From: dmason@plg.uwaterloo.ca (Dave Mason)
Subject: Re: Regulations concerning Amway in Ontario (facts and comparisons)
Organization: /u2/dmason/.organization
Distribution: kw
Date: Thu, 1 Oct 1992 16:17:50 GMT

 Let's analyse and contrast a few of the postings from bjpocock.  Keep
your eye open for code phrases.

In article <BvEr3B.Hp9@undergrad.math.waterloo.edu> bjpocock@undergrad.math.waterloo.edu (Beastor the Mad) writes:

> There seems to be alot of interest in the Regulations surronding Amway. Amway
> is not a pyramid scheme! [...]
> 
> Three common elements of a pyramid scheme have been identified as: (1)a large
> required initial investment or purchase of inventory; (2) direct payment for
> the recruitment of additional persons in the scheme; and (3) heavy emphasis
> on the recruitment of additional persons with little or no emphasis on the
> sale of the product.
> 
> The Amway Sales and Marketing Plan contains none of the above described 
> elements.  Distributors of AMWAY products earn monies by selling products
> to their retail customers and other distributors in their sales organization,
> not from the introduction of additional persons into the business.

In article <BvEGLu.JK5@undergrad.math.waterloo.edu> bjpocock@undergrad.math.waterloo.edu (Beastor the Mad) writes:
> TWO... it is based around the fact that you get 1% of a 100 peoples work
>	instead of 100% of your own work.  This is an example, not how
>	it works for this system.

Back to the original quoted article.
>  AMWAY
> distributors who require large initial investments in sales kits or inventory
> and do not properly emphasis retail sales of AMWAY products may invite
> scrutiny under various provincal pyramid laws.
>
> In summary, it is mandatory that distributors of AMWAY products present the
> AMWAY sales and Marketing Plan in accordance with AMWAY literature and sales
> aids, properly emphasize retail selling, and only require purchase of the
> literature portion of the Amway Sales Kit to enter the business.  IT is 
> important to realize that simple and innocent changes made by well-meaning
> distributors could violate these laws.

I.e. Amway lawyers have analyzed the laws and determined how close
they can get to the laws limits without being convicted.  This has
been codified in the sales and marketing plan.  It's close
enough that if a distributor strays a little bit, they cross the line.
This strikes me as similar to companies that pollute but intentionally
at a level that is just below the statutory limit, because they can
make a few more bucks than they could if they were good citizens.

> As you may note... I did not present the Marketing Plan to anyone as of yet..
> and I certainly have not said that getting people is how you make money up
> front.  YOu make money by selling products through your distributors and
> by selling them yourself.  It is fairly large difference there.

In article <BvEoK8.C5r@undergrad.math.waterloo.edu> bjpocock@undergrad.math.waterloo.edu (Beastor the Mad) writes:

> You also don't make your money by selling.  Most of it is by Professional
> Networking.

I.e. recruiting people to be below you in the heirarchy.

Sigh.

In some sense, what Amway does is not much different than what General
Motors does: There's a president who makes a lot of money based on the
productivity of the vicepresidents who make slightly less money based
on the productivity of the senior managers who....the productivity of
the plebes on the assembly line and the salespeople in the
dealerships.

Amway just makes it more explicit, and describes their business as
sales of consumer products while setting the margins such that you
don't make very much if you're selling products directly (unlike the
assembly line worker who makes a pretty good living), and the
incentive is to recruit others so that you start making a percentage
off their sales (and the sales of their recruits (and the sales of
their recruits' recruits (etc.))).  Of course the fact that new
recruits will need some inventory (which you make a percentage on)
doesn't hurt either (but we can't require TOO much inventory or we'll
look like a pyramid!).

I don't know what margins Amway uses.  They probably could make minor
changes in those margins and change the emphasis from recruitment to
sales.  But then the people at the top of the pyramid (oops, I mean
company) wouldn't make as much money.

I must say none of this has much attraction for me.  But then, neither
does working for GM.

	../Dave
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