So they can't lower their prices, huh

Amway UK has lowered their prices. I already knew that. I thought it was maybe a 10% drop in the price. The prices of the following items are now 22% to 45% (average of 31%) of their previous price in the UK. (source)

• BODY SERIES™ Concentrated Liquid Hand Soap 250 ml
  
• BODY SERIES™ Fresh Scent Deodorant and Anti-Perspirant Spray 200ml/130 g
  
• BODY SERIES™ 3-in-1 Bar Soap 6 bars - 150 g
  
• SA8 SOLUTIONS™ Pre-Wash Spray 400ml
  
• L.O.C. ™ Mini Wipes 4 travel packs each with 24 wipes
  
• GREEN MEADOWS™ Air Freshener 150 ml
  
• PURSUE™ Toilet Bowl Cleaner 750ml
  
• L.O.C. ™ Plus SEE SPRAY Glass Cleaner 500 ml
  
• L.O.C. ™ Plus Soft Cleanser 500 ml
  
• AMWAY™ Wax Furniture Polish 400 ml
  
• BODY SERIES™ Concentrated Liquid Hand Soap Refill 1 Litre
  

That is a significant drop in price. Why couldn't they have done that sometime in the last decade in the US?

TEAM: Who damaged whom? (Chuck Goetschel's perspective on Fanista)

Original Source

Who damaged whom?
by Admin on Tue 27 Nov 2007 08:40 AM PST

I was on the plane flying home Tuesday, November 20, 2007 from mediation meeting with Quixtar attorneys, the person sitting in front of me was reading the New York Times and I found myself in shock by what I was seeing on the front page of the business section.. “No way!” I kept thinking once I was able to read the entire article. “Developed in secrecy over the last two years” the article explained, the new web business was finally launching. “Think of it as part Amazon (online retail), part My-Space (social network) and part Amway (direct pitch from somebody you know).” The products: “DVDs and CDs…and in the coming months it plans to add video games, digital downloads and books.” “More consumers shop online for books, DVDs and music than any other product, according to iCrossing.” The bottom line: Alticor (parent company of Amway/Quixtar) has decided to launch a competing multilevel business named Fanista. They are even attempting to promote a new coin name to the industry, “common interest commerce” to replace multi-level marketing. The big question is why wasn’t Fanista added to Amway/Quixtar rather than launched as a competitor? Once you answer that question, you will understand why I, along with five other IBOAI board members, said without change we could no longer support the Company. In my opinion, and supported by the Fanista launch, they are not leading with the best intentions of the independent business owners (IBOs) in mind.

In my previous paper, “The truth they don’t want you to know”, I talked about how it appeared to me that the Company was going to sell around the IBOs. Several web sites have been set up where the general public can purchase directly. New rules were being passed allowing products to be sold to the public through certain venues. And, great success has occurred in China where products are sold in stores yielding rumors that the “China model” will be seen elsewhere starting in India. However, I honestly never believed that the Company would go so far as to launch a competing multi-level business to Amway/Quixtar. Given Fanista is a direct competitor, it makes one wonder if Amway/Quixtar IBOs register, refer people and earn a profit from Fanista, are they in violation of the non-compete clause of their contract.? If they refer people to their Fanista community from their own or other lines of sponsorship of the Amway/Quixtar business, are they in violation of the non-solicitation clause of their contract? If IBOs can do these things, how is it not in violation of their contract? Is that part of the contract void only if the competing business is also owned by Alticor? And, if IBOs cannot participate, how is it ethically acceptable for the rest of the world to profit with Fanista while the IBOs that created Alticor’s wealth are left out?

Currently, I, along with Randy Haugen, Don Wilson, Orrin Woodward, Chris Brady and Billy Florence, am being sued for damages by the IBOAI board for breaking their confidentiality agreement. In the oath we agreed to “keep all things confidential.” However, we also agreed to “serve and protect” the IBOs. When the IBOAI board UNANIMOUSLY agreed and informed the Company that the “Amway Transformation” was going to be harmful to the IBOs but no change occurred to the direction being taken, then the only way to serve and protect the IBOs was to tell them the truth. I took that responsibility seriously to the point of loosing my business, my income and everything I had worked years to create. Everyone also agreed that we believed in the promise of Rich DeVos that the board gave people security. That is, he “guaranteed” the business owners that the Company would never make a change without the support of the board—our security was that nobody would ever “change the deal.” We all bought into his promise, promoted it, and it was never discounted by any leader or Corporate representative.

Specifically, Rich DeVos said, “…There is no other company in the world that ever set up an association like this one… Everything we do is done in consultation with your representatives who meet with us four times per year…We did that so you would feel secure when somebody like Jay or myself got fat and happy or something and tried to change the deal. And so we said before we even got it going, we set up a guarantee that we can’t change the deal. Because if we know we can’t, we won’t even think about trying…You have that assurance and that protection for your plan because a lot of you have been without it and they changed the deal just about the time you were to make it live for you! We wanted to make sure that didn’t happen to you.” (For the actual recording of Rich DeVos, either click on the following link or copy and paste it into your browser: http://www.musicwebtown.com/theiborebellion/playlists/114468/884361.mp3).

I know we on the board all believed in this promise. From my understanding, the June 2007 board meeting was the first time in board history that a unanimous vote was taken against the direction of the Company. I also believe that the August 2007 emergency board meeting was the first time in board history such a meeting was called. However, in the end, no promise was upheld as the Company marched forward unaffected. At the August board meeting, I believe when the pressure was put on each of us to individually state to Doug DeVos, Steve VanAndel and Jim Payne where we stood with everything, had we all maintained a firm posture that was in alignment with our unanimous negative vote against their agenda, we may have had a chance to stop it. It was sad to me to see the flip-flop personas of the remaining board members. I truly don’t mean to be critical of those remaining board members but our only chance was to stay strong and unified. How can they sign a document to the Company vehemently opposed to an Amway transformation one day and sign a document to IBOs thoroughly excited about it the next day? I am not one to say anything of negative nature of others, particularly people I would consider friends and business leaders, however, now that they chose to sue me and the other five for damages, it motivates me to open up. Whose business is damaged by whom? In my opinion, hundreds of thousands of IBOs will have a significantly worse business opportunity than they could have had because the remaining board members didn’t stand firm.

This situation reminds me of the story of when Henry David Thoreau was put in jail for not paying his taxes. He refused to pay his poll tax to a government that supported slavery. He said, "I cannot for an instant recognize . . . as my government [that] which is the slave's government also." While in jail (the non-documented story says), he was paid a visit by Ralph Waldo Emerson who asked Thoreau, “Why are you on that side of these bars?” To which Thoreau responded, “Why are you on THAT side?” The other board members want to sue us and silence us in jail and I question them why they are on that side?

As a final note for thought, if one isn’t convinced that firm pressure from the right source can’t evoke change, then take a look at some of the price reductions Amway of UK has made due to the pressure from the DTI. Although Alticor has expressed the DTI investigation as a training systems--business support materials (BSM) problem, the main root issue all along has been the lack of income people can make due to the pricing of products being too high (See London Times article regarding the current court case). Do you think this couldn’t happen in North America and elsewhere too?

BODY SERIES™ Concentrated Liquid Hand Soap 250 ml
UK price: £1.75 was Retail £7.95

BODY SERIES™ Fresh Scent Deodorant and Anti-Perspirant Spray 200ml/130 g
UK price: £2.95 was Retail £6.50

BODY SERIES™ 3-in-1 Bar Soap 6 bars - 150 g
UK price: £4.50 was Retail £12.25

SA8 SOLUTIONS™ Pre-Wash Spray 400ml
UK price: £1.65 was Retail £5.90

L.O.C. ™ Mini Wipes 4 travel packs each with 24 wipes
UK price: £4.25 was Retail £10.90

GREEN MEADOWS™ Air Freshener 150 ml
UK price: £1.25 was Retail £4.30

PURSUE™ Toilet Bowl Cleaner 750ml
UK price: £2.45 was Retail £5.50

L.O.C. ™ Plus SEE SPRAY Glass Cleaner 500 ml
UK price: £1.45 was Retail £5.85

L.O.C. ™ Plus Soft Cleanser 500 ml
UK price: £1.35 was Retail £5.80

AMWAY™ Wax Furniture Polish 400 ml
UK price: £1.45 was Retail £6.65

BODY SERIES™ Concentrated Liquid Hand Soap Refill 1 Litre
UK price: £5.95 was Retail £26.40

We stood up to the Company to evoke change in the interest of all IBOs. We felt it was essential that the Company lower the prices as now has happened in the UK. We were concerned about the concept of the Company selling around the IBOs as it would be devastating to the individual business owner. Fanista is beyond what anyone ever imagined. We felt the Amway Transformation was going to take a very difficult business and make it a next to impossible business. That transformation is underway. The board, according to Rich DeVos, was the people’s security. It was designed such that the elected representatives would stand firm in their beliefs to the Company and the Company would listen. The board had a united opinion. After an emergency board meeting no change was happening. It was the final hour. We stayed firm with our convictions while the others claimed, “There is nothing we can do” and flipped over. I so wish they would have stood with us. Instead, their current lawsuit for damages against us is now in process. Who damaged whom? I hope all can be resolved soon.

TEAM: Fanista Analysis

Original Source

TRAITOROUS ACTIONS ACCUMULATE @ ALTICOR
Sunday, November 25, 2007

As many of you already know Alticor unveiled its latest business, www.Fanista.com, last Tuesday. Certainly Alticor is free to start and invest their money where they chose. However, I would purpose that Fanista is yet the latest assault on IBOs across the globe. Despite Alticor's company line of how they are making Amway / Quixtar the best opportunity ever for IBOs, evidence suggests otherwise. In my view Quixtar is leaving IBO's in the dust, but intend on milking them for all they are worth on the way out.


The last year Alticor has clearly undermined the IBO distributor and his / her exclusive product pipeline. Nutrilite and Artistry products can now be had at various sites on the web. A company so concerned about contracts appear to breach the IBO agreement of exclusivity. Alticor defends this by passing on volume to an IBO near to the purchaser. How do you know this is happening? How long will this continue? This practice appears to be at the discretion of the purchaser. I say this is about as solid as the whole Quixtar isn't Amway story. That is this is what we do until it isn't convenient anymore. The resurrection of the Amway name in North America is certainly the largest kick in the teeth to IBOs and needs no further explanation as to the damages it will cause.

So what is Fanista? Fanista is an online business that sells CDs, DVDs, and books. Fanista is free to join and relies on it's members to rate various media and refer their friends. Members are paid when their referrals purchase items. Fanista calls this CIC or Common Interest Commerce. Whatever they want to call it, there is not really any money to be made. By all accounts Daniel Adler, the lead person at Fanista, is a talented and well connected Hollywood insider. Does he know that he has possibly committed career suicide by aligning himself with Amway? This guy may have went from the hippest guy at the party to the pariah. Let's think about it.... if Amway ain't cool in Grand Rapids it certainly ain't cool in Hollywood.

Fanista's sole financial backer is Alticor. Alticor calls Fanista an investment I say they own it. Here are the things I find most interesting about Fanista. First of all this Fanista idea was planned in secret for at least the last two years. According the article link below, authored by Chris Knape of the Grand Rapids Press, Alticor's vice president of corporate enterprises Jim Weaver said they first invested in Fanista in April 2006. It would seem rather unethical to plan an entirely new enterprise which directly competes with existing Quixtar partners stores and IBOs. The article also stated the following:

A spokeswoman for Quixtar said the company's distributors have been notified about Fanista and are free to join, but the company is not doing anything special to get Amway distributors involved in Fanista yet.

If there was any bombshell to the Fanista reveal it was Alticor's allowance of simultaneous duel membership at Fanista and Amway / Quixtar. Fanista is without question a multi-level marketing plan with what they call uplinks and downlinks. Fansita is also clearly in direct competition with Quixtar by selling exact and overlapping merchandise. So why would it be acceptable for distributors to be a part of Fanista? Wasn't Alticor / Amway / Quixtar just doing their best to put a halt to the TEAM's information and events under the premise that TEAM was a competing business? Alticor's hypocrisy and apparent selective enforcement of non-competition elements will come back to bite them. Is this yet the latest blunder committed by the arrogant Alticor?

Many of you were wondering if Alticor had learned its lesson on pricing and fixed things with Fanista. The short answer to this question is no. However, even though pricing isn't optimal at Fanista it is nothing like the outright swindling at Quixtar. Here are three additional excerpts from the Grand Rapids Press article.

A scan Tuesday of the site, which is still in a beta-testing phase, showed prices of seven of eight featured CDs on Fanista ranged from 1 cent to $4 higher than the same items on Amazon.com.
Five of eight Fanista featured DVDs were less expensive at Amazon. two were cheaper by a penny at Fanista. One featured DVD,
The Rocketeer," was 51 cents cheaper at Fanista.
Adler said Fanista will constantly assess pricing, but it believes the price issue will become less important if Fanista provides a compelling place for people to connect.

The last bullet point would indicate Adler is spending a little too much time with the Ada brain trust if he believes price doesn't matter.

Alticor's actions toward IBOs is undermining and traitorous. I find it impossible to believe Alticor is conducting business in the interest of IBOs. Every new idea, and step they have taken has resulted in a less stable and less sustainable business for IBOs. Whether it is the Amway name change, the fierce refusal to have competitive prices, undermining the exclusive product pipelines, or creating whole new companies, make no mistake these are all attacks on the IBOs existence. Fanista members will never create any sort of wealth nor will there be any of those expensive bonus payments, or Peter Island, Diamond Club and Achiever trips. There also won't be IBOs asking for competitive pricing. Let's face it, life for Alticor will be much simpler without all of you IBOs. If that is their business decision it is too bad they aren't men enough to come clean and negotiate a payout. Instead they will milk you for all your worth, methodically destroy your businesses, and then without warning pull the plug. If you think this sounds crazy, just say these two words to yourself a few times.... Woodward..... Brady...... Woodward..... Brady..... If these guys were disposable you all are.
Article by Chris Knape cited above


Posted by The IBO Rebellion at 3:43 AM

TEAM: QUIXTAR, THE GRINCH THAT STOLE BLACK FRIDAY

Original Source

QUIXTAR, THE GRINCH THAT STOLE BLACK FRIDAY
Thursday, November 22, 2007

Yet another example of the pathetic quagmire Alticor / Amway / Quixtar finds itself in. What am I talking about? Tomorrow, November 23rd 2007, marks the day commonly referred to as "Black Friday" or the biggest day in retail. In 2006 retail sales for "Black Friday" exceeded 8.9 billion dollars. A simple Google search for "Black Friday" will reveal websites dedicated to this retailing phenomenon. Sites such as www.blackfriday.info, compile sale papers from major players in retail including those exclusive to the internet marketplace. There are certainly bargains to be had not only on Friday but the remainder of the weekend. So big is this event that many analysts are examining how the "Black Friday" effect is creeping into Thanksgiving Day itself. Last year over 8 billion retailing website hits were totaled not on Friday but actually on Thanksgiving.

Next Monday, folks will head back to work to catch up on what they weren't able to do on Thursday and Friday right? Actually no. Monday is when people go back to work to SHOP! Next Monday is referred to as "Cyber Monday." Monday is another huge day in retailing, specifically internet retailing. Last year "Cyber Monday" sales were estimated at a record setting 608 million dollars.

So what am I fussing about? What did Quixtar ever do to take advantage of these repeated and predictable explosions in the marketplace? It is just another example of their detachment from reality and their disregard for the Walmartization of the North American marketplace. I mean really how much smarts does it take? Is the answer that they really don't care? Quixtar sitting the bench on these dates is another example of Quixtar not holding up their end of the deal. This goes hand in hand with products being over priced. They don't play on these dates because they refuse to compete. How much does this cost IBO's year after year? I have never seen a company so afraid of common four letter words. You know like the words "sale" or "good" or "deal." If Q ever does lower the price on something the pv/bv always drops much faster than the price. This being true goes to prove what TEAM is saying. It is about internal consumption not customer sales. If there is no volume what is the point in promoting something if your cut is .7 pv?

So while the rest of the retail marketplace is setting sales records this weekend, Quixtar and their lonely website will be just that.... lonely. I picture Quixtar as the online version of a shuttered auto factory. They don't get it and they didn't change until it was too late. Over the years Quixtar has heralded some of their sales records and I am sure I repeated them myself. Maybe that is what ticks me off. I remember their first 1 million dollar day and then their first 12 million dollar day. When was Quixtar setting these records? Not on "Black Friday," or "Cyber Monday," or the day after Christmas. This should have been and should be a red flag! No their records were set on March 31st and August 31st, you know when people stretched and reached for goals. In other words it was fake volume. Fake volume inspired by a fake company with fake retail sales and fake principles. IBO's were forced to play the game to meet Quixtar's criteria. This is why Quixtar is the Grinch that stole "Black Friday."

In closing I would like to thank all you for making this blog the success it has been. I would also like to wish you all an incredible Thanksgiving Day. We all have so much to be thankful for. Thanksgiving Day 2007 will forever have significance as the first Thanksgiving that we can thank God for our opportunity to move on with TEAM and for our permanent separation from the world according to Quixtar. God Bless you all and enjoy all those high quality products on sale this weekend.

Posted by The IBO Rebellion at 4:07 AM

NEWS: Amway tunes in, invests in media sales site

Original Source

Amway tunes in, invests in media sales site
Wednesday, November 21, 2007
By Chris Knape
The Grand Rapids Press

ADA TOWNSHIP -- Alticor is going to the movies.

The Amway parent company is the lead investor in Fanista.com, a new social networking and media sales company that launched Tuesday.

Fanista uses an incentive system to reward buyers of music, DVDs and, soon, books and videogames, that will be familiar to those involved with Amway and its Quixtar online store.



While using the site is free, users can sign up for a free membership that provides them a 5 percent cash or store credit bonus from purchases made by friends they signed up.

The Beverly Hills, Calif.-based company is led by Dan Adler, whose career includes stints with Walt Disney Imagineering and the Creative Artists Agency.

"The more we built the business model, the more and more I saw Alticor as the perfect business partner," he said. "We welcome who they are and what they are and what they can add in terms of value."

Jim Weaver, vice president of corporate enterprises at Alticor, said the company first invested in Fanista in April 2006.

"We got into the business because it was a natural fit," he said. "For us, if you think of Amway and what Rich DeVos and Jay Van Andel started, it was a social network of friends selling products to people they knew."

Fanista takes that idea into the 21st century and focuses on a younger demographic with its entertainment-focused product line.

Alticor has no day-to-day role in Fanista's operations, nor does Fanista have any West Michigan presence. Fanista's distribution system for media it sells is handled by a third party.

Members who sign up friends become "uplinks" while those friends they sign up are "downlinks," a hierarchical system similar to Amway's "upline" and "downline" distributors.

Uplinks also get a 5 percent discount on merchandise and a chance to earn a 5 percent commission on purchases made by friends their downlinks sign up if their downlinks buy at least $100 in merchandise each year.

Fanista omits the use of the term "multilevel marketing" in explaining its system. The site calls its system "common interest commerce," or CIC.



A spokeswoman for Quixtar said the company's distributors have been notified about Fanista and are free to join, but the company is not doing anything special to get Amway distributors involved in Fanista yet.

The site addresses concerns commonly associated with Amway in direct, sometimes humorous ways.

A list of frequently asked questions includes: "So if I sign up for CIC, does that mean I'll be able to afford a diamond-encrusted iPhone?"

The answer: "In a word, no. Don't quit your day job. You'll make some decent change on CIC, but it's not going to pay the rent."

There's also: "This isn't one of those illegal pyramid schemes, is it?"

The answer: "Not even close. A pyramid scheme promises to pay for the act of recruiting others, who in turn recruit others, and so on, like a chain letter. While we would be delighted if you personally sign up thousands of people, just signing them up won't earn you a penny. It won't earn us much either, since no one pays to register."

There is no mention of Amway or Alticor's involvement in funding the site, although a New York Times story Tuesday heavily played up the Amway tie.

A scan Tuesday of the site, which is still in a beta-testing phase, showed prices of seven of eight featured CDs on Fanista ranged from 1 cent to $4 higher than the same items on Amazon.com.

"Curtis," by the artist 50 Cent, was $9.98 on Fanista and $13.98 on Amazon.

Five of eight Fanista-featured DVDs were less expensive at Amazon. Two were cheaper by a penny at Fanista. One featured DVD, "The Rocketeer," was 51 cents cheaper at Fanista.



Adler said Fanista will constantly assess pricing, but it believes the price issue will become less important if Fanista provides a compelling place for people to connect.

The company also hopes to attract users by offering exclusive content. The first such product is a videogame for PCs and Macs slated to be released next week.

Fanista is working on partnerships with artists, who could create downlinks filled with fans. Fan purchases could generate bonuses to support a celebrity's favorite charity, Weaver said.

Digital downloads also are in the works with music downloads slated to be added by the end of the year.

Fanista is independent of Spout.com, a movie-based social networking and DVD sales site launched in 2006 by Rick DeVos.

Rick DeVos is the eldest grandson of Amway co-founder Rich DeVos.

Spout does not offer a sales incentive program like Amway's.

Rick DeVos and other Spout executives were not available for comment.

Adler said he has spoken to DeVos about the Fanista and sees some overlap in the concepts, but there is no relationship between the two companies.

Fanista is one of several efforts Alticor, which said it had sales of $6 billion last year, has undertaken to diversify its international multilevel sales business.

Alticor also owns Fulton Innovation, which is developing wireless electric charging systems for phones and other gadgets.

In 2006, the firm paid $40.8 million for Gurwitch Products, a luxury cosmetics company marketing the Laura Mercier line.

Send e-mail to the author: cknape@grpress.com

The Decline of Lifestyle in the United States

I made a comment that has been brought into question:

The percentage of people who fall into the market segment they are targeting is shrinking.

I'm a melancholy-choleric, the wrong kind of person to question the facts on, you're about to get unloaded on.

First, let's start with some common knowledge. Credit Card debt is at an all time high. Personal Savings is at an all time low. While these are not proof positive that people with money are becoming a smaller percentage of the population, it is an indicator of the financial sickness in our society.

The rest of the information, the real meat, is taken from three tables found at Historical Income Tables - Households from the US Census Bureau and Historical Income Tables - People from the US Census Bureau.

NOTE: The charts shown below start with 2006 or 2005 on the left and go further back in time towards the right. That is different than most charts and may take a little getting used to. It puts the most recent information closest to the values on the left, making it easier to evaluate the most recent data (most important in my opinion).

I couldn't quickly find the study done on inflation that stated that when the government reported inflation at 3% it was really 8%, so all the following will use the inflation number reported by the government, which paints a grim enough picture.

UPDATE: Someone pointed me to a website that had the following chart showing the differences in inflation numbers from www.shadowstats.com. The rest of this post has not been updated, so keep in mind that the rest of the inflation numbers may be about 2.5 points lower than they really are.


And with that, let's start with inflation. Below is a chart of the inflation reported by the federal government from 1968 to 2005.



What I find funny is the last six years. Anyone who has paid for medical insurance or had any medical expenses knows that their overall expenses have increased a lot more than 3% or 4% per year. Also, if you live in a "hot" housing market (like Southern California) you know that your overall expenses have gone up more than 3% or 4% per year. So let's stick with these inflation numbers and call them conservative numbers.

Now lets look at how income is distributed among our population. Here is a chart of the population divided into 5ths. There is an even number of people represented by each 5th. This chart is the income of each 5th, adjusted for inflation.



Notice how the highest 5th pulls away so quickly from the rest. I've included the top 5% also, notice it pulls away even faster. The other incomes are basically flat (relative to the explosive income growth of the top 5th). Basically this chart states that the rich get richer and the poor at least stay the same. It's that 5% that is pulling up the top 5th. It looks like if you pulled the top 5% out of the top 5th, it would be flat too.

UPDATE: I've remembered my algebra, and have updated the graph to show the Highest Fifth, without the top 5%:


This chart alone shows that there is a widening gap between the 5% and the 95%. It also shows that if you are looking for a very large market, target those whose incomes are $50,000 and under, which is 60% of the population. If you want to bump that to 80% target $75,000 and under. 60% of the people probably couldn't afford to spend $800 to $1,200 per month (300 PV in Quixtar), not to mention tools, conferences, seminars, etc.

Now you may argue that with Quixtar, you would quickly be able to become self-sustaining. If that were the case, 60% of the people would not quit after 3 years. The reason they are not in a higher fifth is their thinking. It is going to take more system to help get their thinking to the point that their business will pay for itself, especially in 6/4/2 or 9/4/2 business building. That was the beauty of Team Approach. You could start getting up to 25% back on the products pretty quickly (making the pricing more in line) and have time to get your thinking in line to produce more income. Imagine if the products were a great deal to begin with. It would be a no-brainer for anyone to be a customer, better prices and personalized service. Then you could actually have people getting to break even within a month of getting started. But I digress.

Now let's look at how fast incomes rose for each 5th. The chart below shows what the average yearly increase (after inflation) in income was per year for each 5th. The 2000's should probably be ignored, since we only have the first half of that story (which starts out pretty sad).



Notice that again, the top 5th far exceeds everyone else in growth. The top 5th, on average, got just over 2% raise every year during the 90's. However, the top 5% was pulling that up, since they were getting almost 3% raise every year. Everyone else is sitting there on the low end of 1% (actually, the three lowest got 0.93%, 0.78% and 0.85%, and the 4th Fifth got 1.13%). Now these are the increases in income after inflation, which is probably a little on the low side, so these are actually more likely to be negative growths. Of course if you look at the 2000's, its just not a pretty picture so far.

UPDATE: Again, due to my remembering algebra, I'm able to bring you this updated chart, with the 5% taken out of the Highest Fifth:


Now there are a few reasons I think many people may not have felt this as much. One of which is that we have gone from a single earner per household society to a two earner per household society. The chart below shows the average Household Income and the Income Per Capita (all income in all households divided by the number of people).



The Per Capita number is a bit misleading. Family sizes have been shrinking over the years. That means that a typical family in 1970 might have had a father (the bread winner), a wife and three children. This means his income was divided by 5. Today it may be more like a father (one bread winner), a wife (another bread winner) and two children. This is the combined income of two divided by 4, or each bread winner's income divided by 2.

Notice how the Household income still pulls away faster, even given the information above. There are more two income-earner families, which has taken the brunt of the economic force. But what will the average family do to keep up? Dad works two jobs? Multiple nuclear families living together? What will be the social trend to help bear the brunt of the increasing expense of getting by?

So back to the questioned statement:

The percentage of people who fall into the market segment they are targeting is shrinking.

If you focus on people who make $75,000 and less, you get 80% of the market. Of course, there are people in the Highest Fifth that shop at Walmart, because everyone would rather spend their money on fun stuff, and save money on the everyday stuff to do it. Even Emeralds and Diamonds shop at Walmart (as seen in a few of the Affidavits).

However, if you price yourself so that only the upper end of the 4th Fifth and the Highest Fifth could afford it, that is a 30% market share. While they have more money, I'd rather have 1% of 100 men than 100% of 1 man.

If you would like the full spreadsheet, PDF and images used for this posting, email me at ThomasEvanAnthonyMorris (at) gmail (dot) com, and I will email you everything I used (1.3 MB zip file).

Thoughts on Wealth

In the book The Millionaire Next Door it states that most millionaires are first generation. It talks about how the second generation has the wealth given to them too easily, and they do not learn the principles that generated the wealth, thus with each generation more principles of wealth are lost. I think we are in a similar situation here.

Rich DeVos, Jay VanAndel, Helyne and Joe Victor were all there when the American Way Association was formed (the predecessor to Amway and Quixtar). Jody, Helyne and Joe's son, is very proud of the fact that he was there when it all started. Rich, Jay, Helyne, Joe and a handful of others started the American Way Association because Nutrilite was not treating them fairly, in their estimation. Because of the injustices they suffered, they built, almost from scratch, an extremely successful business. Each has passed their legacy on to the next generation. Wealth was not a problem (or at least up until this point). However, it appears that the principles that founded the American Way Association have been lost by the second generation.

I respect Jody a lot. Looking at it from his viewpoint, I can understand why he stays. It is his family legacy. If he even entertains leaving, it would literally destroy his family legacy. So he stays, hoping, as the IBOAI (and the ADA board before it) will be able to guide Amway to a successful future. According to Randy Haugen's statement, the board had been asking for certain changes since the mid 90's. I think Quixtar ended up being a distraction, a stall. A lot changed with Quixtar. A lot didn't change.

Originally, Amway appears to have been a great value at any income level. If you washed your clothes, or cleaned your own house, you wold be financially better off buying Amway products. But then the internet came and brought immense price pressures to the market. From what I can figure, before the mid 90's just about anyone could make it to 25% (Platinum, Direct), but you needed the system (books, tapes, seminars) to stay focused enough to make it much further. Now the money at 25% is bigger (with system income included), but the trek appears to have become more difficult.

I am amazed at how Orrin and Chris engineered a system to turn it around. The took the lemons and made lemonade, and not just for the "kingpins" as they are called. They were truly focused on the first circle, the new guy. When August 9th came this year, I heard that Quixtar was going to be upping the amount they give out. They did, but only for certain levels, and it was not the first circle that benefitted. It appears their strategy is, if we given enough of an incentive to the "kingpins" and even mini-"kingpins", they will figure out how to replace the people who have quit, and maybe add a few more.

I heard a guy by the name of Dexter Yager once say, "Sell to the classes, live with the masses. Sell to the masses, live with the classes." In other words, if you try to sell high priced products to a few people, you will never do as well as trying to sell a lot of low priced goods to the lower incomes. The Walton family (of Walmart fame) became the richest family in the world based on that principle, and Walmart became the first "largest company" that didn't actually make anything. Quixtar seems to be targeting middle-middle class (maybe upper-middle class) and higher. While I am somewhere in the middle class with my "95% income" I live in a lower-middle class (or maybe lower) side of town. Understanding that the difference between 95% and 5% is thinking has made me reconsider where I live, but when I first got started, it was frustrating to me and my group when they would start looking the prices.

I stated in an earlier posting the we do want to compete with Walmart. Here is why I think we do. The rich get richer and the poor get poorer. But the percentage of people who are rich is shrinking quickly and the percentage of people who are poor is swelling quickly. Then there is the middle class, which is slipping more towards the poor than towards the rich. There was a study done in which they noted that when the government reported its inflation numbers at 3%, the real inflation felt by the average American was around 8%. The government did not include things like medical costs, insurance costs, etc. in their numbers, and this was before the double digit growth in medical costs we've seen lately. At 8%, the cost of living doubles every 10 years. I know my salary has not doubled in the last 10 years.

I think that is why our society has gone from single-income households to two-income households. As more people shift down in the income levels, they become more desperate. If a majority of the people are having a hard time getting by, history teaches us that they will be more easily swayed, with their votes, to vote for principles they would not have voted for two decades earlier. Universal Health Care, Guaranteed Housing, No Child Left Behind. You've probably heard of these things. They are nothing knew. Communist Russia promised all this to their people. A guarantee that you would not fall below a fairly high minimum standard of living, but where there is a floor, there is also a ceiling. The higher the floor, the lower the ceiling. If people from fifty years ago would look at the political agenda items today, they would claim the communist party is taking over.

There are two issues at heart here. The first is a shrinking market demographic, the one Quixtar is targeting. The percentage of people who fall into the market segment they are targeting is shrinking. The percentage of people who fall into the market segment that Walmart is targeting is growing. I would rather be in a growing market than a shrinking market. The growing market also has more incentive to build a business to get out. Not only are you statistically more likely to find a "hungry" guy in this larger market, but he is less likely to be "doin' good." I think that is why Quixtar is a revolving door of about 3 years. The really hungry get in but can't afford to stick to it much longer than that if they don't happen to register enough people who can afford to move volume.

The second issue is one of "make a difference." I am very concerned where this country is headed. I think it is the freest, greatest country in the world, but I think if we do not help rebalance the rich and poor in this country, it will be rebalanced by the government by popular vote, and the only way we can rebalance it is to teach the principles of wealth. Isn't that what Team has transformed itself into? (No, really, that is a serious question. I'm still trying to figure out what Team is transforming into, but it is looking much better than the Amway route at this point).

I believe in the free enterprise system. I believe in compensation relative to how much you excel beyond average. I don't want to see either eroded away any more than it has. I think that will only come with those who know educating the masses (not just the middle class) and giving them a reason (they own a successful business) to fight for those values.

I have no problem with Access Business Group (Amway) products as far as quality. Price is an issue for me, but I was buying 300 points per month for at least half a decade. I was buying hope because people I knew had become successful (before 1995). Since reading Randy Haugen's description of what happened in the mid 90's, I regret spending so much money when even the "kingpins" knew it wasn't working. I don't blame them, they were trying to course correct Amway/Quixtar. I don't blame Jody Victor for standing behind the IBOAI and Quixtar. They say the captain goes down with the ship. I just hope they don't take too many passengers with them. MLM has a bad enough name is as.