Amway: hierarchies, pyramids, networks

I’ve shared my invitation, the introduction, and the explanation which my Amway evangelist gave on how economics work. Now for the juicy part: pyramids 😉

I have to confess: the guy lost me in the next part of the conversation. This was where the system (which still had no name) was explained. At first it was quite easy to follow. He identified the problem with how things are working by pointing to “conventional distribution” and “personal franchise”. The conventional way would be that a manufacturer provides products to a wholesaler, which provides it to the retailer, from which you would buy it. Instead, the “creating wealth” tract suggested that I become a “prosumer”, which imply that I should buy directly from the manufacturer.

Now this kind of made some sense to me. Since I’m into all this ecology stuff, I buy into the idea that we should shorten the distance between the manufacturer and the user (although in ecology this would imply shortening the physical waste being created in the moving around of products, not necessarily shortening the hierarchy of distribution), and there is nothing new to idea that I should buy higher up in the hierarchy. That’s what the whole “straight from the wholesaler” thing is about, and even some “straight from the manufacturer” sales. However, if cutting out the middle-man was what “creating wealth” was about, then the next section of the tract should have been a list of manufacturers in and around Pretoria, with URLs for their online orders. And I know that you do find factories around Pretoria where you can buy straight from the manufacturer. What followed made one big mess of this, however. Also, if these products were so cheap, why not provide me with a pricelist? That would seem the obvious thing to do!

There was the promise that in my buying directly from the manufacturer, I will be saving 30%. Then the first picture of the hierarchy which I will be becoming part of appeared. I was not simply buying directly from the manufacturer or the wholesaler (as I would be doing when going to Pretoria West or Silverton), I was to become part of a team of consumers buying together so that I can earn 21% rebate on my money, and an extra 4% which I didn’t understand. So, 25% of 30% would only come when I’m part of this team of buyers.

Next, I started gathering that I won’t be ordering from any manufacturer directly. I mean, I wasn’t getting a list of addresses, giving me the power to drive over to a factory or a farm, and buy my milk or cookies, I was to order through some kind of network, which would package stuff for me and deliver to my home… suddenly this started sounding quite similar to the wholesaler and the retailer which I’m used to. And actually, I think we have a better deal! Cause when I want fresh products, I drive down to the local mom&pop fruit and vegetable shop down in Lynnwood road. Small little place, which sell fresh products which I would guess has a very short line in delivery. It doesn’t have any wrapping, and they don’t stock plastic bags. They are able to sell it to me real cheap, its fresh, and they employ enough people to guide me through the shop, to hand our a peach that I can taste when I walk in, to carry the box of vegetables to the car. Real nice place! I’ll recommend them as the economically en eco-friendly option.

The last straw was when they started drawing all these pictures of how I should be building teams of consumers under myself so that I can earn masses of income from their buying through me, or me earning money from their consumption, or something like that. Gone was the “directly from the manufacturer” part. For this product to reach my house, a whole ordering and delivering system was in place, packaging it, importing it (since I could gather by now that some of these products was not manufactured in South Africa), and finally, handing out profit and bonuses to people in some kind of hierarchy which I was to become part of.

However, the hierarchy was so complex I couldn’t quite follow the guy. He couldn’t tell me how many people would average a team.  What I could figure out afterwords was that if I build a network consuming R200000 of products which was part of this business which the guy was selling (still no mention of Amway or Network21), I will make R15000 per month, plus R75000 in bonus. Quite a profit I, the new middle man, could make if you would be willing to believe that I, and those I recruit, was actually buying directly from the manufacturer. But I’ll refrain from the calculations at this stage, since I’m simply telling a story.

(lastly, some google searches reveal that buying Amway would actually be more expensive. Can’t comment on that though, since I still haven’t received a price list).

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