Amway’s marketing model

Amway is definitely not a pyramid scheme

In China in the late 1990s, the pyramid schemes that arose with Amway and Avon became a business game. Many lawless elements use the banner of direct selling and pyramid selling, but in fact they have distorted the original spirit of direct selling to obtain income by selling products. More than 600 single-layer MLM companies suddenly popped up in China. They use high and quick returns as bait to encourage people to join, sell products at huge profits, and rely on new people (downlines) to pay large amounts of money when they join to form a "head tax" "As a source of huge profits, this kind of illegal financing and commercial fraud known as "pyramid" has spread like a scourge everywhere in China. Finally, on April 21, 1998, the State Council issued a ban on pyramid schemes, and Amway (China) was not immune to this unreasonable disaster. In fact, in the 1970s, illegal pyramid schemes also emerged in the United States. In 1975, Amway became the subject of a U.S. federal trade investigation. In 1979, the investigation concluded that Amway relied on the sale of goods as a prerequisite for receiving performance bonuses, and there was no so-called "headhunter bonus." Therefore, it determined that Amway's marketing plan was to sell products, not direct sales rights, or "pyramid" sales, and was legal. Business operations. In the end, this famous judgment affirmed that multi-level pyramid schemes are legitimate undertakings and provided criteria for judging what is legitimate and legal and what is improper and illegal multi-level pyramid schemes.

Amway invested more than 80 million US dollars in Guangzhou in 1992 to register and establish a large-scale Sino-US cooperative manufacturing enterprise-Amway (China) Daily Necessities Co., Ltd. The place officially opened. So far, there are more than 100 specialty stores (branch offices) across the country. The business model adopted by Amway around the world encountered setbacks in China, and the company was suddenly faced with a difficult choice of life and death. After Amway (China)'s unremitting efforts and three months of research, on July 21, 1998, Amway (China) was specifically approved to adopt the business model transformation of "setting up own stores + hiring sales personnel" and retaining the core concept of direct selling. business.

After the transformation, sales dropped sharply in 1998 due to the termination of the original sales model and the impact of policies. In 1999, Amway (China) proposed 10 revitalization plans: such as establishing 58 specialty stores; lowering the prices of some products by 30%, adjusting the relative net turnover of sales commissions, and introducing the titles of sales director and sales manager. At the same time, Amway (China) also relies on the 20% discount model to attract a large number of long-term customers. The company's performance began to recover.

In 2000, Amway's performance achieved rapid development, reaching sales of 2.4 billion yuan, almost double that before the transformation, ranking 115th among the 500 largest foreign-invested enterprises in the country. In 2001, Amway (China) achieved another great success, reaching sales of 4 billion yuan.

In early 2002, the Chinese government began to crack down on illegal pyramid schemes and "economic cults" and issued the "Notice on Issues Concerning the Transformation of Sales Methods by Foreign-Invested MLM Enterprises" Provisions" (referred to as "Document No. 31").

Amway (China) has undergone another rectification. Amway's seven-year development in China has been full of twists and turns. The trouble of Amway (China) is that it does not know how to clearly explain the difference between its marketing model and the illegal pyramid schemes that have become more and more popular in society. When the wave of crackdowns on illegal pyramid schemes to rectify the market economic order hit us again, Amway (China) took the initiative to start "the most intensive and largest-scale team clean-up and rectification work since the company opened seven years ago, changing from reactive to proactive." One includes The "rectification" notice with nine contents, including suspending the acceptance of new salesmen, re-checking the identity of salesmen, prohibiting cross-regional sales, and restricting meetings, quickly spread throughout Amway China's 130,000 marketing army. From January 3, 2002 to the present, the marketing team of Amway (China) has dropped sharply from 130,000 people in early 2001 to 70,000 people.

Standardizing internal management is more important than expanding business. Amway (China)'s performance rose instead of falling. In 2002, its performance grew strongly to 5.7 billion yuan.