Professional Documents
Culture Documents
1. History
1.1 Founding
1.2 International expansion
1.3 Quixtar
2. Global markets
2.1 Amway China
3. Brands
3.1 Household cleaners
3.2 Health and beauty
3.2.1 Artistry
3.2.2 Nutrilite
3.2.3 e Spring
3.2.4 Atmosphere
4. Ditto Delivery
5 .Business model
5.1 Definitions
6 .Other interests
6.1 Radio
6.2 Orlando Arena naming rights
6.3 San Jose Earthquakes
6.4 Los Angeles Sol
7. Politics and culture
8. Controversy
8.1 Pyramid scheme accusations
8.1.1 FTC investigation
8.1.2 Amway Andhra Pradesh (India)
8.2 Canadian tax case
8.3 RIAA lawsuit
8.4 Procter & Gamble
8.5 Amway UK
8.6 Welcome to Life (Poland)
8.7 Other issues
9. See also
10. References
1
INTRODUCTION
Amway is the largest direct selling company and manufacturer in the world that uses network
marketing to sell a variety of products, primarily in the health, beauty, and home care
markets. Amway was founded in 1959 by Jay Van Andel and Richard DeVos. Based in Ada,
Michigan, the company and family of companies under Alticor reported sales growth of 2.3%,
reaching US$8.4 billion for the year ending December 31, 2009. 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
ninety countries and territories around the world. It is ranked by Forbes as one of the largest private
companies in the United States and by Deloitte as one of the largest retailers in the world.
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AMWAY BUSINESS OPPORTUNITY
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An opportunity that is blind to color, race, occupation, language,
gender, age, and country of origin.
• Unlimited potential.
A BUSINESS OPPORTUNITY FOR A BETTER LIFE The Amway story begins with two
friends in West Michigan who wanted a better life for their families. Jay Van Andel and Rich DeVos
launched their business in the 1950s selling NUTRILITE® Dietary Supplements door to door. While
Amway has grown into a global company, what Rich and Jay discovered in Ada, Michigan, over 50
years ago still remains true today – people and relationships are the core of this business.
The AMWAY® business opportunity was founded on principles that are carved in stone in front of
the World Headquarters in Ada, Michigan: Freedom, Family, Hope, and Reward.
Amway will:
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HISTORY
FOUNDING
Jay Van Andel and Richard DeVos, friends since school days, had been
business partners in various endeavors including a hamburger stand, air
charter service, and a sailing business. In 1949 they were introduced by
Neil Maaskant (Van Andel's second cousin) to the Nutrilite
Products Corporation. Nutrilite was a California-based direct sales
company founded by Dr. Carl Rhenborg, developer of the
first multivitamin marketed in the United States. In August 1949, after a
night-long talk, DeVos and Van Andel signed up to become distributors
for Nutrilite food supplements. They sold their first box the next day for $19.50, but lost interest for
the next two weeks. Shortly thereafter, at the urging of Maaskant, who had become their sponsor,
they traveled to Chicago to attend a Nutrilite seminar. The meeting was at a downtown hotel, with
over a hundred people in attendance. After seeing promotional filmstrips and listening to talks by
company representatives and successful distributors, they decided to pursue the Nutrilite business
opportunity with enthusiasm. They sold their second box of supplements on their return trip to
Michigan, and rapidly proceeded to develop their new business further.
In 1949, DeVos and Van Andel had formed Ja-Ri Corporation (abbreviated from their respective
first names) for importing wooden goods from South American countries; after their trip to the
Nutrilite seminar, they dropped this business and Ja-Ri became their Nutrilite distributorship. In
addition to profits on each product sold, Nutrilite also offered commission on the sales of products by
new distributors introduced to the company by existing distributors—a system today known as multi-
level marketing or network marketing. By 1958, DeVos and Van Andel had built an organization of
over 5,000 distributors. However, following concerns about the stability of Nutrilite, in April 1959
they and some of their top distributors formed The American Way Association to represent the
distributors and look for additional products to market.
Their first product was called Frisk, a concentrated organic cleaner developed by a scientist in Ohio.
DeVos and Van Andel bought the rights to manufacture and distribute Frisk, and later changed the
name to LOC (Liquid Organic Concentrate). They subsequently formed Amway Sales Corporation to
procure and inventory products and to handle the sales and marketing plan, and Amway Services
Corporation to handle insurance and other benefits for distributors (Amway being an abbreviation
of American Way). In 1960 they purchased a 50% share in Atco Manufacturing Company in Detroit,
the original manufacturers of LOC, and changed its name to Amway Manufacturing Corporation. In
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1964 the Amway Sales Corporation, Amway Services Corporation, and Amway Manufacturing
Corporation merged to form a single entity, Amway Corporation Amway bought control of Nutrilite
in 1972 and full ownership in 1994.
INTERNATIONAL EXPANSION
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.
QUIXTAR
After virtually all Amway distributors in North America switched to Quixtar, Alticor elected to close
Amway North America after 2001. The main difference was that all distributors, now
called 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, and the home of the Orlando Magic was
named the Amway Arena in 2005. The Orlando Magic is owned by Amway founder Richard
DeVos. In 2006, Quixtar published The Quixtar Independent Business Owner Compensation Plan, in
which the company reported that the average monthly gross income for "Active" IBOs was $115. 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 worldwide. That name is Amway Global.
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GLOBAL MARKETS
In 2008 two thirds of Amway's 58 markets reported sales increases, including strong growth in the
China, Russia and India markets. Amway India sales grew 40% to 1128 crore (US$230million).
AMWAY CHINA
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BRANDS
Amway's product line grew from LOC, with the laundry detergent SA8 added in 1960, and later the
hair care product Satinique (1965) and the cosmetics line Artistry (1968). Today Amway
manufactures over 450 products, with manufacturing facilities in China, India & the US, as well as
Nutrilite organic farms in Brazil, Mexico and The United States (California & Washington State). In
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addition, Amway affiliates market products from hundreds of other manufacturers offering
everything from books (e.g. Barnes & Noble, North America) to wine (World of Wine, Europe).
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HOUSEHOLD CLEANERS
Amway is best known in North America for its original multi-purpose cleaning
product LOC, SA8 laundry detergent, and Dish Drops dishwashing liquid. In the January 2007 issue
of Consumer Reports, SA8 with Bioquest was rated the best-performing laundry detergent, scoring
99 out of a possible 100 points. Consumer Reports did, however, criticise SA8's pricing, a situation
which was disputed by Amway. In 2008, Amway's cleaning products were named "Favourite of
Experts" by an independent consumer survey in Ukraine.
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HEALTH AND BEAUTY
The majority of Amway's sales today come from the Health & Beauty sector and in North America
the Amway Global/Quixtar website is ranked the #1 Health & Beauty website by Internet Retailer. In
South Korea Amway is ranked one of the top two companies in toiletries and cosmetics. Amway's
health & beauty brands include Artistry, Beauty cycle, Time Defiance, Artistry Essentials, Pure
White, Satinique, Tolsom, Body Series, Glister, Moiskin (South America),
Nutrilite, Nutriway (Scandinavia and Australia/New Zealand), e Spring, Atmosphere and I Cook as
well as XL and XS Energy drinks. The beauty of your new business is that there are hundreds of
products that you represent. Every product can help you to build a healthy retail business. And, you’ll
be excited to have these products in your home to use and share with others. Your customers will feel
like they’ve been given something special when they experience our exclusive, premier quality
products that make up your new AMWAY® business. We are so confident in the products we offer,
that we back them with a 180-day Satisfaction Guarantee.
HEALTH
A supplement innovator for over 75 years, Nutrilite is the expert in providing plant-based nutrition
products. NUTRILITE® is the world’s leading brand of vitamin, mineral, and dietary
supplements1, offering wellness-promoting and sports nutritional products. And, it is the
only global vitamin and mineral brand to grow, harvest, and process plants on its own
certified organic farms. Other top brands in the Health category include: XS® Energy
Drinks, I Cook® Cookware, eSpring® Water Purifier, Perfect Empowered Drinking
Water®, and ATMOSPHERE® Air Purifier.
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ARTISTRY
Artistry (cosmetics)
Amway's Artistry products include skin care, cosmetics, and anti-aging creams and
serums. Euromonitor International, an independent researcher and publisher of market reports,
business reference books and online information databases, ranks Artistry as one of the world's top 5
best selling brands in the prestige brand category, alongside Clinique, Estee Lauder, Lancome,
and Shiseido. Artistry is the only direct sales brand classifed in the "prestige" category.
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Amway is ranked number 1 in the on-line health and beauty market in North America from 2004-
2010. Artistry sponsored the 2010 Miss America contest, and they are planning to do the same for
2011. The current Miss America is an official spokeswoman for Artistry.
NUTRILITE
Nutrilite
Amway's Largest selling brand is the Nutrilite range of health supplements (marketed as Nutriway in
some countries), and in 2008 Nutrilite sales exceeded US$3billion globally Nutrilite products
incorporate organically grown whole-plant concentrates. Euromonitor has for several years ranked
Nutrilite the world's best-selling nutritional brand in tablet or capsule form. In 2001, five Nutrilite
products were the first dietary supplements to be certified by NSF International. Surveys by
independent group Consumerlab.com since 2002 have rated Nutrilite as having the highest customer
satisfaction rating (96% in 2006) in the direct selling/MLM brand category. In 2006, 2007, 2008, and
2009 in the nutrient and health food category, Nutrilite won "Platinum" and "Gold" awards in
Malaysia, China, Taiwan, Thailand, and Asia overall in the Reader's Digest "Trusted Brands of Asia"
survey. In 2008 Nutrilite scientists, in partnership with Alticor subsidiary Interleukin Genetics won
the 12th John M. Kinney Award for Nutrition and Metabolism for their research into the interaction
between nutrition and genetics.
ESPRING
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Amway's "eSpring" water filter, introduced in 2000, was the first
home water treatment system to incorporate a carbon block filter and
ultraviolet disinfection unit, becoming the first home system to achieve certification for ANSI/NSF
Standards 42, 53 and 55. The unit was also the first commercial product to include sister
company Fulton Innovations' eCoupled wireless power induction technology. Fulton Innovation
introduced the technology in other consumer electronic products at the 2007 International Consumer
Electronics Show. Companies licensing this technology include General Motors, Motorola and
Visteon. In 2006 eSpring was named Product of the Year by the Poland-based non-profit World
Foundation of Health, Heart and Mind. E Spring has won numerous Gold and Platinum awards in
the Reader's Digest Most Trusted Brand Asia surveys.
ATMOSPHERE
In 2008 Amway's HEPA air filtration system became the first air cleaner certified Asthma and
Allergy Friendly by the Asthma and Allergy Foundation of America.
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DITTO DELIVERY
Amway owns a patent on the online shopping method of Ditto Delivery, which allows consumers to
specify an automatic monthly delivery of each product. In May, 2001, Ditto Delivery accounted for
30% of Quixtar's North American sales.
BUSINESS MODEL
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Amway combines direct selling with a network marketing strategy. IBOs may both market the
products directly to potential customers and also recruit (sponsor) and train other people who become
IBOs themselves and in turn have the same opportunity. 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 have generated. People may also register as IBOs to buy products at
a discounted rate. Amway has been accused of using high pressure tactics and in effect brainwashing
its IBO's, using peer pressure in meetings and threats to get IBO's to recruit more, lower income
members who are less likely to complain about being taken advantage of. These claims however have
never been proved in the many court cases against them due to alleged clever manipulation of the
employment laws in various countries.
DEFINITIONS
OTHER INTERESTS
RADIO
Amway bought the Mutual Broadcasting System radio network in 1977 and sold it in 1985.
A major part of the partnership is focused on community initiatives in the Bay Area. As a result,
Amway Global is now also the official sponsor of the team's Kicks for Kids program that focuses on
fitness and healthy lifestyles, as well as bringing underprivileged children to Earthquakes games.
The partnership also saw the creation of the Amway Global Street Team, which appears at all
Earthquakes home games and at a number of soccer and non-soccer events throughout the Bay Area.
The members of the Amway Global Street Team give away Earthquakes-branded merchandise and
provide soccer skills demonstrations at each event.
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POLITICS AND CULTURE
Commentators have identified Amway as supporting the U.S. Republican Party, and its founders
contributed $4,000,000 to a conservative 527 group in the 2004 election cycle. Amway states that its
business opportunity is open to people regardless of their religious and political beliefs.
Rolling Stone's Bob Moser has contended that former Amway CEO and co-founder Richard DeVos is
connected with the dominionist political movement in the United States. Moser states that DeVos was
a supporter of the late D. James Kennedy, giving more than $5 million to Kennedy's ministry.
Multiple high-ranking Amway leaders such as Richard DeVos and Dexter Yager are also owners and
members of the board of Gospel Films, a producer of movies and books geared towards conservative
Christians as well as co-owner (along with Salem Communications) of Gospel Communications.
Amway co-founder, Jay Van Andel (in 1980), and later his son Steve Van Andel (in 2001) were
elected by the board of directors of the United States Chamber of Commerce as chairman of that
organization.
In May 2005, former Amway President Dick DeVos, one of the wealthiest men in Michigan,
announced that he would run against Governor Jennifer Granholm in Michigan's 2006 gubernatorial
election. DeVos, running as a Republican, won 42% of the popular vote, while Granholm won 56%.
Amway emphasizes the environmental benefits of many of its products, and in June 1989 the United
Nations Environmental Program's Regional Office for North America recognized it for its
contributions to the cause of the environment.
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CONTROVERSY
PYRAMID SCHEME ACCUSATIONS
Amway has several times been accused of being a pyramid scheme. A 1979 FTC investigation in the
United States (see below), a 1997 Belgian court and a 2008 court judgement in the United Kingdom
all dismissed these claims.
FTC INVESTIGATION
In a 1979 ruling, the Federal Trade Commission found that Amway does not qualify as a pyramid
scheme since Amway compensation system is based on retail sales to consumers, not payments for
recruiting.
It did, however, order Amway to stop retail price fixing and allocating customers among distributors
and prohibited the company 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.
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decision, the Andhra Pradesh state government enacted a ban on Amway media
advertisements. Amway challenged the ban and in July 2009 the AP High Court refused a petition the
ban should be enforced. As of June, 2009 the original 2006 CID case was still pending at the Chief
Metropolitan Magistrate Court in Hyderabad.
In 1983, Amway pleaded guilty to criminal tax evasion and customs fraud in Canada, resulting in a
fine of $25 million CAD, the largest fine ever imposed in Canada at the time. In 1989 the company
settled the outstanding customs duties for $45 million CAD. In a 1994 interview, Amway co-founder
Rich DeVos stated that this incident had been his greatest "moral or spiritual challenge", first in "soul
searching as to whether they had done anything wrong" and then for pleading guilty for technical
reasons, despite believing they were innocent of the charges. DeVos stated he believed that the case
had been motivated by "political reasons".
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RIAA LAWSUIT
The Recording Industry Association of America (RIAA), as part of its anti-piracy efforts, sued
Amway and several distributors in 1996, alleging that copyrighted music was used on "highly
profitable" training videotapes. Amway denied wrongdoing, blaming the case on a misunderstanding
by distributors, and settled the case out of court for $9 million. In a related lawsuit initiated by the
distributors involved, the Court established that Mahaleel Lee Luster, who had been contracted to
make the videotapes, had violated copyright without the knowledge of three of the five of those
distributors.
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PROCTER & GAMBLE
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AMWAY UK
In May 2007, the UK Department of Trade and Industry (DTI) accused Amway and distributor
organizations Britt WorldWide and Network TwentyOne UK of "objectionable practices" and
petitioned to wind up the companies. The case against Amway was dismissed in 2008 on the
condition that a full earnings disclosure is published publicly, no registration or renewal fees are
charged and that the sale of business support materials are prohibited. The case against Network 21
was dismissed in 2009.
OTHER ISSUES
A Dateline NBC report from 2004 picked up the criticism against some Amway distributor
groups. Amway subsequently published a website with a response to the Dateline report.
Some Amway distributor groups have been accused of using cult-like tactics to attract new
distributors and keep them involved and committed. Allegations include resemblance to a Big
Brother organization with paranoid attitude to insiders critical of the organization, seminars and
rallies resembling religious revival meetings and enormous involvement of distributors despite
minimal incomes. An examination of the 1979–1980 tax records in the state of Wisconsin showed
that the Direct Distributors, comprising less than 1% of all distributors, reported a net loss of $918 on
average.
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SEE ALSO
Companies portal
Alticor
Artistry (cosmetics)
Direct selling
eCoupled
Multi-level marketing
Network TwentyOne
Nutrilite
SA8 (detergent)
XS Energy Drink
REFERENCES
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16. ^ The World of Artistry
17. ^ Artistry - Beauty, Science, Synergy
18. ^ Nutrilite passes $3 billion mark in annual sales
19. ^ The World Market for OTC Healthcare. Euromonitor. January 2008.
20. ^ NSF International Announces Dietary Supplements Certification Program
21. ^ ConsumerLab.com Survey
22. ^ Consumerlab.com 2009 Report on Vitamin & Supplement Users
23. ^ Reader's Digest Trusted Brands Asia
24. ^ John M Kinney Winners 2008
25. ^ NSF International: Who they are what they do
26. ^ In-Vehicle Wireless Power Transfer Unveiled
27. ^ Startup Jump-Starts Wireless Power
28. ^ Amway Poland receives "Product of the Year" for eSpring
29. ^ Reader's Digest Trusted Brands Asia
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