Named after the expression “American Way”, this company has already been one of the top-performing businesses in the world, also featured in the Forbes Magazine. The Amway business model is currently based on direct selling and multi-level marketing and has faced some controversies in the past.
Let’s go a little deeper into the Amway business model, which starts back in 1959.
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Amway was founded in 1959, by two childhood friends: Richard Devos and Jay Van Andel. Before that, they had already been partners in other businesses, and their Amway history starts with the introduction of Nutrilite products.
Neil Maaskant, a cousin of Van Andel’s had introduced Nutrilite to the duo, and, despite both of them hadn’t shown any interest, Maaskant was able to convince them to attend a meeting in Chicago, and they then decided to move on with the brand, thus making him his sponsor. Devos and Van Andel became Nutrilite distributors, and they enjoyed the way they did business since they made a profit not only by selling their products but also through commissions that they earned on the sales of other distributors, that they had introduced to Nutrilite — it is what, today, is called multi-level marketing.
Van Andel and Debos built a successful organization with over 5,000 distributors. So, in 1958, along with those distributors, they formed the Amway association.
After that, they got the rights to manufacture an organic cleaner, one of the world’s first biodegradable multipurpose cleaners, which became a high-seller and established a secure base.
Three years later, Amway acquired the Nutrilite brand, and, in the next decade, they would begin its expansion worldwide.
Nowadays, Amway is one of the largest private American companies, with an estimated revenue of 8 to 10 billion dollars annually.
Amway, which is officially called Amway Corporation, Inc., is still up today, owned by one of its founders, with Steve Van Andel being the Chairman. Since January 2019, the CEO position is occupied by Milind Pant, a businessman that was the former president of Pizza Hut International for about 10 years.
To help people live better lives, by offering people a business opportunity that allows them to succeed through their own hard work.
Amway sellers are not called contractors or distributors, but Amway Business owners. Anyone that wishes to become an Amway business owner must pay a registration fee to start. This fee varies according to the country that which it is held.
Amway manufactures more than 450 products and the majority of its revenues comes from the sales of these products, through multi-level marketing. The ABOs (Amway’s business owners) make money in three ways: one by selling products directly to the customers, another when they get bonuses if the sales volume is high, and the last one through incentives when the business grows.
Currently, nutrition and wellness products are responsible for approximately 52% of total sales, and beauty and personal care products are responsible for around 26% of total sales. Nutrilite, Artistry, eSpring, and XS are some of the top-performing brands of Amway.
Let’s take a look at the Amway Business Model Canvas below:
Amway’s customer segments consist of:
Amway’s value propositions consist of:
Amway’s channels consist of:
Amway’s customer relationships consist of:
Amway’s revenue streams consist of:
Amway’s key resources consist of:
Amway’s key activities consist of:
Amway’s key partners consist of:
Amway’s cost structure consists of:
Below, there is a detailed swot analysis of Amway:
National and international rules and regulations: governments’ rules and regulations may affect and restrict the business of Amway.
To end the conversation about the Amway business model, it is important to say that the company and its board have been subject to several controversies during the brand’s history because their business has been mistakenly confused for a Pyramid Model.
However, in a pyramid model, people can make revenue by simply recruiting new members. According to the brand, participants of Amway, unlike that, rely on a granted hierarchy of members who purchase, retail, and further spread out this sequence, characterizing more of a network than a pyramid itself.
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