Difference between revisions of "How Amway Works"

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The simplest method of generating an income is to buy products from Amway at their base wholesale price, add a markup, and sell them directly to a consumer. In general, Amway Business Owners (ABO) have the right to sell Amway-sourced products at whichever price they choose. The recommended markup on Amway manufactured products varies from 20-35%. In many markets Amway also makes available products from third-party manufacturers. The potential retail markup on these "catalogue" products is usually limited however, and they are generally made available for the personal convenience of Amway business owners rather than for resale. There are a number of exceptions to this, including [[XS Energy]] drinks and [[Emma Page]] Jewellery.
 
The simplest method of generating an income is to buy products from Amway at their base wholesale price, add a markup, and sell them directly to a consumer. In general, Amway Business Owners (ABO) have the right to sell Amway-sourced products at whichever price they choose. The recommended markup on Amway manufactured products varies from 20-35%. In many markets Amway also makes available products from third-party manufacturers. The potential retail markup on these "catalogue" products is usually limited however, and they are generally made available for the personal convenience of Amway business owners rather than for resale. There are a number of exceptions to this, including [[XS Energy]] drinks and [[Emma Page]] Jewellery.
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bir gelir getirici basit yöntem, baz toptan fiyata Amway ürünleri satın almak için bir biçimlendirme ekleyebilir ve bir tüketici doğrudan satmaktır. Genel olarak, Amway İşletme Sahipleri (ABO) seçtikleri hangisi fiyata Amway kaynaklı ürünleri satmak hakkına sahiptir. Amway üretilen ürünlerde tavsiye biçimlendirme% 20-35 arasında değişir. Birçok pazarda Amway ayrıca üçüncü parti üreticilerin mevcut ürünler yapar. Bu "katalog" ürünlerde potansiyel perakende biçimlendirme genellikle, ancak sınırlı genellikle Amway iş sahiplerinin kişisel rahatlık yerine satış için sunulmaktadır. XS Enerji içecekleri ve Emma Sayfa Mücevher dahil olmak üzere bu istisna bir dizi vardır.
  
 
=Volume rebates=
 
=Volume rebates=

Revision as of 18:46, 28 October 2010

Amway business owners can earn income and other incentives in a variety of ways. They fall under the categories of Retail Markup, Volume Rebates, Leadership Bonuses and Higher Awards and Incentives.

Retail Markup

The simplest method of generating an income is to buy products from Amway at their base wholesale price, add a markup, and sell them directly to a consumer. In general, Amway Business Owners (ABO) have the right to sell Amway-sourced products at whichever price they choose. The recommended markup on Amway manufactured products varies from 20-35%. In many markets Amway also makes available products from third-party manufacturers. The potential retail markup on these "catalogue" products is usually limited however, and they are generally made available for the personal convenience of Amway business owners rather than for resale. There are a number of exceptions to this, including XS Energy drinks and Emma Page Jewellery.

bir gelir getirici basit yöntem, baz toptan fiyata Amway ürünleri satın almak için bir biçimlendirme ekleyebilir ve bir tüketici doğrudan satmaktır. Genel olarak, Amway İşletme Sahipleri (ABO) seçtikleri hangisi fiyata Amway kaynaklı ürünleri satmak hakkına sahiptir. Amway üretilen ürünlerde tavsiye biçimlendirme% 20-35 arasında değişir. Birçok pazarda Amway ayrıca üçüncü parti üreticilerin mevcut ürünler yapar. Bu "katalog" ürünlerde potansiyel perakende biçimlendirme genellikle, ancak sınırlı genellikle Amway iş sahiplerinin kişisel rahatlık yerine satış için sunulmaktadır. XS Enerji içecekleri ve Emma Sayfa Mücevher dahil olmak üzere bu istisna bir dizi vardır.

Volume rebates

In most product based businesses, the more volume you buy from your supplier, the cheaper per-unit price you receive. This means when you resell the product your potential markup (and thus profit) is higher. The same applies for Amway, however it occurs in a slightly different manner. In traditional distribution you would be required to purchase large inventories up-front and you would receive an upfront discount on the purchase price. With Amway, all authorised representatives make their initial purchase at the same price, no matter the volume. At the end of the month the total volume of products purchased through that ABO is added up, and the volume discount paid as a rebate, typically on or about the 13th of the following month. In addition, the volume is based on all products purchased, so you don't need to buy large inventory of one product to receive a discount, as is often the case in traditional distribution.

Because of the international nature of the business, the wide variety of products available, and the differing amounts of markup available to be shared on Amway manufactured products compared to third-party manufactured products, volume is calculated using a points system rather than per unit or purchasing cost. The scales varies slightly between different markets (see below). Every product is allocated a Point Value (PV) and a Business Volume (BV). The PV is used to calculate the rebate percentage earned. For most core line products (ie those manufactured by Amway), the BV is usually close to the wholesale price of the product less any sales tax. The rebate paid is calculated by multiplying the PV rebate percentage by the total BV.

Increasing Sales Volume

An ABO's sales volume consists of three components - products purchased for personal use, products sold at retail to personal clients, and products sold at wholesale to other ABOs whom they introduce to the business ("sponsor"). Increasing any of these three areas increases an ABOs total sales volume. Products sold through sponsored ABOs result in smaller profit margins than products sold directly to consumers, however the increased sales volume would normally make up for the smaller margins. This is analagous to a retail store situation where the store owner may employee additional sales people (an expense) in the hope that the increase in sales volume will offset this and lead to overall greater profits. An ABO will invest time in finding and training new ABOs as well as retail clients because the new ABOs will eventually be able to create sales volume without their sponsor's input.

The Distribution Chain

Prior to the introduction of direct fulfillment, where every ABO deals directly with the company, ABOs would purchase their products from their sponsor, who would purchase them from their sponsor and so on up until the first Direct Distributor, who would deal directly with Amway. The Direct would receive the total volume rebate back from Amway corporation and would then be responsible for distributing the volume rebates earned to their frontline distributors who would do the same for their frontline and so on. Today, most ABOs let Amway handle these logistics, ordering products directly from Amway and Amway calculating and distributing the rebates as necessary. In the FTC's investigation of Amway in the 1970's, it was reported that about half of all distributors were within 3 "levels" of Amway, more than 70% where within 4 levels and 99% within 8 levels, which is comparable to traditional distribution chains.

Rebate Scale

North American Rebate Scale

PV Rebate (% of BV)
7,500+ 25%
6,000 23%
4,000 21%
2,500 18%
1,500 15%
1,000 12%
600 9%
300 6%
100 3%

Australia/New Zealand Rebate Scale

PV Rebate (% of BV)
7,500+ 21%
5,000 18%
3,250 15%
2,500 12%
1,000 9%
400 6%
100 3%

Malaysia/Brunei Rebate Scale

PV Rebate (% of BV)
12,500+ 21%
7,500 18%
4,500 15%
3,000 12%
1,750 9%
900 6%
250 3%

United Kingdom, ROI, and India

PV Rebate (% of BV)
10,000+ 21%
7,000 18%
4,000 15%
2,400 12%
1,200 9%
600 6%

India

PV Rebate (% of BV)
10,000+ 21%
7,000 18%
4,000 15%
2,000 12%
1,000 9%
300 6%

Japan

PV Rebate (% of BV)
1,000,000 21%
600,000 18%
360,000 15%
180,000 12%
90,000 9%
30,000 6%
10,000 3%

Mexico

PV Rebate (% of BV)
10,000+ 21%
7,000 18%
4,000 15%
2,400 12%
1,200 9%

Other Markets

PV Rebate (% of BV)
10,000+ 21%
7,000 18%
4,000 15%
2,400 12%
1,200 9%
600 6%
200 3%

Leadership bonuses

4% leadership bonus

In traditional distribution there can come a point where one of your wholesale customers is purchasing so much volume than they'd be better of dealing directly with the wholesaler or manufacturer themselves. At this point you would generally lose them as a customer, and thus lose the associated profit. By contrast, Amway incentivises people help their downline reach this point. Historically, when a downline reached the top of the volume rebate scale, they would "break away" from their sponsoring distributor and begin dealing directly with Amway - become a "direct distributor". Rather than the sponsoring IBO losing income however, Amway would continue to pay them a 4% leadership bonus on the volume of sales generated by the "break-away" group. Even though today all IBOs may deal directly with Amway, the same principle applies. To qualify for the full 4% bonus, an upline IBO needs to have a certain amount of volume outside of the breakaway leg (typically set around the 12%-15% volume level) or at least 2 breakaway legs. If an IBO does not have this qualifying volume than some or all of the bonus will be passed upline to the first IBO who qualifies.

Ruby bonus

Depth bonus

Pearl bonus

Emerald bonus

Diamond bonus

Diamond Plus bonuses

FAA points

Higher Awards and Incentives