Amway - The Story of the Leading Direct Sales Corporation

It's hard to impress our contemporaries with various network marketing systems - literally every month a new company appears on the local market offering an "innovative product and business building system." But all these are just attempts to achieve the same success as the founding companies of the direct sales system. One such exemplary company is Amway - a corporation that stood at the origins of network marketing and is not inferior in scale to the legendary Avon. And yet, the foundation for creating the most successful corporation was the simple business idea of selling dietary supplements...

Origins

The modern form of Amway, as we know it, stemmed from the company Nutrilite. It was established in 1939 by Carl Rehnborg, who, in 1917, was interned in China and had to survive in harsh camp conditions for ten years. The detainees' diet was poor, and Carl managed to survive only by consuming various plants and powdered bones as "emergency rations."

Thus, the accidental discovery of dietary supplements happened, a concept almost every adult in the modern world has heard about. After his release from the camp, Carl devised the idea of a business selling dietary supplements that would provide all necessary nutrients to the body, regardless of the food consumed. The dietary supplements took their final form after seven years of rigorous experiments. And then began the organization of a revolutionary sales system.

Nutrilite focused on direct sales and, thanks to a successful marketing system, rapidly developed a partner network of 15,000 people. At that time, this was unprecedented success. Initially, the success was driven by powerful advertising that promised the supplements could cure various ailments, even cancer. This attracted authorities' attention, leading to a four-year legal process that resulted in changes to exaggerated advertising claims. Around this time, the MLM sales strategy was refined, a blueprint that many modern companies still follow.

Birth of Amway

Amway was founded by two partners who were selling Nutrilite products. Born in Ada city, Jay Van Andel and Rich DeVos became such successful networkers that they built a network of two thousand partners. After a decade of work, they decided to leave the company and start their own business. They chose to operate based on a proven MLM scheme, using their existing Nutrilite network as a foundation. They chose a rather pretentious name for the new company - "American Way of Life," shortened to Amway.

The first product was a biodegradable cleaning product, serving as the foundation for the entire L.O.C. product line. Besides excellent performance, this new product had a notable competitive advantage - it could decompose in a biological environment, making it environmentally safe. It's worth noting that this formula was not an in-house invention but was purchased from a talented chemist in Detroit.

The cleaning product quickly gained overwhelming success, leading to large-scale industrial production. However, the company founders realized that expanding their product range was necessary for real success.

Starting from 1960, Amway began producing the following product lines:

• Laundry detergent.
• Dishware.
• Women's cosmetics.
• Fragrances.

The catalog at that time included over 300 product names. Within a couple of years, the distributor network had grown to 100,000 people.

In 1972, Amway acquired a controlling stake in its parent company Nutrilite and started trading in dietary supplements.

Success Achievement

By 1981, the corporation had earned its first billion, marking a period of massive growth for the company. In 1989, Amway received a United Nations award for environmental protection efforts. By then, the company had 3.5 million distributors in 80 countries and a product range of 6,500 items. Amway branches started appearing in the post-Soviet space in the early 2000s.

The company's success is based on a well-developed MLM system that incentivizes network participants to expand and increase sales. The income of those involved in Amway product sales depends on earned points within the system, personal product turnover, and sales generated by the people they invite. To receive rewards from the company, individuals must register with tax authorities.

It is worth noting that the number of Amway product distributors who earn real income is relatively low - less than 1% of the total participants in the network. The majority of network participants primarily purchase products for personal or family use.

Criticism

Amway has faced criticism from various governments and individuals, but it’s worth noting that all legal proceedings against the company have been won, demonstrating the legality of its operations and absence of pyramid scheme elements in its sales structure. The attacks on the corporation stem from skeptics trying to find signs of fraud in the company’s activities, which, in reality, do not exist. These suspicions are fueled by high-profile pyramid schemes worldwide, causing people to harbor fears of network marketing.

As you can see, an MLM sales strategy can lead to dizzying success. So, if you want to start your own business, it's worth taking a cue from how the Amway corporation evolved.

If you enjoyed this article, share it with your friends - they may be interested in partnering with Amway or applying MLM principles to their own business.