Obviously, when you only consider the performance bonuses that are paid for product volume, this statement is true. Until your upline helps you establish a downline, you will not receive much in the way of a performance bonus. As a matter of fact, you will probably end up spending more money for products than you would shopping at your local stores. I encourage you to get the price on some of the more common consumable products from Amway, where concentration is not a factor, and do your own price comparison.
But there are other ways of making money in the Amway business, in addition to the Amway bonuses, and as long as you are "plugged into the system" then there are any number of ways that Direct Distributors and above can make money just from your participation in the "system." Typically, these ways of making money are not achieved until the Direct Distributor level or above. You may not even be aware of these ways of making money until then.
If you have not done so already, you should read the Britt distributors response for the "other side of the story" to to why DD's and above deserve this income and really see an inside look about how much work is really involved at different levels in the business. Normally you don't see this kind open and honest discussion of the details.
You should be aware that Direct Distributors are entitled to one free weekly shipment from Amway as long as all the products they order are shipped to one address. One of my readers noticed that this is documented in Amway's Wholesale Price List (SA-13) on page 5. Only those non-direct distributors who are also Warehouse Ordering Distributors get charged the 4%/$4 minimum by Amway. I was always under the false impression that this money was being forwarded to Amway.
I am sure that some of this money may be used to defray shipping costs to distance groups that the 4% doesn't cover, but not all of it. A fully qualified DD will be collecting $600-$800 per month from these shipping charges.
Next, let's look at the sale of Business Support Materials (BSM's). According to Amway's business rules and code of ethics, all BSM's are optional. No one can force you to buy ANY BSM. Of course, you may encounter attitudes such as "BSM's are optional...but so is success" or "No one has ever succeeded without the BSM's" or "Just like a plumber needs certain tools for their job, an Amway distributor needs tools."
Do you think a Diamond or above would have any problem purchasing books directly from a publisher? All it takes is getting a resale tax ID and you can deal directly with a publisher. With several hundred people in their downline, all needing the same Positive Mental Attitude (PMA) books, don't you think they would get a volume discount from a publisher just like any book store? This discount is not passed onto the distributor. YOU will pay the list price for the book.
Of course they do have money tied up in inventory, and anytime a business person has money tied up in inventory, they deserve a profit. But it is another way of making money from you.
Cassette tapes are considered another essential tool to building the business. These tapes range from motivational stories, seminars that teach some aspect of building the business, or tapes that you can hand out to new prospects that tells them absolutely nothing about the Amway business and in fact rarely, if ever, even mentions the "A" word. Prices for these tapes vary per organization. They are generally around $5-$6.
How much does it cost to create these tapes? You can find out by visiting these web-sites:
InterNET Services Corporation is owned by Dexter Yager, a crown-ambassador in Amway. You, as an individual, could have them make 5,000 cassette tapes for as little as 60 cents per copy (as of Apr 97). AMI, which is owned by Bill Britt, another crown-ambassador, would charge you 85 cents per copy for 5000 cassettes.
Now I doubt if Bill or Dexter would sell me 5000 tapes at a loss...right? So it must cost them substantially less than these amounts to create the tapes. And the more tapes that are made in a single run, the less it costs per unit. So let's just guesstimate that Britt cranks out 100,000 tapes a week and let's assume that each tape cost 50 cents to create and the final price to the distributor is $6.
$5.50 times 100,000 = $550,000 * 52 = $28,600,000 EACH
And remember, these figures are for only one AMO. There are several major ones out there.
Of course, everyone from a DD on up shares in the profits from these tapes. However, to the best of my knowledge, there are no written contracts, similar to the SA-88 - Amway Distributor Application form, that will guarantee that you will particpate in the "tools" profit. These kind of activities are apparently done with a "wink and a nod."
A DD or above does have money tied up in tape inventories, but not with standing order tapes. They are produced and sold every week with no inventories required.
There are also video tapes available. These may range from high-lights of the major functions that you just attended, to Diamond life-styles videos, and even video tapes that show the whole plan for you. The price of these tapes vary per organization, but I have mostly seen them sold for around $12-$15 each.
So how much does it cost to create these video tapes? Once again, you can find out by visiting ICCA's web-site and looking at what it would cost you, as an individual, to have them created. As of Apr 97, 5,000 T-30 tapes would cost you $1.37 per tape. For 5,000 T-60 tapes it would cost $2.05 per tape.
Now let's look at the major weekend functions.
Obviously, there is the cost of renting a coliseum, security, audio and video technicians, maintenance etc during the weekend. It probably does take a day or two to set up and tear down. A former Direct Distributor who checked into renting a facility on the east coast that would hold 10,000 people told me it would cost $70,000 for the weekend. Let's see what the profitibility would me at just this one facility.
I have heard from various email that the cost for weekend tickets now range from $65 per person to nearly $100 per person. This does not include transportation, hotels, or meals. Let's also assume that only 7,500 people showed up.
The rest is simple math -- 7,500 * 65 = $487,500 at the low-end and 7,500 * 100 = $750,000 at the high-end.
The following is based on assumptions and may not accurately reflect speaker fees, etc.
You would need to subtract from this the fees paid to the speakers. Let's assume that each speaker gets $5,000 for their performance. Let's also assume that there are 30 speakers for the function. That's $150,000 for speaker fees.
Let's also assume miscellaneous costs of $80,000. That comes to a total of $300,000. That means from this one function, there is the potential of $187,500 to $450,000 PROFIT.
And we are talking about 1 function only, which is also probably relatively small. Most distributor organizations hold 4 major functions a year, but you have to remember that organizations such as Britt's and Yager's are so large that they have to break these four functions into smaller functions so there may literally be 40-50 major weekend functions a year. In 1997, Britt had 11 FED's -- so take that times four and you get 44 major functions a year. Lets assume an average $500,000 profit per function, which is probably low, that's $22,000,000 a year profit!
I have little data on the monthly seminar/rallies and on the weekly opens at a hotel. Some of the smaller functions may lose money and some of the profits above may be used to offset the loss. I have little data on these smaller functions.
There is no doubt that the speakers at the monthly functions are paid for their appearance. I also suspect that the speaker at the weekly open gets paid. However, the profit margins for these weekly functions are probably small.
I have not even touched on every type of BSM offered by an AMO! But I think you can see why "the system" is so important. All it takes is a little common sense and a little checking to realize that the statement "We don't make money until you make money" is somewhat deceptive to say the least. Adding the guesstimates above gives you in excess of $50 million, which is probably a low guesstimate, in Business Support Material Income from a system as large as Britt's or Yager's. This money is of course shared with the directs and above. This is how loyalty to the system is generated. If you don't push the stuff, you don't share in the profits.
Don't foreget this guesstimate was only for the Britt AMO (Amway Motivational Organization). Yager, INA, Network 21, and several other AMO's do the same thing.
If you don't believe any of this, check out Double Diamond Brig Hart's lawsuit at Amway Untold Stories and find that he estimates that 70% of Dexter's $40 million annual income comes from the sale of BSM's.