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January 2, 2008
Retailing in Quixtar Part 1 (3.4%)
By Truth in Quixtar
I wanted to write a post about how the enforcement of the Amway/Quixtar retailing rules were a joke but found that stepping into that realm only seemed to open more doors to more issues. So in the interest of trying to keep the posts on this as brief as possible I decided to break it up into three parts.
In part 1 I will discuss the number 3.4% which is the number I got from the California lawsuit transcript. Just to give some background, DJ Poyfair, who is the counsel for the Plantiffs (Orrin Woodward, etc), was making a point about how the high prices were not justified by the high quality of the products and had this to say:
This network marketing company has outside sales of 3.4% of outside. That’s if you accept their definition of what constitutes outside retail sales.
Now, Poyfair was referring to the 70% rule from FTC v. Amway when bringing this up, and was trying to imply that the FTC said IBOs should be selling 70% of the products that they buy. I write this only to include proper context, I will save the 70% rule for Part 2.
The first thing that came to mind when I saw that only 3.4% of sales in Quixtar were outside sales, is that this is no real surprise. I don't think anyone could honestly say they expected such a number to be any higher. I think it speaks volumes to the fact that the focus is on sponsoring and very little focus has been placed on actually selling a product to a customer.
With those kinds of numbers I don't see how this can be taken seriously as a business. I have said it before that if IBOs had the numbers to show they were really a business, they wouldn't have to have rehearsed answers when showing the buisness plan. Try flashing the 3.4% next time you show the plan and I bet the person across the table gets up and leaves in about 3.4 seconds.
Of course as with any other fact that comes out about Amway/Quixtar there is a supporter there to try and put spin and sugar on it to make it sound better. The spin/sugar this time is that this number is only concluded by using the definition Quixtar uses for an outside sale. Ironically, that is the same definition that many would assume it is, a sale to an actual customer, not an IBO. The argument is that many people who are IBOs simply buy the products and don't sponsor or sell to others, therefore making them actually customers.
On the surface this seems valid and if one were to count those purchases as sales to customers the number would certainly rise. But, I see it as just another example of what is wrong with this business. Why should someone have to sign up as a business owner just so they can get a good price? Doesn't it make more sense to have your prices competitive in the first place so that you can make retail profit on top of your PV check? What other business model does someone have to sign-up as a business owner just to get good prices?
Frankly I think IBOs should be a bit peeved with Quixtar over the prices and compensation plan. Ty Tribble many times has showed examples of other MLM companies that have much better compensation plans as well as better prices on their products. Sitting on 3.4% Quixtar looks more like a Wholesale buyer's club then it does a business.
Comments
"Why should someone have to sign up as a business owner just so they can get a good price?"
A good price as in... an opportunity to be able to generate cash flow long term? That sounds to me like a good price indeed.
I have seen the plan, the numbers and the concept and it all makes sense. You are mixed up and your analysis doesn't really help out but only to confuse.
anonymous says great plan. How come you aren't making any money from it then?
"I think you could probably come up with a better information source than the Universal Oasis man, Ty Tribble."
Ty was the one who posted the numbers so he is the one who got credit. Nothing more then that.
"A good price as in... an opportunity to be able to generate cash flow long term?"
Uh, NO. As in those that only sign up so they can buy products at a lower price because retail is too high.
Hey Mr. Anonymous, you just proved Truth's point. The only reason people buy the products is because of the opportunity, not because of the value of the products. That's a problem! Since 91% of IBOs quit after 3 years, the products clearly aren't worth the price or else people would remain IBOs. Instead, people buy the products in the hopes of climbing to the top, but they're never informed that only 1 out of 100,000 people go Emerald (earn approximately $80K per year). It's an elaborate transfer of money from the bottom to the top a/k/a a pyramid, in my opinion.
Perry Barrister, you claim "they're never informed that only 1 out of 100,000 people go Emerald".
This is false, that information is provided to all prospects in the mandatory SA-4400 and now QBOB as well as on thisbiznow.com
Cash flow long term? What cash flow, the products are overpriced. The only cash that is flowing is into Amway headquarters. Perhaps they could lower the prices and just conduct an internet based business without the AMOs.
"Why should someone have to sign up as a business owner just so they can get a good price?"
Good question, another one would be "Why did Am/Quix do away with the 'member' customer level?" That gave people the opportunity to purchase at IBO cost, but pass the PV/BV to the sponsoring IBO. I would think that if AM/QUIX wanted to do something about the 3.4% retail rate, and improve the horrible SA4400 numbers, the membership option would be something to reconsider.
I have to agree with Dirty Shoe's comment about Ty Tribble. No offense to the man, but he isn't a completely objective and factual source of information. I understand that you are giving credit where credit is due, but there are better sources of information regarding the network marketing community that are unbiased. I usually come in here for some good realistic observations and insights on the Quixtar/Amway organization. The robust exchange of ideas on this blog are pretty interesting and extensive. There is no hidden agenda here since open discussions are more than encouraged. Unfortunately, in Tribble's blog, he does have a hidden agenda, he presents negative or slightly positive information on other MLMs playing off as being an expert and then tries to market his own MLM. Nothing wrong with that, but it kind of makes it hard to get an objective view on Quixtar when one is trying to get disgruntled or ex-IBOs into one of his MLMs.
"I have to agree with Dirty Shoe's comment about Ty Tribble. No offense to the man, but he isn't a completely objective and factual source of information."
Ty posted clear numbers about the compensation of other MLMs vs. Quixtar. I would think that if they were not factual one could easily go and prove that. I know Ty is not objective when it comes to Quixtar, but the point that there are other MLMs with better compensation plans then Quixtar is clearly a fact that can be verified by anyone at anytime.
Remember, it's one item in the whole article. It's not like I had an interview with him for the entire piece.
Who could be considered objective?
I don't think as a former IBO who was ripped off by the high prices and motivational scam that I could be considered objective.
I don't think a current IBO who has visions of grandeur could be considered objective.
I think it's safe to say Amway and it's employees aren't objective. Their websites are absolutely loaded with careful word smithing and propaganda.
Bottom line in my opinion is you are not about to get the truth from Amway. Until you do, people will presume the worst.
I'm glad that I am not an IBO trying to build a business in this day and age, and the only thing that can make it better is Amway.
Who, incidentally, appear to be failing miserably at that.
ibofightback is right. More than 1 in 100,000 go emerald, but that number is still dismal.
Continual great posts on the front page. Keep it up!
"The first thing that came to mind when I saw that only 3.4% of sales in Quixtar were outside sales, is that this is no real surprise. I don't think anyone could honestly say they expected such a number to be any higher. I think it speaks volumes to the fact that the focus is on sponsoring and very little focus has been placed on actually selling a product to a customer".
The 3.4% figure was a hell of a surprise to us initially, we thought it would be maybe 30-50% but 3.4%?? Not much better figures in the UK either, where just 6% of distributors bought products "to sell on". Haven't got any figures for Amway Australia, but gosh wouldn't we love to know!....Our guess is that it would be just as dismal.
"Perry Barrister, you claim "they're never informed that only 1 out of 100,000 people go Emerald".
This is false, that information is provided to all prospects in the mandatory SA-4400 and now QBOB as well as on thisbiznow.com"
As an IBO I can say my group doesn't us the SA-4400 it just reviewed quickly after registration and at that point to late. Most groups are not using the new info because it reflects the sales portion of the business and that makes the "business plan" we all heard a big fat lie.
IBO? - if you're breaking amway's rules then your not really running an amway business are you?
You're supposed to be using the QBOB now, not SA-4400, and if your organisation doesn't clean up it's act soon you have no chance of accreditation and thus no longer qualify for all the discretionary bonuses, including the free trips.
I'd put some pressure upline if I was you.
The other thing to mention about sales is covering the cost of running a business. Or group swung away from sponsoring only to a retail based. I did the maths to figure out how much I needed to sell to cover my business exp's (not just tapes, books Fn's but petrol, hotels etc etc etc).
It was 1050PV a month (in our market), which ball park is about $4000 turnover a month. Or selling about $125 a day! This was far to high a goal for me. So this was the start of the end for me.
So I figure there is also issues with amount of mark up on products (I would expect in business for at least 50% when there in our market is about 20%).
For the record - some of the brands (Artistry, Nutriway, EP) in our market are well priced for what they are. But they are top end products, not designed for mass consumption eg small high end target market.
IBOfightback. Enjoy your site, and comments. Great to see someone on the net who is a great source of info. You say:
This is false, that information is provided to all prospects in the mandatory SA-4400 and now QBOB as well as on thisbiznow.com
However I was communicated (off the record) by a serious diamond in our market (I would guess about 25-40%? off market share), not to use the brochure (!) So technically you might be right, but in the real life this things don't always go on.
stickshark,
AFAIK, QBOB and SA-4400 are North America only documents. It is against the rules to use them in other markets as they may make claims that don't apply to that market. Or are you referring to some other brochure? Other markets have different rules.
Ibofightback
In other non north American markets they have a brochure (last I heard it was called a "leave behind brochure") that is supposed to be "left behind" with the prospective IBO after the plan has been shown. Haven't looked at in a while, but had all the company approved info. It would appear to be the same concept as the documents that North American's talk about. However it would clearly be tailored to the correct market.
But in principle it is the same, the company produces a document that highlights some important points, and the IBO's in the field are less than encouraged to use it..... no wonder there is some big issues our there.
"IBO? - if you're breaking amway's rules then your not really running an amway business are you?"
Well as most LOS never follow the retail rules, I guess I never have been. As for upline pressure - That would be negative (lol). My answer is not to renew and not to spread the lies on to others.
Funny how the 'required' QBOB must be purchased by the IBO.
Must be that theory that information must cost IBOs money if it's valuable.
Absolute garbage. I'm shocked. Once again, critics couldn't invent this stuff if they tried. This company never fails to step on its crank every chance it gets. Amazing.
Oh - and those different rules for differnt markets...
...what different markets don't require sales to people who aren't IBOs?
I have additional information about Quixtar's compensation plan that I can not share yet, but it will BLOW PEOPLE'S MINDS.
I am pretty much convinced at this point and believe that I can provide facts to back this up that Quixtar has one of the worst compensation plans in the MLM industry.
Maybe I can put it a better way...there are hundreds of companies that pay better than Quixtar and many of them are stable and growing.
Just some thoughts.
I have been an Amway/Quixtar IBO since the late 70's. I have never made it rich, I have never worked hard to build the business, but I did show the opportunity to others and sponsor a few and make retail customers out of others.
Since Quixtar has been online, all of my customers and downline order on their own and renew on their own. Some months I do around 1,000 - 1,500 PV, other months around 150 - 200 PV. It all depends on who orders what and when they do it. I have found that since I spent a little time with them upfront to show and explain the products, they are very loyal to them.
I have not actively done anything proactive in the business since mid-2000 except purchase products and make sure I do my taxes and such. I make a few hundred dollars each year without any recent business building effort, and this has been for many years.
The business model works if you both sponsor a few people, retail some products (so easy with the online ordering) and show those you sponsor how to retail some products online. I found that once you show someone how to use the website (maybe 30-45 minutes once or twice, depending on their skill) they will order online because the products are quality products and shopping online is very easy and time-saving for most people.
Just a few thoughts.
While I agree with yout point completely, I think you could probably come up with a better information source than the Universal Oasis man, Ty Tribble. I'm wondering how much snake oil he retails, that is if he doesn't count "gifting" as a retail sale.
Posted by: Dirty Shoe | January 3, 2008 4:36 PM