Amway was founded in 1959 by Jay Van Andel and Richard DeVos. (Amway being an abbreviation of American Way). Based in Ada, Michigan, the company and family of companies under Alticor reported sales growth of 9.5%, reaching US$9.2 billion for the year ending December 31, 2010. Website: http://www.amway.com/EN
In 1999 the founders of the Amway corporation established a new holding company, named Alticor, and launched three new companies: a sister (and separate) Internet-focused company named Quixtar, Access Business Group, and Pyxis Innovations. Pyxis, later replaced by Fulton Innovation, pursued research and development and Access Business Group handled manufacturing and logistics for Amway, Quixtar, and third party clients.
The main difference was that all “Independent Business Owners” (IBO) could order directly from Amway on the internet, rather than from their upline “direct distributor”, and have products shipped directly to their home. The Amway name continued being used in the rest of the world. After virtually all Amway distributors in North America switched to Quixtar, Alticor elected to close Amway North America after 2001. In June 2007 it was announced that the Quixtar brand would be phased out over an 18 to 24 month period in favor of a unified Amway brand (Amway Global) worldwide.
Amway expanded overseas to Australia in 1971, to Europe in 1973, to parts of Asia in 1974, to Japan in 1979, to Latin America in 1985, to China in 1995, to Africa in 1997, to India and Scandinavia in 1998, to Russia in 2005, and to Vietnam in 2008.
Amway is a direct selling company and manufacturer that uses network marketing, face to face recruiting and selling by distributors, to sell a variety of products, primarily in the health, beauty, and home care markets. “Independent Business Owners” (IBOs) may market products directly to potential customers and may also recruit (sponsor) and train other people to become IBOs. Each IBO may earn income both from the retail markup on any products they sell personally, plus a performance bonus based on the sales volume they and their downline (IBOs they have sponsored) have generated. People may also register as IBOs to buy products at discounted prices.
Amway owns a patent on the online shopping method of Ditto Delivery, which allows consumers to specify an automatic monthly delivery of each product. Its product lines include home care products, personal care products, jewelry, electronics, Nutrilite dietary supplements, water purifiers, air purifiers, insurance and cosmetics. In 2004, Health & Beauty products accounted for nearly 60% of worldwide sales. Amway conducts business through a number of affiliated companies in more than a hundred countries and territories around the world. Amway was ranked No.114 among the largest global retailers by Deloitte in 2006, and No.32 among the largest private companies in the U.S. by Forbes in 2010.
Amway’s business practices have been the subject of controversy and the company has been involved in several court cases in the United States, Canada, and elsewhere. It got a bad name as being named a Pyramid scheme. This has effected the perception of MLM companies since then.
In a 1979 ruling, the Federal Trade Commission found that Amway does not qualify as a pyramid scheme because distributors were not paid to recruit people and had to sell products to get bonus checks, and the company was committed to buying back its distributors’ excess inventory.
The FTC did, however, find Amway “guilty of price-fixing and making exaggerated income claims, the company was ordered to stop retail price fixing and allocating customers among distributors and was prohibited from misrepresenting the amount of profit, earnings or sales its distributors are likely to achieve with the business. Amway was ordered to accompany any such statements with the actual averages per distributor, pointing out that more than half of the distributors do not make any money, with the average distributor making less than $100 per month. The order was violated with a 1986 ad campaign, resulting in a $100,000 fine.
Other facts of interest.
In the 1990s, the Amway organization was a major contributor to the Republican Party (GOP) and to the election campaigns of various GOP candidates. Amway and its sales force contributed a substantial amount (up to half) of the total funds ($669,525) for the 1994 political campaign of Republican congresswoman and Amway distributor Sue Myrick (N.C.). According to two reports by Mother Jones magazine, a liberal news organization, Amway distributor Dexter Yager “used the company’s extensive voice-mail system to rally hundreds of Amway distributors into giving a total of $295,871” to Myrick’s campaignIn October 1994, Amway gave the biggest corporate contribution recorded to that date to a political party for a single election – $2.5 million to the Republican National Committee – and was the number one corporate political donor in the U.S. In the 2004 election cycle, the organization contributed a total of $4million to a conservative 527 group, Progress for America.
Several sources have commented on the promotion of Christian conservative ideology within Amway. In ‘The Cult of Free Enterprise’, author (and former Amway distributor) Stephen Butterfield wrote “[Amway] sells a marketing and motivational system, a cause, a way of life, in a fervid emotional atmosphere of rallies and political religious revivalism.
Orlando Arena naming rights
In December 2006, Alticor secured the naming rights for the 17,000-seat basketball arena in Orlando, Florida – home of the Orlando Magic, which are owned by the family of Rich DeVos. The arena, formerly known as the TD Waterhouse Centre, is now called Amway Arena. It is scheduled for demolition in late 2011, following the 2010 opening of its successor, Amway Center.
Amway has had a spotted but successful track record. If you are looking at an MLM company think of the challenge everyone has – how do you get “leads” or customers? Find a company that helps you succeed.
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