may first appear.
5. Although not present in the UK (or at least it isn’t SUPPOSED to be present, and is the reason it is mentioned here), the ATS totally distorts the incentives for the company, high level distributors, and the vast majority of lower level distributors. Keep in mind the tool profit is not only MUCH greater than the high level distributor Amway profit, but this profit is not known to most prospects or distributors.
6. The poor, and very much earned, reputation of Amway. Even though the ATS has been cleaned up in the UK (we think!), it is still present around the world, so this “dirt” will rub off on the UK unless/until similar rules are written AND enforced around the world.