Amway facts for kids
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Headquarters in Ada, Michigan
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| Private | |
| Industry | Multi-level marketing |
| Founded | November 9, 1959 |
| Founder | |
| Headquarters | Ada, Michigan, United States |
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Area served
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Worldwide |
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Key people
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| Products |
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| Brands | Amway Home, Glister, G&H, Nutrilite, Artistry, AmwayQueen, eSpring, Atmosphere, XS Energy |
| Revenue | US$ 8.1 billion (2022) |
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Number of employees
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15,000+ |
| Parent | Alticor |
Amway (short for "American Way") is a company from the United States. It sells products for health, beauty, and home care. The company was started in 1959 by Jay Van Andel and Richard DeVos. Its main office is in Ada, Michigan. Amway and its related companies, under Alticor, made $8.9 billion in sales in 2019. It is known as the largest company of its kind in the world based on how much money it makes. Amway operates in over 100 countries and areas.
Amway has faced investigations in different countries. These investigations looked into claims that its business model was like a pyramid scheme. The company has paid millions of dollars to settle these issues. For example, in India, Amway was found to have illegal business practices between 2007 and 2008. This decision was later supported by India's highest court. In 2021, authorities in India froze some of Amway's money and property. They called Amway's business model a "pyramid fraud." In 1983, Amway admitted to not paying enough taxes to the Canadian government for 15 years and had to pay a large fine.
Contents
Amway's Story: How It Began
Starting the Company
Jay Van Andel and Richard DeVos were friends since they were kids. They also worked together on many projects. These included a hamburger stand, an air travel service, and a sailing business. In 1949, they learned about Nutrilite Products Corporation. This company sold food supplements. DeVos and Van Andel became distributors for Nutrilite in August. They sold their first box of products the very next day.
At first, they were not very interested. But their sponsor, Neil Maaskant, encouraged them to attend a Nutrilite meeting in Chicago. After seeing how successful others were, they decided to focus on the Nutrilite business. They quickly grew their sales.
In 1949, DeVos and Van Andel had a company called Ja-Ri Corporation. It was for importing wooden goods. After the Chicago meeting, they used Ja-Ri to sell Nutrilite products instead. Nutrilite paid commissions not only on products sold by a distributor. It also paid for sales made by new distributors that person brought into the company. This system is called multi-level marketing. By 1958, DeVos and Van Andel had over 5,000 distributors.
However, they were worried about Nutrilite's future. So, in April 1959, they and some top distributors formed the American Way Association, or Amway. They wanted to support distributors and find more products to sell.
Their first product was an organic cleaner called Frisk. They bought the rights to make and sell it. Later, they changed its name to LOC (Liquid Organic Cleaner). They then created Amway Sales Corporation to buy and store products. This company also handled sales and marketing. They also formed Amway Services Corporation for things like insurance for distributors. In 1960, they bought half of Atco Manufacturing Company. This was the original maker of LOC. They renamed it Amway Manufacturing Corporation. In 1964, these three Amway companies joined together to form Amway Corporation.
Amway bought most of Nutrilite in 1972. They owned it completely by 1994.
Expanding Around the World
Amway started selling in Australia in 1971. It expanded to parts of Europe in 1973 and Asia in 1974. Japan joined in 1979, and Latin America in 1985. Amway reached Thailand in 1987 and China in 1995. Africa followed in 1997, and India and Scandinavia in 1998. Later, it expanded to Ukraine in 2003, Russia in 2005, and Vietnam in 2008.
In 2014, Amway worked with Alfa-Bank to create a loyalty card program in Russia called "Alfa-Amway."
Forbes magazine ranked Amway as the 42nd largest private company in the U.S. in 2018. It was also ranked number one on the Direct Selling News Global 100 list in 2018.
Quixtar: A New Name for North America
In 1999, Amway's founders created a new main company called Alticor. They also started three new companies. One was Quixtar, which focused on online sales. Another was Access Business Group, which handled making and shipping products.
The main change with Quixtar was that "Independent Business Owners" (IBOs) could order products directly online from Amway. Products were shipped right to their homes. This was different from ordering from their "upline" distributor. The Amway name continued to be used in other parts of the world. Most Amway distributors in North America switched to Quixtar. Because of this, Alticor closed Amway North America after 2001. In 2007, it was announced that the Quixtar name would slowly be replaced. The goal was to use one Amway brand (Amway Global) everywhere.
Amway's Global Reach
Amway operates in over 100 countries and areas. These are grouped into regions like the Americas, Europe, and Asia. Amway's biggest markets include China, Korea, the United States, Japan, and Thailand.
In 2008, Alticor reported that sales increased in two-thirds of its 58 markets. China, Russia, Ukraine, and India showed strong growth.
Amway in China
Amway China started in 1995. In 1998, the Chinese government banned all direct selling companies. This happened after some illegal pyramid schemes caused problems. After talking with the government, companies like Amway were allowed to keep operating. They did this by using retail stores and independent salespeople. China created new direct selling laws in 2005. In 2006, Amway was one of the first companies to get a license to sell directly again.
However, the law in China has some rules. Teachers, doctors, and government workers cannot be direct sales agents. Also, salespeople in China cannot earn money from sales made by distributors they recruit.
In 2006, Amway China had about 180,000 sales representatives. It also had 140 stores and $2 billion in sales each year. By 2008, China was Amway's largest market. It reported 28% growth and sales of about $2.5 billion. In 2010, Amway had 237 retail shops in China. It also had 160,000 direct sales agents and $3 billion in revenue. Amway has continued to grow in China.
Amway's Products and Brands
Amway's product line grew from LOC. They added SA8 laundry detergent in 1960. Later came Satinique hair care (1965) and the Artistry cosmetics line (1968).
In 2018, health and wellness products made up 52% of total sales. Beauty and personal care products were 26% of sales.
Cleaning Products for Your Home
Amway is well known for its original multi-purpose cleaner, LOC. Other popular products include SA8 laundry detergent and Dish Drops dishwashing liquid.
A study in 2010 tested different detergents. Amway's Legacy of Clean detergents were ranked lower than many others. Experts suggested that consumers could find better and cheaper products at regular grocery stores.
Health and Beauty Products
Amway's health and beauty brands include Artistry, Satinique, and Nutrilite. Other brands are eSpring, Atmosphere, and iCook. They also have XS Energy drinks.
Artistry Beauty Products
Amway's Artistry products include skin care, makeup, and anti-aging creams. In 2011, Artistry sales reached $2.8 billion.
Nutrilite Health Supplements
Amway's best-selling brand is the Nutrilite line of health supplements. In some countries, it's called Nutriway. In 2008, Nutrilite sales were over $3 billion globally. In 2001, Nutrilite was among the first dietary supplements to get special certifications for quality.
In 2011, Nutrilite vitamins and supplements led Amway's sales, totaling almost $4.7 billion. According to Euromonitor International, Nutrilite was the world's top-selling vitamin and dietary supplement brand in 2014. In China, Nutrilite was the most popular brand in this category in 2015.
In 2009, Amway recalled some Nutrilite and XS Energy Bars. This was because they might have been made with ingredients that had Salmonella. The company said no one had reported getting sick from the products.
In 2012, a consumer group questioned some claims Amway made about Nutrilite products. Amway said its claims were true. However, they later agreed to change product labels by the end of 2014.
eSpring Water Filters
Amway introduced its eSpring water filter in 2000. Amway says it was the first system to combine a carbon block filter and ultraviolet light. It also had electronic monitoring in the filter. It was the first home system to get certain certifications for water quality. Amway also claims eSpring is certified for many potential contaminants.
eSpring was the first product to use a special wireless power technology.
In 2007, Consumer Reports compared water filters. eSpring was ranked fifth out of 27 brands.
XS Energy Drinks
On January 14, 2015, Amway bought XS Energy. This company makes energy drinks and snacks. XS Energy had been sold as an Amway product since 2003. By 2015, it was sold in 38 countries. It made $150 million in sales each year.
XS Energy was the first sugar-free energy drink brand sold worldwide.
Ditto Delivery: Automatic Orders
Ditto Delivery is a program by Alticor. It automatically sends monthly orders to customers. These orders are based on what customers need regularly. By May 2001, Ditto Delivery made up 30% of Quixtar's sales in North America.
How Amway's Business Works
Amway uses a mix of direct selling and multi-level marketing. Amway distributors are called "independent business owners" (IBOs). They can sell products directly to customers. They can also bring in and guide other people to become IBOs. IBOs can earn money in two ways. First, they make a profit from selling products themselves. Second, they get a bonus based on the total sales made by them and the IBOs they have sponsored. People can also become IBOs just to buy products at lower prices.
Harvard Business School called Amway "one of the most profitable direct selling companies in the world." They noted that Amway's founders achieved success using a "pyramid-like distribution system." In this system, distributors earned a percentage of their own sales. They also earned a percentage of sales from distributors they recruited.
Amway and Sports
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In the late 1980s and early 1990s, Amway sponsored racing driver Scott Brayton. He competed in the CART IndyCar championship.
In 2006, Alticor bought the naming rights for the Orlando Magic basketball team's home arena. The Orlando Magic team is owned by the DeVos family. The arena was renamed the Amway Arena. A newer arena, the Amway Center, opened in 2010.
In 2009, Amway Global signed a deal with the San Jose Earthquakes soccer team. Amway became their jersey sponsor.
In 2011, Amway signed a deal to be a sponsor for the National Hockey League's Detroit Red Wings.
Amway and Public Life
Helping Political Parties
In the 1990s, Amway and its sales force gave a lot of money to the Republican Party (GOP). They also supported election campaigns for many Republican candidates. For example, Amway and its distributors gave a lot of money to Republican congresswoman Sue Myrick's campaign in 1994. Myrick was also an Amway distributor.
In October 1994, Amway gave $2.5 million to the Republican National Committee (RNC). This was the biggest corporate donation to a political party for a single election at that time. Amway was the top corporate political donor in the U.S.
In 1997, Richard DeVos and his wife gave $1 million to the RNC. This was one of the largest donations of its kind. In July 1997, some political leaders added a special rule to a tax bill. This rule gave Amway and four other companies a tax break on their Asian branches. This saved them $19 million.
A report in 1997 said that Amway had its "own group" in Congress. Five Republican House members were also Amway distributors. They met with Amway leaders to talk about issues that affected the company.
In 2004, members of the Van Andel and DeVos families were among the largest donors to the Republican party.
Dick DeVos, son of Amway founder Richard DeVos, was in charge of finance for the Republican National Committee. His wife, Betsy DeVos, was the chair of the Michigan Republican Party for several years.
In 2005, Dick DeVos ran for governor of Michigan. He lost the election.
In 2012, a gay rights activist called for people to stop buying Amway products. This was because Amway President Doug DeVos had donated to an organization that was against same-sex marriage.
In 2017, Betsy DeVos became the 11th Secretary of Education in the U.S.
Amway and Beliefs
Some people have noted that Amway promotes certain Christian conservative ideas. One magazine described Amway distributors as being "influenced by the company's dual themes of Christian morality and free enterprise." Some say that Amway's meetings feel like religious events.
The founders of Amway, Richard DeVos and Jay Van Andel, were described as "fervently conservative, fervently Christian." High-ranking Amway leaders were involved with groups that made movies and books for conservative Christians.
Some experts have called Amway a "quasi-religious corporation." They say it teaches a "gospel of prosperity," meaning that wealth is a sign of God's favor. However, others say that distributors stay involved because they find social satisfaction, even if they don't make much money.
Chamber of Commerce Leadership
Amway co-founder Jay Van Andel was elected chairman of the United States Chamber of Commerce in 1980. Later, his son Steve Van Andel also became chairman in 2001. This organization works to influence government policies for businesses.
Concerns About Amway's Business Model
Some critics have called Amway a "legal pyramid scheme." They say that the strong loyalty of its members hides the fact that many distributors don't make much money.
FTC Investigation in the U.S.
In 1979, the Federal Trade Commission (FTC) investigated Amway. The FTC decided that Amway was not a pyramid scheme. This was because:
- Distributors were not paid just for recruiting new people.
- Distributors were not forced to buy a lot of products they couldn't sell.
- Distributors had to make retail sales (at least 10 per month).
- Amway and its distributors had to accept returns of extra products from other distributors.
However, the FTC did find Amway guilty of "price-fixing" and making "exaggerated income claims." Price-fixing means setting prices unfairly. Amway was ordered to stop these practices. It also had to tell people the actual average earnings of its distributors. This included stating that more than half of distributors made no money, and the average earned less than $100 per month. Amway was fined $100,000 in 1986 for not following this order.
Studies by consumer groups have shown that most people who join multi-level marketing companies like Amway lose money. The FTC requires Amway to state that 54% of its recruits make nothing, and the rest earn about $65 a month on average.
Amway in India
In 2006, police in India started investigating Amway distributors. They claimed the company broke laws about "money circulation schemes." They closed Amway offices and some distributor offices in the state. The police said Amway's business model was illegal. The Reserve Bank of India also said Amway might be breaking laws. Some people believe Amway focuses more on recruiting people than selling products. In 2008, the government in one Indian state banned Amway ads.
In 2011, police in another Indian state, Kerala, sealed Amway offices. They seized products worth about $400,000. Amway's managing director in India was arrested in 2013 on charges of running a pyramid scheme. He was released on bail. He was arrested again in 2014 by police in another state for similar reasons and jailed for two months before getting bail.
In 2017, an Indian court charged two Amway India directors with cheating and breaking money circulation laws. In April 2022, authorities in India froze Amway India's assets, including its factory and bank accounts. They did this under a law against money laundering.
U.S. Class Action Settlement
In 2010, Amway agreed to pay $56 million to settle a lawsuit in the U.S. This lawsuit, filed in 2007, claimed fraud and that the company operated an illegal pyramid scheme. Amway said the settlement was not an admission of guilt. However, it did make changes to its business operations because of the lawsuit. The total value of the settlement, including business changes, was $100 million.
Efforts to Change Regulations
Some people connected to Amway supported a change to U.S. law. This change would have made it harder for the FTC to investigate if multi-level marketing companies were pyramid schemes. It would have allowed sales made to people inside the company to count as sales to "ultimate users." This would have blurred the line between real sales and sales made just to recruit members or earn commissions. Consumer groups and organizations like Truth in Advertising were against this change.
Other Legal Issues
Canadian Tax Case
In 1982, Amway's founders and an executive were accused in Canada of not reporting the true value of goods brought into the country. They were said to have cheated the Canadian government out of over $28 million from 1965 to 1980. The charges were dropped in 1983 after Amway and its Canadian company admitted guilt to customs fraud. They paid a fine of $25 million CAD. This was the largest fine ever in Canada at the time. In 1989, the company paid another $45 million CAD to settle remaining customs duties.
Music Copyright Lawsuit
In 1996, a music industry group sued Amway and some distributors. They claimed that copyrighted music was used on training videos without permission. Amway denied doing anything wrong. They said it was a misunderstanding by distributors. Amway settled the case out of court for $9 million.
Amway in the UK
In 2007, Amway's operations in the UK and Ireland were stopped. This followed an investigation by the UK government. The government wanted to ban Amway. They said the company used misleading marketing and gave false ideas about how much money distributors could make. They also said distributors were encouraged to buy expensive "motivation and training" materials.
In 2008, a UK judge dismissed the government's claims against Amway. The judge said that Amway had made big changes in the past year. These changes included banning motivational events and materials not approved by Amway. However, the judge also believed that Amway had allowed "misrepresentations" of its business by independent sellers in the past. He felt the company had not acted strongly enough against these issues.
Film in Poland: Welcome to Life
In 1997, Amway Poland sued the makers of a Polish film called Welcome to Life. They claimed the film was false and broke copyright rules. The film's director and producer were later found not guilty of spreading false information. The film was banned for 12 years. It was described as a "scary movie about brainwashing." It showed intense "pep rallies" and included comments from distributors. They said meetings felt similar to old Communist Party meetings. The film also showed recruitment methods that seemed like those of a cult.
In 2001, a court ruled in favor of a related company. But in 2004, a court dismissed Amway's lawsuit. On appeal, Amway won. The filmmakers were ordered to pay a fine to a children's charity and publish an apology. As of 2009, the film was still banned due to other ongoing cases.
In 2012, a court ruled the film could be shown. But the makers had to remove "untrue information." This included a claim that 30% of Amway's income came from selling training materials. It also said that most profits were shared by only a tiny number of top distributors.
Dr. Phil and Shape Up Products
In 2004, TV personality Phil McGraw (Dr. Phil) stopped selling his "Shape Up" supplements. This happened because the U.S. Federal Trade Commission (FTC) was investigating them. The supplements were made by a company related to Amway. The FTC later dropped its investigation. However, in 2005, a lawsuit was filed against Dr. Phil. People who used the products claimed they did not help with weight loss. In 2006, a $10.5 million settlement was reached. Amway agreed to provide cash and Nutrilite products to unhappy users of Shape Up.
Rules Broken in Vietnam
In January 2017, the Vietnam Ministry of Industry and Trade found that Amway Vietnam had broken federal rules. They said the company was involved in unauthorized multi-level marketing.
Other Topics
Concerns About Group Behavior
Some Amway distributor groups have been accused of using "cult-like" methods. These methods were said to attract new distributors and keep them involved. Concerns included a strong focus on the organization and a distrust of critics. Seminars and rallies were said to feel like religious events. Many distributors stayed involved even if they earned very little money. For example, tax records from 1979–1980 in Wisconsin showed that average distributors actually lost money.
TV Report by Dateline NBC
In 2004, Dateline NBC aired a critical report about Quixtar (Amway in North America). The report was based on a year-long secret investigation. It found that the average distributor made only about $1,400 per year. It also noted that many "high level distributors" made most of their money from selling motivational books, tapes, and seminars. They were not making most of their money from selling Quixtar's products.
The report said that only a few top distributors ran very profitable businesses selling these motivational materials. Regular distributors could not sell these items themselves. But they were told they needed to buy them to succeed. The program also said that a Quixtar recruiter made misleading statements about earnings during a recruitment meeting.
See Also
In Spanish: Amway para niños
- List of multi-level marketing companies
- Morrison v. Amway Corp.
Books About Amway
- American Victory: The Real Story of Today's Amway, published April 1997 by Chapel & Croft Publishing; ISBN: 0-9645171-6-7
- Amway: The Cult of Free Enterprise, published December 1, 1985, by South End Press; ISBN: 0-9648795-1-4
- Amway Forever: The Amazing Story of a Global Business Phenomenon (), published August 2011 by John Wiley & Sons; ISBN: 978-0-470-48821-8
- Amway: The True Story of the Company That Transformed the Lives of Millions, published September 1, 1999, by Berkley Publishing Group; ISBN: 0-425-17040-3
- An Enterprising Life, published 1998 by HarperCollins; ISBN: 0-88730-997-6
- An Uncommon Freedom: The Amway Experience and Why It Grows, published 1982 by Revell; ISBN: 978-0800713058
- Commitment to excellence: The Remarkable Amway Story, published 1986 by Benjamin; ISBN: 0-87502-136-0
- Compassionate Capitalism: People Helping People Help Themselves, published September 1994 by Penguin Books; ISBN: 0-452-27051-0
- Empire of Freedom: The Amway Story and What It Means to You, published September 3, 1997, by Prima Lifestyles; ISBN: 0-7615-1088-5
- How to Be Like Rich DeVos: Succeeding with Integrity in Business and Life, published 2004 by Health Communications, Inc; ISBN: 0-7573-0158-4
- Merchants of Deception: An Insider's Chilling Look at the Worldwide, Multi-Billion Dollar Conspiracy of Lies That Is Amway and Its Motivational Organizations, published 2009 by BookSurge Publishing; ISBN: 978-1-4392-4715-0
- The First Eleven: The Growth of Amway in Britain Through the Lives of Its Local Heroes, published 1984 by AM Publishing; ISBN: 0-9509593-0-8
- Promises to Keep: The Amway Phenomenon and How It Works, published 1986 by Berkley Books; ISBN: 0-425-09856-7
- The Direct Selling Revolution: Understanding the Growth of the Amway Corporation, published 1993 by WileyBlackwell; ISBN: 978-0-631-19229-9
- The Possible Dream: A Candid Look At Amway, published 1977 by Revell; ISBN: 0-8007-0857-1
- Profiles of the American Dream: Rich DeVos and Jay Van Andel and the Remarkable Beginnings of Amway, 1997 by Premiere Films
