In an Amvox message to leaders on January 21, 1999, Amway Senior VP Ken McDonald announced:

"Participants in this new e-commerce venture are going to be able to access four different categories of products. They'll be able to access quality Amway-manufactured products, catalog merchandise, and services. But, in addition, we will be partnering with many well-known stores and brands that provide online ordering capability, quality distribution, and high-level customer service. We currently envision 12 to 100 of these merchant partners with smaller amounts of PV/BV compensation flowing upline."

Then, buried at the end of the paragraph, McDonald adds: "We're also planning to offer a family-friendly Internet service provider that will filter out all those 'bad-guy' Web sites you want to keep from invading your family's PC."

On March 15, 1999, Dave Van Andel announced:

"We just finished up a historic week of ADA [Amway Distributors Association] Board meetings here in Grand Rapids. Once again, your Board worked tirelessly on your behalf. Great progress was made on many of the details for both Quixtar and the IMC model--independent business owner, member and client."

Now, if Quixtar isn't Amway, why are the distributor rules being created by the Amway Distributor's Association Board? Van Andel elaborates:

"I am pleased to announce that Quixtar, Incorporated is a Delaware corporation, owned by the DeVos and Van Andel families. Quixtar, Inc. is a sister company to Amway Corporation. It will not be owned by Amway, but rather by our two families. It will be run by the second generation of DeVos and Van Andel's.

Amway is also owned by the two families. As another privately held corporation, Quixtar will not be held to the same standards of disclosure as a publicly-owned corporation. Important information -- important to new recruits, that is -- like real corporate income, balance sheets, numbers of distributors, and the like will be kept from those who need it most. Van Andel continues:

"Yesterday, the Executive Committee signed a historic document--The Manifesto For the New Millennium. This Manifesto reaffirms the partnership of Amway, Quixtar and your Board."

Whether they call it a separate business or not, it is apparent that Quixtar is just another branch on the Amway tree.

What does this new venture mean for Amway Corp. and for distributors?

• Amway is, first and foremost, a manufacturer or products. For years, Amway maintained its growth by expanding into new markets worldwide. However, that expansion has run into some expensive snags in the past few years: the business was closed down in China by the government of the PRC while they deliberated on whether to allow MLM to continue in China. Amway reopened, but was forced to change its distributorion model and sell through retail stores. India has launched an investigation of Amway. Sales, and numbers of distributors, plummeted in Korea following Amway's conviction for false and misleading advertising. Japan has suffered a serious economic downturn, affecting Amway's business there. And at home in North America, numbers of distributors -- and therefore sales -- have plummeted. In the third quarter of 1998, Amway began layoffs in the US. Desperately searching for new markets, Amway has decided to expand onto the internet.
  
  How will Quixtar help Amway? I believe, based on past performance and my knowledge of the internet, that Amway will see a temporary increase in sales as its enrollments become engorged with new distributors looking to get rich quick on the internet.
  
  
• Amway's distributor leaders are, first and foremost, distributors of motivational tools and functions, with 65-95% of their income coming from the "system" and not from Amway. Finding their market at home drying up, Yager, Britt, Janz, Hayes and others also began expanding worldwide. Unfortunately, international expansion is expensive, and there is a relatively long time line on profitability.
  
  
  How will Quixtar help the distributor leaders? I believe they, too, will see a temporary increase in the volume of Amway products running through their business as enrollments increase. But, since sales of Amway products are not their primary business, that impact will be negligible on all but the very biggest pins. Will Quixtar help their primary business, the sale of tools and functions? Not much! An internet-based distributor is far less likely to ever become "plugged in" than a distributor sponsored by an "in-your-face" upline. Distributor leaders, in my opinion, will quickly become disillusioned with Quixtar and stop promoting it much.
  
  
• The 99-plus percent of distributors who are not at the Direct Distributor level or above are, first and foremost, consumers of their own products. The first step toward success in Amway, they are told, is "buying from your own store." This, the vast majority of distributors, lose money every year they maintain their distributorships. (1) How will Quixtar help them?
  
  One of the few rules Amway is -- so far -- insistent upon, is that distributor websites must be password protected. Thus, if you are a distributor and you invite someone to shop in your online store, you have to provide them not only with a URL, but with a password -- which they must be willing to use! This puts an immediate obstacle in the way of anyone who might be interested in your products, since open sites are the norm on the internet, and ease of access is king.
  
  Only 18% of all Amway products sold in the US today are actually sold to consumers, (2) so the potential pool of shoppers at your website is extremely limited. Will having the products available on the internet increase those numbers? I find it highly unlikely. So who will shop on Quixtar? The same people who shop with distributors now -- distributors! If you join Quixtar expecting the world to beat a path to your URL, you will be sadly disappointed.
  
  Since, as a non-Direct Distributor, you earn nothing from the sales of motivational tools, you will, as has been historically true, run your business at a loss to support your Diamonds' tool-based lifestyle.

I believe Amway Corp. is also trying to overwhelm its web-based critics like myself in the deluge of Quixtar hype. Some distributor leaders are apparently admitting at functions that Amway is "out to get" the web critics, especially Sidney Schwartz. Having thousands of new distributor sites will certainly make it more difficult to find sites like this one in the search engines. Amway's recent legal maneuverings also point to its hysterical attempts to silence and intimidate those who criticize. And, buried in Quixtar announcements, is that tantalizing little statement from McDonald:

"We're also planning to offer a family-friendly Internet service provider that will filter out all those 'bad-guy' Web sites you want to keep from invading your family's PC."

I have believed for several years that Amway would be forced to establish its own ISP for two reasons: to establish another source of "residual" income, and to -- surreptitiously or openly -- block sites like this one from distributors' browsers. It will be interesting to see which "bad guy" sites Big Brother Amway sees fit to block.

(1) According to information that the FTC forces Amway to publish, the SA4400, fewer than 1% (one percent) of all distributors ever qualify even one time as Direct Distributors. Years ago, in 1982, the Wisconsin Attorney General studied tax returns of Amway distributors in his state. At that time, Direct Distributors lost an average of $918 per year. From my own experience, I know this figure to be very low today for distributors who participate in the "system."

(2) This testimony was given in the RIAA lawsuit, settled last year.

This page updated Apr-27-99