Wednesday, October 3, 2007

My Response to IBOAI, Yes, we really want to compete with Walmart

The IBOAI must be getting desperate. They asked "You SURE You Want Quixtar Like Wal-Mart?" I turned the question around to what we really want, not to be *like* Wal-Mart, but to *compete* with Wal-Mart.

We want to take the online model and merge it with discount pricing. Wal-Mart has to pay for property tax, land, stores, lighting, shoplifting, inventory, greeters, etc., etc., etc. We want what Quixtar had promised us in 1999. We have given up hope that Quixtar can provide that. To be honest, I took a look at the Market America website, and was quite impressed. Granted it was only a superficial look at the site, but it reminded me of all the talk of what Quixtar was *going* to be back in 1999.

I think most of us have not seen what we want. We are trying to define it. It is something like a cross between Wal-Mart discounting and online-only-ness.

And the troubles that Wal-Mart is supposedly having? I searched the Wall Street Journal's website (thanks IBOAI for not providing a link to the source), and all I found was the following:

From this article at the Wall Street Jounral:
Wal-Mart Stores Inc is struggling to redefine its down-market image as other discounters pitch themselves as upscale and palatable alternatives.

And the IBOAI decided that blurb was enough to say "Hah. See, Wal-Mart ain't so tough!" Are we still in 3rd grade? It sure looks like they are grasping at straws.

I'm pretty sure its not just Randy, Ron, Bill, Chuck and Don who have seen the growth curve in their business take a steep change in direction in the mid-90s. Orrin and Chris, from what I understand, didn't really have much of a business before 1999, so all they really know is Quixtar, that's the only growth curve they've seen. But the remaining IBOAI members are not so green. Are they hoping that the trend will change? That suddenly (and magically) their growth curves will return to their early 90s glory?

So Wal-Mart is having a small bump in its road. It may not increase its profits as much as it had hoped, but I don't think it will be anything like what Quixtar will see. I'm looking forward to the numbers posted by Quixtar next fall, if they have the courage to post the numbers. So they've been doing around $1.1 billion. By my estimation, Team represents somewhere between $120 million and $250 million. That's a really rough, conservative estimate, but it should be in the ballpark. So I estimate that $1.1 billion will become $1 billion, or less next year. That is not taking into account the bad name that Quixtar is taking on around the web. Nor is it taking into account that all new potential recruits face the fact that they will become Amway distributors. Nor is it taking into account that prices have gone up again this year (ok, shipping has gone up and prices mostly stayed the same, still costs me more). And Quixtar thought they had a bad name on the internet before. After being shown the plan, someone does a search for Quixtar, and what do they find? Voluminous blogs and message boards talking about the great exodus of thousands of distributors (IBOs at the time) who left because the prices were too high, and getting higher. Then they are going to want to check out the prices, and guess what, they'll be high.

Now Quixtar is a small part of the overall Amway. Quixtar does less than 1/5 the volume of Amway + Quixtar. Maybe they really do want to get rid of the United States and Canada Amway. Who knows. I was told that Quixtar was going to be United States and Canada only because most people had the internet. What are those non-US Diamonds thinking about when they consider that their countries are going to get the internet, and they will get to see the history of the great Team exodus?

This is getting weirder and weirder as it goes on. Stay tuned for more fun from Quixtar and their band of merry men, I mean the IBOAI.


therightthing said...

Here's some info from a NY MAGAZINE article on Wal-Mart:

"For more than a year now, Wal-Mart’s been reporting horrible numbers, just awful, while the rest of retail is in ascendancy. One hundred million people may still shop there every week, but from the looks of the numbers, they aren’t buying much of what they see..."

"Despite the dismal financial performance, which has produced a horridly underperforming stock that has flatlined for seven years now, Wal-Mart’s management is in total denial. Almost every month, CEO Lee Scott starts afresh with an optimistic prediction of how the next five weeks will go. Then routinely, at the end of almost every month, the company misses its projections..."

"We live in an era when consumers, more than ever, want to feel rich. Wal-Mart may still be competitive on the price front, but it’s losing THE QUALITY GAME. In the most recent quarter, same-store sales for Target grew 4.6 percent, compared with 1.5 percent for Wal-Mart..."

"It’s not just apparel and soft goods that Wal-Mart’s losing at. Best Buy, the giant electronic big-box retailer, has figured out a way to beat Wal-Mart, too: offer SUPERIOR CUSTOMER SERVICE on big-ticket items like TVs and computers. Best Buy has trained its salespeople to be genuinely knowledgeable about what they sell."

No need to attack these facts. Just consider them in building a business based on the "Wal-Mart" model.

IBOFightback - Fighting the Amway Myths said...

Wal-Mart has to pay for property tax, land, stores, lighting, shoplifting, inventory, greeters, etc., etc., etc.

And, cost of goods aside, all of that *plus* admin, logistics etc is less than 19% of revenue.

Since you're still going to need a lot of admin etc expenses, and have additional (different) ones as a web-based business, this means what, at best 10-15% of revenues available to pay your network?

And that's assuming you can get wal-mart like prices from manufacturers! (not a chance!)

Just doesn't sound a good business model for MLM to me ...

Anonymous said...

I have an observation and a question. It should be obvious to everyone that the Quixtar business is mainly consumer driven. What I mean by that is the pricing is much better for the IBOs than customers. Don’t get me wrong, there are a few product lines which can be marketed to individuals as well as business entities. I have been at the platinum level on and off over the years. Because of one other IBO and ourselves, 70% of what goes through our business volume at platinum is retail. I realize this is not the norm and most IBO businesses are concentrated on self use. My question is “What is wrong with that?”

I have heard that if we do too much self-use and very little retail we (Quixtar/Amway) is considered a pyramid. Why is that? What is wrong with a “Buying Club.” Does that mean Sam’s Wholesale and Costco are illegal? If there is no profit on sign-up, no front end loading, and new people perceive value on the things they buy for personal use, why isn’t this business simply a “Free Enterprise Business?” People aren’t required to buy products to make PV brackets, they do it because the increase in volume means they can afford more products or make money for use in their family household. Why don’t we simply hold people accountable for their own actions. If they buy more than they can afford, they will do the same through Walmart, Bestbuy, or any other business establishment.

Rather than trying to change an entire culture driven consumerism, why not change or clarify the “law?” Business and distribution has changed over the past 20 years. Why doesn’t the FTC get up to date. I don’t need to be protected. I just need to have an opportunity to increase my income. If it is through a concept that considers me a “Walmart” store, I am all for it. I am simply paid to advertise what I have access to, educate people on the products available (not being done at most retail establishments anymore) and encourage other people to do the same.

The person at the top of this business does not make the most money unless he or she has done the work. People who don’t make money haven’t learned the skills necessary to be successful in a people business. That is the reason for the leadership development programs which are available through each Diamond organization. I will have to admit that some are better than others but all are necessary to reach any major level in this type of business. If you went to school, would you expect to pay for the salary of your teacher as well as the books and media that you learn from? If you expect someone else to pay for it then you will never have a large Quixtar business. You will not be able to duplicate yourself. Why get so uptight about having to pay anywhere from $3 to $6 a tape. The money is used to perpetuate an ongoing resource of people from whom we can learn.

Quixtar, stop maligning Team and other IBOs. You are loosing integrity and credibility with the people you are trying to support. It will be hard enough to overcome the “Amway” name but much harder if the field no longer believes that you have the IBO’s best interest at heart.

Anonymous said...

Let me quote this to make sure i am not misunderstood. in discussing the increase of sales, therightthing said, "....caompared with 1.5 percent for Wal-Mart...."

So you're telling me they still increased? Failing to see the negative here. What are the comparable revenues between Target and Wal-Mart I wonder? Oh wait I found it in the same article mention by therightthing. I quote, "....Wal-Mart's revenues are still six times as high." Well done picking and choosing therightthing. Try adding the full story next time.

Anonymous said...

Maybe some more numbers.

"IBOs earned $343 million in bonuses and incentives in fiscal 2003"

Apples to Apples

"In return for employees’ loyalty and dedication, Walton began offering profit sharing
in 1971. “Every associate that had been with us for at least one year, and who
worked at least 1,000 hours a year, was eligible for it,” he explained. “Using a
formula based on profit growth, we contribute a percentage of every eligible
associate’s wages to his or her plan, which the associate can take when they leave the
company, either in cash or in Wal-Mart stock.”3 In 2001, Wal-Mart’s annual
company contribution totaled $486 million."

That was basing Q's 2003 numbers of bonuses vs Wal-Mart's 2001 numbers. Liking the Wal-Mart model more and more.

Anonymous said...

How about some more recent numbers:

Quixtar 2006 numbers:
"IBOs earned $370.1 million in bonuses and other incentives in 2006"

Wal-Mart's 2006 numbers:
"Wal-Mart Stores Inc. announced Thursday that it paid its hourly employees more than $1.1 billion in profit sharing, retirement accounts, discounts and other benefits last fiscal year.
For the fiscal year ended Jan. 31, Wal-Mart paid $667 million in profit sharing and 401(k) contributions, $51.4 million toward the company's stock purchase plan, $397 million in discounted merchandise and $529.8 million in bonuses, the Bentonville-based company said."

Loving the Wal-Mart model more and more.

Anonymous said...

Wow! Wal-Mart gave out bonuses equal to Quixtar's total profits. That's hilarious.

chris said...

Check it out even walmart is compteting with itself on the internet, they have the site to shop deal you can buy something on the internet( I bought an air mattres it was $5.00 cheaper than I could get it at the store) it was on, they ship it to the store for free, and i picked it up there...who wouldn't want to be part of that type of deal.

Anonymous said...

Some of you need to brush up on your math and statistics skills. Or simply think things through. If Wal-Mart, the world's largest employer, gave out the same dollar amount but has however many more employees, then it is divided that many more times. Same amount divided by 10 times as many employees mean they get 1/10th compared to Q. Only Wal-Mart doesn't have 10 times as many employees sharing the money. They have thousands more.
For what it is worth, Q is already on the Mall-Wart model, family owned with mega income to the family. The founding families have simply proven themselves to be Walton want-a-be's. They will be happy when ALL of the IBO's settle for mediocre incomes while the founding families lay claim to half the spots on the list of the Top 10 richest Americans.

Anonymous said...

First of all, the numbers were to show that bonuses could be better with greater volume. Especially when a business model would be put in place that would not take the cream off the top before giving back bonuses. It wasn't meant to be scientific, just that Quixtar (umm Amway, or umm Alticor) isn't all that, like they seem to think.

Secondly, Walmart did not hand out the same amount. Read all the posts and understand them before commenting please. Walmart gave out BONUSES equal to Q's TOTAL PROFITS.

Imagine have the profits of a Walmart mixed with the compensation plan of TEAM (all profits go back to the people).

If you cannot connect A with B then you maybe shouldn't post without getting a better understanding.