MLM Alert: Guess Which Company is No. 1 in Online Health and Beauty Sales?
By Anna Johnson on May 20th, 2010Multi-level marketing – a.k.a. MLM and network marketing – often gets a bad rap, yet certain MLM companies have stood the test of time and continue to do well despite the MLM haters. One of those companies happens to be the one that not only pioneered the MLM concept back in 1959, but made a whopping $8.4 billion in sales last year.
It turns out that this particular company’s North American operation also has the top-selling website in the health and beauty category, based on Internet Retailer’s Top 500 Guide to the web. And not only has this company had the top-selling health and beauty site for seven consecutive years now, but its online store ranks 27th in overall web sales.
And which company is that, you might ask?
Amway! More accurately: Amway Global – the North American affiliate of Amway Corp. (both part of the Alticor group of companies). According to Internet Retailer, Amway Global’s online sales were more than $885 million in 2009.
Amway Global’s flagship brands include Nutrilite – the world’s leading brand of vitamins, minerals and dietary supplements, based on 2008 sales – and the Artistry range of skin care and cosmetics – one of the world’s top five largest-selling prestige brands of facial skin care and color cosmetics, based on a study by Euromonitor International.
So how does Amway do it… despite its much maligned business model? Probably like any other highly successful company – through such things as strong leadership and management, continuous product innovation, and effective marketing.
From its inception in 1959, when co-founders Jay Van Andel and Richard DeVos began selling Nutrilite door to door, Amway has: grown into a huge corporate group; continued to develop new, high quality products; and has – unfazed by its competitors, lawsuits and MLM critics alike – aggressively grown its multi-level marketing program.
As the Internet Retailer ranking suggests, Amway has also embraced the Internet in a major way. Presumably Amway Global’s online sales are all corporate sales, rather than deriving from Amway’s independent distributors or ‘independent business owners’ (IBOs).
As far as its MLM program goes, Amway has a fairly standard network marketing program based on recruiting distributors – or ‘independent business owners’ (IBOs) – to both sell Amway’s products and recruit fellow distributors.
While Amway has an estimated 3+ million distributors across more than 80 countries and territories, only 34 percent of them are ‘active’, and the average active IBO makes only USD $115 per month. Amway defines an ‘active’ distributor as someone who attempts to make a retail sale, presents the IBO business opportunity, receives bonus money, or attends a company or IBO meeting.
You might wonder how an MLM company can survive and thrive with a ‘sales force’ that exhibits such high turnover and, with such low earnings, can’t be making much in the way of sales. It’s likely, however, that Amway has built its business model precisely on this reality.
Put it this way: having been in business for over 5 decades now, you can bet Amway recognized (and embraced) the realities of its business model LONG ago!
It’s not hard to imagine that Amway fully expects that most distributors won’t sell a thing (if at all). Consequently, the company likely puts far more resources into recruitment than in retention. Amway may also view distributors primarily as customers who will typically buy the business opportunity and participate in that for a short while, but then ultimately become CONSUMERS of Amway’s products.
While MLM participants may be unlikely to achieve much – if any – business or financial success, MLM companies such as Amway are certainly worthy of study. The reality is that, for all the anti-MLM sentiment around, the network marketing model is alive and well today, ESPECIALLY online. For entrepreneurs, it’s instructive to understand WHY.
Source: Amway Global, “Amway Global Business Opportunity,” Amway Global
