2009 comebacks: Amway
Desperate times inspire desperate actions. This may be part of the business plan behind the reemergence of Amway from behind the obfuscating name it adopted, Quixtar. The company, often criticized for operating much like a pyramid scheme, is returning to its best-known brand name, Amway, no doubt hoping to recruit new agents unable to find other work.
The original Amway was purchased by Alticor Inc. in 2000, and has since emphasized online sales and recruiting in foreign countries. The Alticor CEO told the AP recently that 80% of the companies sales are now outside of the U.S.
The Amway model is no doubt familiar to almost everyone: a sales agent buys product from the company at wholesale and sells it to friends and family at retail. The agent is also rewarded for recruiting new sales agents by receiving a bonus based that agent's sales. This pyramid-like scheme troubles critics such as our own Tracy Coenan. She also criticizes the company for raking in dough selling motivational materials to its own agents.
A 2004 NBC Dateline report found that the average active Quixtar (Amway) agent made only $1,400 or so per year. However, they recorded a pitch session in which the speaker suggested that the audience members could pull in a quarter of a million a year. While the company policy prohibits recruiters from exaggerating income claims, the whole business structure makes this an inevitability. This disconnect leads to much of the controversy surrounding Amway.
Nonetheless, in an economy with climbing unemployment and dwindling investments, I expect this year will be very good for Amway and similar home-business schemes. I can only suggest there are better places to put your energy.