We often hear of the “1%” taking away opportunities from the 99%. This cultural stigma in 2011/2012 was very large and associated with the Occupy Movements, especially those in Wall street. What does the 1% have to do with Amway.

Amway, by it’s very nature as an MLM, can only succeed if the majority fail.

Why?

An MLM runs on levels where each level can only be a maximum of a certain “percentage” of the overall population.

Based on this article from TheTruthAboutAmway, we have found certainfacts:

• 0.3685% (1 in 271) IBO’s make it Platinum. A platinum member makes on average 50k per year.

Let’s look at the breakdown of that, however.

According to Suite101, this average 50k is pre-tax gross revenue (not including expenses), and is both before taxes and does not provide any health benefits such as health insurance.

It also takes a minimum of six months as a Silver Member.

In 1982 the State of Wisconsin examined the tax returns of the 20,000 Amway distributors in the state and found that “direct distributors who make a gross income on average of over $14,000 wind up losing a thousand dollars after business expenses.” (60Minutes). This means that on average it takes 2 years of working at Amway to make a net profit of around ~1000/month. 

Going up the ladder therefore means incurring more expenses to bring more individuals into your group. So, even though you may have achieved a “Platinum” level on Amway, you probably will not be making money on average.

Carnegie Mellon did a study on Amway. I made an info graphic chart to represent the estimated amount of money earned through years of working at Amway.

If we look carefully at the results, we will understand five  conclusions:

• It takes about 28 years tojust break evenon expenses.
• After 28 years, there is a pretty steady flow of income.
• Using stories such as it takes 3-5 years to have residual income, is just not correct. Usingone or two examplesas a source of hope does not show actuals on what the expected earnings are through Amway, but rather 1% exceptions to the rule.
• It takes about 50 years to earn $1 million on average cumulative. This is an average of less than 20k per year without benefits.
• If you invested 50k right now in the bank with decent interest, you would make more than in 50 years of Amway on average.

Another great acknowledgement of IBO failure is Amway’s payment of 150 Million to IBOs for fraud. Source: Pyramidschemealert

According to the statistics I provided earlier, Direct Distributor on average takes 28 years. Source: Amway.

These are the various achievable levels in Amway. However, the levels above Distributor represent less than 1% of Amway IBO’s. Therefore, when you’re at a low level (Silver Producer) or (Gold Producer), you get the notion that there are a lot of successful people who have come out of Amway. However, this number is low. Even within the 1%, very few members are profitable since Direct Distributors on average are barely breaking even. However, when you highlight the lifestyle and success of exceptional individuals who have made it through the Amway Program, you create a hope that it is easy to live a lifestyle that really is only attainable by 1%.

According to Winston Wu, if every individual earned the “potential” earnings per level, then Amway’s statistics would indicate that based on a break-down of levels, there are over 14 billion people in the world.

Takeaway: Amway costs money to join and encourages the notion that most individuals can make it big and earn residual income from 2-5 years by showing 1-2 individuals who broke the pathway. However, the average individual spends a lot of money on Amway and less than 1% of individuals on Amway break even. Much fewer than that amount are positive. It takes on average 28 years to start earning residual income.