I read in an article regarding Amway UK and the court case which was a near death survival for Amway. The story goes like this – they had been charging real high price and the UK Government went to the court in the public interest with an objective to liquidate Amway UK. It was accused that, there were unrealistic claims about financial freedom and rewards, prices were exorbitant, BSMs were robbing the money. Amway successfully pleaded guilty (as I understand) and slashed product prices, a few of the diamonds got affected and so on. What is it to do with India Amway and that too after three years of that story? Very relevant as long as someone has eyes and brains open!
Amway India has been launching new products, sorry old products in new bottle in 2012 like crazy. Generally, PV-BV ratio gets adjusted to offset the inflation – my ex-up-line’s claim 🙂 Whenever that happens sweeping product price hike happens because, same soap cannot fetch lower PV! What do I mean – price hike, let us not forget the agenda 🙂 Within the year, how can you keep the motivation high? Re-branding and re-launching the products; is that all? no, every product that was launched in new bottle – old wine in new bottle – has new prices. If you look at last eight months in different stages there have been minimum of two price hikes.
Amway India was accused of charging too high prices in the cost sensitive country like India since its entry in 1998. They successfully sold the funda of concentrated products, value for money and market competitive products – which are practically unrealistic. However, in last three years Amway has not improved anything, but prices have been more than affordable to even dedicated IBOs. Or dedicated IBOs do not speak up anyways! I am not sure, India government is united enough to go the level of banning the company through the court orders. But do I think Amway deserves a bit of punishment yes, of course. One simple face wash in the Indian market costs less than 150 and for about 25% more quantity Amway products cost more than double on MRP. And I am talking about so-called market competing products, and they are not super-premiums as per Amway claims. In fact that, face wash brand is supposedly available only in India and it is more expensive than any other product in same utility for the consumer. Coming to BSMs, when I was an IBO , I was made to buy CDs Rs 100/per CD, DVD will cost Rs 200, monthly minimum cost of a core low pin IBO would come to Rs 500, a weekly open meeting (lasting two hours) used to cost Rs 50 for one person, if you have spouse add another Rs 50 – might vary from city to city, monthly Business Building seminar Rs 250 and for life changing events like summer conference and free enterprise day Rs 750 and out-station travelling charges usually Rs 2500 per event for two people! Now let us come to how much should they cost, a good CD/DVD is priced at Rs 10 in the market for the final consumer. Books are reasonably priced but it depends on how many plans you show and how many go in waste – sorry small investments. Open meeting per person should not cost you more than Rs 10 – Rs 20 as per pricing on educational seminar – called differently each time though 🙂 Unfortunately Rs 250 is priced at least five times higher and Rs 750 is priced at least ten times higher the cost which I remember the cost of diamond’s travelling and stay.
Above is a simple illustration of how expensive are the BSM and Amway maintenance! If you are at six or nine percent with a few retail sales you are expected to make Rs 1000 to Rs 2500 as a best case scenario inflow. You can never have income every month, but expenses will be there every month. If you take 12-18 months to reach a consistent 9% I leave calculation of losses under various scenarios. I believe Amway India is ready to do day-light-robbery through products and BSMs.