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    Amway-Direct Selling and Supply Chain

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    Sachin R. Kanojia
    Amway is a direct selling company that uses multi-level marketing to sell products like home care, personal care, and nutritional supplements directly to consumers. Independent business owners, called IBOs, sell Amway products and can earn commissions on their own sales as well as the sales of others they recruit. Amway was founded in 1959 and has grown to become one of the largest private companies in the United States with over $8 billion in annual sales globally.

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    Amway-Direct Selling and Supply Chain

    Uploaded by

    Sachin R. Kanojia
    874 views3 pages
    Amway is a direct selling company that uses multi-level marketing to sell products like home care, personal care, and nutritional supplements directly to consumers. Independent business owners, called IBOs, sell Amway products and can earn commissions on their own sales as well as the sales of others they recruit. Amway was founded in 1959 and has grown to become one of the largest private companies in the United States with over $8 billion in annual sales globally.

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    Amway is a direct selling company that uses multi-level marketing to sell products like home care, personal care, and nutritional supplements directly to consumers. Independent business owners, called IBOs, sell Amway products and can earn commissions on their own sales as well as the sales of others they recruit. Amway was founded in 1959 and has grown to become one of the largest private companies in the United States with over $8 billion in annual sales globally.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    874 views3 pages

    Amway-Direct Selling and Supply Chain

    Uploaded by

    Sachin R. Kanojia
    Amway is a direct selling company that uses multi-level marketing to sell products like home care, personal care, and nutritional supplements directly to consumers. Independent business owners, called IBOs, sell Amway products and can earn commissions on their own sales as well as the sales of others they recruit. Amway was founded in 1959 and has grown to become one of the largest private companies in the United States with over $8 billion in annual sales globally.

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    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Direct selling and supply chain

    A supply chain contains a set of links that bring finished products to end consumers. As a direct selling company,
    selling consumable products directly to consumers and bypassing the traditional 'retail' or 'high street'. Amway has its
    own distinct chain, placing a strong emphasis on IBOs who are able to focus on individual customers and their needs.
    Amway manufactures the majority of its own brand products at their manufacturing plant in Ada, Michican. It then
    distributes these directly to the IBOs through a centralised warehouse in Venlo, Netherlands. Having signed a
    contract to work within Amway's Rules of Conduct and Code of Ethics, IBOs are trusted to operate flexibly within a
    'self regulatory' environment. They develop direct supply channels and sell products to friends and customers that
    they know or meet.

    Amway's supply chain is different from a more conventional supply chain that normally sells goods to final consumers
    through retail outlets. Amway's way of working depends on building lasting connections with the end consumer.
    Feedback provided by consumers and IBOs helps to shape future changes in products and the service provided.
    As a global company, Amway has built up a strong regional structure around regional affiliates such as Amway UK
    and the Republic of Ireland. Operating through the regional structure, affiliates are responsible for:
     forecasting (ensuring stocks are sufficient to meet demand)
     customer service
     efficient distribution: ensuring products reach IBOs on time and in top condition
     product promotion and IBO support e.g. supplying brochures to IBOs.
    Getting the image right is vital in a business that relies on building relationships with individuals and the wider
    community. IBOs often sell directly to friends and it is essential to provide high quality, value for money products with
    a 100% satisfaction guarantee. Amway spends time, money and effort on creating an appropriate design and
    appearance for Amway products. It also develops campaigns that support the business and social aims of the
    company.

    Prev:1. Introduction
    Next:3. Growth

    What is amway?

    Amway is a direct selling company and manufacturer that uses network marketing to sell a variety of
    products, primarily in the health, beauty, and home care markets. [3][4][5] Amway was founded in 1959.
    Reported sales growth of 9.5%, reaching US$9.2 billion for the year ending December 31, 2010. [1] Its
    product lines include home care products, personal care products, jewelry, electronics, Nutrilite dietary
    supplements, water purifiers, air purifiers, insurance and cosmetics. In 2004, Health & Beauty products
    accounted for nearly 60% of worldwide sales. [6] Amway conducts business through a number of affiliated
    companies in more than hundred countries and territories around the world. [7] It is ranked by Forbes as
    one of the largest private companies in the United States.

    The reason for success of Amway is nothing but the MLM or direct marketing

    What is MLM?

    the products and company are supposed to be marketed directly to consumers and potential business
    partners by means of relationship referrals and word of mouth marketing,

    Independent, unsalaried salespeople of multi-level marketing, referred to as distributors (or


    associates, independent business owners, dealers, franchise owners, sales consultants,
    consultants, independent agents, etc.), represent the company that produces the products or
    provides the services they sell. They are awarded a commission based upon the volume of
    product sold through their own sales efforts as well as that of their downline organization.

    Independent distributors develop their organizations by either building an active customer base,
    who buy direct from the company, or by recruiting a downline of independent distributors who
    also build a customer base, thereby expanding the overall organization. Additionally, distributors
    can also earn a profit by retailing products they purchased from the company at wholesale price

    Defination:

     IBO/ABO/AIE  — Independent Business Owner/Amway Business Owner/Amway


    Independent Entrepreneur is a business partner of Amway who is authorized to market
    and distribute products and services available from Amway. Different names are used in
    different markets.
     Distributor - an older term for IBO
     PV — Point Value is a value assigned to each product or service sold by Amway. An
    IBOs monthly performance bonus bracket depends on total PV in a month.
     BV — Business Volume is typically the wholesale cost of the product or service sold by
    Amway. Performance bonuses are multiplied by the groups total BV.
     Performance bonus is the monthly bonus paid by Amway to IBO's. The higher the PV,
    the greater the percentage earned. In North America the Performance bonus ranges from
    3% to 25%. In other markets it ranges from 3% to 21%. In India it ranges from 6%-21%.
     Retail Profit is the markup earned by an IBO when they sell a product to a consumer,
    either personally or through an Amway website. Recommended retail markup ranges
    from 20%-35%.
     Sponsor is an IBO who refers (sponsors) a new IBO to Amway, although IBO's do not
    get paid to sponsor.
     Upline is the term used to refer all the IBOs up in the line of sponsorship of an IBO.
     Downline is the term used to refer all the IBOs down in the line of sponsorship of an
    IBO. They are collectively also known as group
     Leg refers to a personally sponsored IBO and all of their downline.
     Silver Producer is an IBO who has reached the maximum bonus level for one month.
     Gold Producer is an IBO who has reached the maximum bonus level for three months.
     Platinum or Direct is an IBO who has reached the maximum bonus level for six
    months.In North America a Platinum is generating a minimum of approximately $30,000
    in sales volume per month.
     Emerald a distributor with at least three legs generating Silver Producer volume for at
    least 6 months of a year.
     Diamond a distributor with at least six legs generating Silver Producer volume for at
    least 6 months of a year.
     Q-12 is a Platinum or higher IBO that qualifies every month for 12 months of a year.

    [email protected]

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