Claudia Gro, PhD Assistant Professor Institute for Management Research Radboud University Nijmegen http://www.ru.nl/bedrijfskunde/koppeling/gross_c/ www.ideologie-im-mlm.

de

Doctoral Thesis Multi-Level Marketing. Identity and Ideology in Network Marketing (in German), VS Research: Wiesbaden, 2008. The Doctoral Thesis was awarded with the Karin-Islinger-Price 2007/08 of the University of Mannheim for the best dissertation in the field of business and related fields.

How many or how few Amway distributors can climb up the ladder of success in Germany?

Amway distributors try to recruit new members with impressive income promises. During my six-month empirical research in Amway Germany (Gro, 2008), I was told in interviews and informal talks that Amway allows people to become financially independent a status that was connected with the level of Diamond in Amway and a monthly provision of 15,00020,000. In speeches during the many weekly meetings in which I participated as well as during big rallies, corresponding stories of success and glamour were told over and over again. The many Amway publications I read gave the same impression. Is this true however? As others have previously done for other countries,1 I tried to find out more about the commissions paid in Amway Germany. Official numbers about how much distributors earn do not exist although the official German regulations ask distributors to give precisely such information to their (potential) recruits (Amway GmbH (Ed.), 2004: 15). However, two other sources help to gain insights into the level of commissions: an official success book My way
1

See e.g. http://www.pyramidschemealert.org/PSAMain/news/newsindex.html, http://www.pyramidschemealert.org/PSAMain/resources /ppsabstract.html, and www.cs.cmu.edu/~dst/Amway/AUS/toolexp.htm.

to Crown Ambassador of the so-called Schwarz-Diamond-Connection (Schwarz & Schwarz, 2001) and the average monthly purchase of German Amway distributors. In table 1 I show data from the official success book (Schwarz & Schwarz, 2001). The left column refers to the level of success and the page from which the information in the table stems. The right column shows the turnover of the whole Downline per level. As the success book (Schwarz & Schwarz, 2001) does not give the group turnover of the Diamond and the Crown Ambassador level, these were calculated/estimated in proportion to the lower levels of success.

Table 1: Official data about provision per level at AW (Gro, 2008: 188)
Level Platinum, p. 20 Ruby, p. 22 Diamond, p. 26 Crown Ambassador, p. 32 Monthly commission in 2,984 5,160 17,705 109,159 Monthly commission without Turnover of Downline in Founders Volume Incentive in 2,184 3,720 16,265 107,719 20,000 36,000 506,000 (calculated by C. G.) ~1.69 Mill. (estimated by C. G.)

The monthly commissions published in the success book are meant to impress existing and new distributors. However, the data also says something about the turnovers needed on the different levels of success, e.g. 1,69 Mill. for a Crown Ambassador. In table 2 I combine these turnovers with the average monthly purchase of Amway members in Germany. According to the company itself, Amway has 85,000 distributors in this country. They produced a turnover of 111 mill. in the business year 2003/2004.2 This includes the membership fee, estimated to be 4 mill. Without this, each distributor buys goods for 113 per month from the company on average. Based on this average purchase I calculated how many members are needed for each level of success. The level of Platinum needs 177 members to reach a monthly turnover of 20,000, i.e. 176 average members in ones own Downline. This implies that only one out of 177 can be a Platinum, i.e. 0.57% of all members. Table 2 does not show what an individual member earns as this depends on the composition of the respective Downline. In fact, the table makes an even stronger claim: It proofs how small the share of people is that can reach a level of success. This statement is possible because the calculation is based on Amways own commission system (Schwarz & Schwarz,
2

Source: www.amivo.de/press_room01.html, accessed on 27th November 2006.

2001). There it is regulated that, for example, a turnover of 20,000 can lead to a commission of 2,184 or 2,984 and for this turnover actually 177 average members are needed.

Table 2: Share of successful distributors calculated on basis of Schwarz & Schwarz (2001) (Gro, 2008: 193)
Level Platinum, p. 20 Ruby, p. 22 Diamond, p. 26 Crown Ambassador, p. 32 Monthly commission in 2,184/2,984 3,720/5,160 16,265/17,705 107,719/109,159 Turnover of Downline in 20,000 36,000 506,000 Number of members Maximum share of leaders needed in Downline who can reach this level 176 318 4,477 0.57% 0.31% 0.02% 0.007%

1.69 Mill. (esti- 14,920 mated, C. G.)

Therefore, the data confirms what others have stated about Amway as an income opportunity: It exists only for very few people and the word opportunity may not only be a euphemism here but could also be regarded as a cover-up for the opposite, namely a deception (Butterfield, 1985; Fitzpatrick & Reynolds, 1997; Scheibeler, 2004) and even a consumer fraud.3

References Amway GmbH (Ed.) Amway Geschftsbedingungen und Null Toleranz-Richtlinie. Amway GmbH, 2004. (Title in English: Amway's Terms and Conditions and Zero-Tolerance Guideline). Butterfield, S. Amway. The Cult of Free Enterprise. Boston: South End Press, 1985. Fitzpatrick, R.L. & Reynolds, J.K. False Profits. Seeking Financial and Spiritual Deliverance in Multi-Level-Marketing and Pyramid Schemes. Charlotte: Herald Press, 1997. Scheibeler, E.N. Merchants of Deception. An Insider's Look at the Worldwide, Systematic Conspiracy of Lies that is Amway/Quixtar and Their Motivational Organization. Available: www.merchantsofdeception.com (July 12, 2005): Eric N. Scheibeler, 2004. Schwarz, M. & Schwarz, M.E. Mein Weg zum Kronenbotschafter. Langenmosen: Marianne und Max Schwarz GmbH & Co. Vertriebsfrderungs KG, 2001. (Title in English: My Way to Crown Ambassador).

See e.g. http://www.pyramidschemealert.org/PSAMain/news/newsindex.html, http://www.pyramidschemealert.org/PSAMain/resources /ppsabstract.html, and www.cs.cmu.edu/~dst/Amway/AUS/toolexp.htm.