So much so that China last year banned all these marketers from operating in that country. Amway, especially, is no stranger to controversies. In 1991, even the respected Forbes magazine wrote that the average Amway distributor earned $780 a month but bought $1,068 worth of goods herself, besides spending on running her business. There could be some truth in that charge.
Studies have shown that the real consumers of such products are the distributors themselves. They account for 80 per cent of the consumers. In the US, the distributors of network marketing companies actually end up selling only 19 per cent of their products to new consumers. That's natural, because even in terms of the operation of the pyramid, the focus is on converting the customer into a distributor.
This also puts paid to the myth that network marketing firms make huge profits at the expense of their distributors/sellers. Yes, their products move, but the market may not be growing alongside. Also, the big risk is that the collapse or withdrawal of one big distributor may significantly disable the value chain.
In fact, for network marketing companies this might also mean the disappearance of a loyal customer base. The other lacuna of this system: no interaction on improvement of business. For marketers of consumer products, the lack of contact with the mind of the real consumer, not the distributor-consumer, could be dangerous.
