In a recent video interview with Amway executives, Doug DeVos and Steve Van Andel, a Wall Street Journal reporter asked them a probing and revealing question. In fact, before the interview, the reporter for the Wall Street Journal emailed Pyramid Scheme Alert to ask for questions to pose to Amway’s top executives.
The question that Pyramid Scheme Alert recommended and that was asked was, “What percentage of the products that Amway sells to the distributor/salespeople, (called Independent Business Owners, IBO) are ever resold to end-user customers who are not also distributors?” In other words, how much ever gets retailed to the public?
Why would the Wall Street Journal ask such a question to a “direct selling” company? Isn’t direct selling, by definition, all about salespeople selling products to retail customers? Why would Amway be asked “how much” of the products are actually retailed?
The reason is that this question determines the very legality of the entire Amway enterprise. And Amway is continuously accused of operating illegally. So the Wall Street Journal took Pyramid Scheme Alert’s recommendation and politely asked Amway’s top leaders whether their company is a fraud or not.
If there is insufficient retailing at Amway, the only other way for the IBO to make money is to recruit more IBOs. The new recruits would have to do the same, as would their recruits, forever and ever. This would be a pyramid recruiting scheme, not a direct selling company. The pyramid recruiting model dooms 99% to be in the bottom levels, where they must lose their money (because they don’t have enough recruits (or none at all) below them). That would make Amway’s claim of offering a “business opportunity” a sham.
Did DeVos’ and Van Andel’s answer reveal a pyramid secret? See an analysis of what it means if the salespeople themselves buy as much as all the retail customers combined do.