Amway - Onmichannel Strategy

Amway India – From Direct Selling to Omni Channel Business
Strategy
“Our unique business model which provides opportunities to the people with an
entrepreneurial mindset led us to become the seventh largest market for Amway
globally in terms of turnover.”1
– Anshu Budhraja, CEO, Amway India Enterprises Pvt. Ltd., in August 2018.
“We are, and will remain, a direct selling company with direct sellers as the key
point of distribution. But visibility and easy access are important components of our
growth strategy... we've lined up a number of initiatives to spur growth in India.”2
– Doug DeVos, President, Amway Global Inc., in January 2017.
INTRODUCTION
In July 2018, the world’s second largest direct selling company, Amway Corporation (Amway)
announced that it expected the revenue of its Indian subsidiary, Amway India Enterprises Pvt. Ltd.,
(Amway India) to triple by 2025. The company, which had been in India for 20 years, claimed to
be the leading direct selling company in the country (Refer to Exhibit I for Growth of Direct
Selling Industry in India, as of 2018).
Amway India commenced its operations in the country in 1998 and became the first company in
the Indian direct selling industry to use a combined strategy of direct selling and multi-level
marketing (MLM), called the ‘Amway Business Model’, to sell its products. The company sold its
products (primarily six products in four categories i.e. Personal Care, Home Care, Nutrition, and
Wellness) through direct selling agents or distributors.
The company brought in several key variations in its business model to adapt it to India. Instead of
delivering products home to the Amway Business Owners (ABOs), it set up Pick-up Centers
(PUCs) throughout the country, where the ABOs could see and feel the products before purchasing
them. It also offered its products in smaller sizes, thereby ensuring they were priced lower. In
addition, it launched several India-specific brands and spent a significant amount of money on
advertising its products.
Over the years, the company gradually shifted to an omni-channel strategy in India to cater to the
needs of its distributors better. In 2008, Amway India entered the e-commerce sector by launching
its own B2B e-commerce website that catered to its distributors. It then established retail outlets
called Brand Experience Centers (BECs) to provide consultancy services to its ABOs on nutrition
and beauty products.
Over a period of time, the company observed that its revenue had started to drop due to heavy
competitive pressure, a rapidly changing retail landscape, continuing regulatory hurdles, and a
rising threat from online marketplaces. So, it decided to shift from being only a B2B player to also
1
Meghna Sharma, “Amway, Art of Direct Selling,” www.financialexpress.com, August 22, 2018.
2
“Amway to Set up 50 Retail Stores By 2018 End,” www.businessinsider.in, January 30, 2017.
1
Strategy
serving the B2C segment. Accordingly, the company made its website accessible to not only
distributors but also customers to make purchases. It also opened Express Pick & Pay Stores (XPP
stores) that allowed consumers to purchase Amway products over the counter. In 2016, Amway
India launched its first digital store with advanced technologies to provide an immersive
experience to customers.
To extend its presence in the retail space, the company was expected to open 500 XPP stores by
2025. Along with that, Amway India also planned to enter various segments like children’s
nutrition, women’s health and wellness, and the sports nutrition category, the air-purifier segment,
and the water purifier segment. Amway also had plans to invest around Rs. 1 billion in India over
the next 2-3 years. 3
As of 2018, India was the seventh biggest market for Amway globally. 4 However, Amway India
had been facing several challenges related to the perception of customers about the company,
legal restrictions, and the pricing of its products. It remained to be seen whether digital channels
and a strong direct seller’s network will help the company achieve a three-fold growth in its
business by 2025.
BACKGROUND NOTE
In August 1949, two friends, Jay Van Andel (Jay) and Richard DeVos (Rich), became the
distributors of “Nutrilite” food supplements manufactured by US-based Nutrilite Products, Inc.
(Nutrilite)5. In September 1949, they incorporated their own Nutrilite product distributorship under
the name “Ja-Ri Corporation” (Ja-Ri Corporation derived from their names Jay and Rich).
By the late 1950s, Jay, Rich, and other distributors observed that their supplier, Nutrilite, was
facing some issues in relation to its business. Nutrilite was faced with increasing government
regulations and was also being prosecuted by the Food and Drug Administration (FDA) 6 for
making false health claims about its products. Moreover, an internal conflict at the company put
the jobs of the distributors at risk. So, Jay and Rich decided to stop selling Nutrilite products and
to produce their own products and sell them through Ja-Ri Corporation, which had more than
5,000 distributors, as of 1958.
In April 1959, Jay and Rich, along with some top distributors of Nutrilite formed an association
named ‘American Way Association’ (AWA) or Amway. Many of the distributors in the Ja-Ri
Corporation joined AWA and started distributing a variety of products. They focused on selling
products which were readily consumable, relatively low-priced, and different from those found in
retail stores. They selected soap and detergents as the primary products because they felt these
would be easier to sell. The first product they distributed was a liquid detergent called ‘Frisk’– one
of the first bio-degradable, concentrated organic multi-purpose cleaners in the world. Later, Jay
and Rich bought the rights to manufacture and distribute Frisk and later renamed it Liquid Organic
Cleaner, which became one of the main products of Amway.
3
“Amway India Aims to Be a Billion Dollar Company By 2025,” www.economictimes.indiatimes.com,
July 4, 2018.
4
Lalatendu Mishra, “Amway Aims to Triple India Revenue By 2025,” www.thehindu.com, July 4, 2018.
5
Nutrilite Products, Inc. is a US-based direct sales company founded in 1934 by Carl F. Rehnborg. It is the
developer of the first multivitamin marketed in the US. Nutrilite is a brand of mineral, vitamin,
and dietary supplements, developed by Nutrilite Products, Inc.
6
Food and Drug Administration (FDA/USFDA) refers to a federal agency of the Services, formed in 1906. It
protects and promotes public health through the control and supervision of food safety, tobacco products,
dietary supplements, pharmaceutical drugs, cosmetics, animal foods & veterinary products.
2
Strategy
AMWAY’S BUSINESS MODEL
The ‘Direct Selling’ model was considered the oldest distribution channel in history and came into
existence alongside the development of various civilizations. In the 20 th century, several
associations which promoted direct selling came into existence in various countries across the
world.
Carl Rehnborg, founder of Nutrilite, was said to be the original founder of the business model
adopted by Jay and Rich for Amway, which then went on to become famous as the ‘Amway
Business Model’. Amway combined the dual principles of direct selling with a multi-level
marketing (MLM) strategy. MLM involved selling goods and services through partners, which in
Amway were other distributors.
The distributors at Amway were referred to as ‘Independent Business Owners’ (IBOs) or Amway
distributors or ABOs. The ABOs recruited new ABOs to expand the sales network – after taking a
one-time fee – thereby forming the MLM structure (Refer to Exhibit II for the Multi-Level
Marketing Structure of Amway). They then trained and supervised the new ABOs.
Each ABO sold company products through the ‘Direct Selling’ method, wherein they sold products
directly to consumers in a face-to-face manner, by giving demonstrations of usage. However, due
to the MLM component involved in the Amway Business Model, their earning differed from that
of a direct selling agent. While a direct selling agent earned a commission on each product sold,
the ABOs earned a little extra. They earned not only on the basis of their own direct efforts, but
also those that they had trained as ABOs. Each ABO earned a bonus commission for a sale done
downline by another ABO. Thus, Amway’s business model implied a pyramidal structure of
income distribution.
The ABOs had a personal stake in the growth of the business. That influenced them to try the
product beforehand so that they would be able to sell it better. Direct selling firms relied more on
the selling skills of their sales force than advertising. Most ABOs recommended the products to
their friends, relatives, and colleagues. The company also educated the distributors about product
attributes and ingredients, and the distributors in turn passed on the information to other
consumers/distributors. This kind of word-of-mouth marketing increased the credibility of the
company and also served as a great channel for consumer feedback on the product.
Over the years, there were various alterations made to Amway’s business model to further attract
distributors. To encourage people, Amway offered free joining, which meant that any adult could
enroll as an ABO without making any payment. The company also provided a 100% ‘Money Back
Guarantee’ on all its products, which meant that a customer could return the product for a 100 %
refund, if he/she was not fully satisfied with it. The company also offered buyers a cooling off
period7.
THE GROWTH OF AMWAY
In September 1959, Amway set up two new divisions – ‘Amway Sales Corporation’ to procure
inventory products and to handle sales and marketing plans and the ‘Amway Services Corporation’
to handle insurance and other benefits for distributors. In 1960, Jay and Rich acquired Eckle
Company, the original manufacturer of LOC, and changed its name to Amway Manufacturing
Company. After a few months, they launched another biodegradable powder detergent named SA8
and other household products like dishwashing liquid, aerosol shoe spray, hair products, and
cosmetics.
7
Cooling off period refers to the period in which the buyers can cancel the contract without incurring the
penalty even after a sale contract is agreed.
3
Strategy
In 1962, the company started its international expansion and opened offices in Canada and the UK.
In November 1963, Ja-Ri Corporation was renamed ‘Amway Corporation’. On January 1, 1964,
Jay and Rich merged the various divisions – Amway Sales Corporation, Amway Services
Corporation, and Amway Manufacturing Corporation into Amway Corporation in order to bring all
the operations under one roof and have control over manufacturing of all the products that they
were distributing. In 1968, Amway joined hands with Artistry 8 to expand its product range and
included skin care, cosmetic products, anti-aging creams, and serums.
In the 1970s, the company expanded its business into eight more international markets like
Australia, Japan, parts of Europe, and parts of Asia. In 1972, Amway acquired Nutrilite to increase
its presence in the home, beauty, and nutrition segments. By the late 1980s, the company had
entered 20 more countries across the world and its sales crossed US$ 1 billion. In the 1990s,
Amway expanded its presence into 33 additional markets like India, China, and South Africa.
In September 1999, Amway established a new company named Quixtar (also known as Amway
North America) to sell consumer products through a website. In mid-2000, it set up two more
companies, i.e. Access Business Group, and Pyxis Innovations (later changed to Fulton
Innovation). In May 2000, a new holding company Alticor Inc. (Alticor) was established and
Amway and its affiliated companies became subsidiaries of Alticor (Refer to Exhibit III for New
Structure of Amway). In May 2009, the name Quixtar was changed to ‘Amway Global Inc.’
As of 2018, Amway had a presence in more than 100 countries and territories including the US,
China, India, Russia, Japan, Thailand, Korea, Europe, and Australia. The company was also an
active member of the World Federation of Direct Selling Associations (WFDSA) 9.
Amway offered 450 products in the areas of Personal Care, Home Care, Home Tech, Cosmetics,
and Nutrition & Wellness. These were promoted through a worldwide distributor force of over 3
million ABOs across 80 countries and territories. The key brands of the company included Nutrilite
and Artistry. As of February 2018, the global revenues (annual sales) of the company were US$ 8.6
billion and they were growing annually at 3%.10
AMWAY’S FORAY INTO INDIA

The high growth potential of the Indian market prompted Amway to make its foray into India. In
August 1995, it established Amway India Enterprises Pvt. Ltd. (Amway India) with an investment
of more than Rs. 2 billion after getting approval from India’s Foreign Investment Promotion Board
(FIPB)11.12
During 1995-98, Amway faced some problems related to the Asian economic situation 13 and the
strong US dollar. Due to those particular circumstances, every product imported from the US or
bought with US dollars became costly for Amway in all its Asian markets. That had an adverse
8
Artistry is a brand of skin care and cosmetic products manufactured by US-based company, Alticor. Its
range includes more than 400 products.
9
World Federation of Direct Selling Associations (WFDSA) is a US-based international non-governmental
organization founded in 1978 that addressed various direct selling issues around the globe.
10
“Amway Announces Sales Of $8.6 Billion USD For 2017,” www.amwayglobal.com, February 12, 2018.
11
The Foreign Investment Promotion Board (FIPB) was a national agency of Government of India founded in
1990. It acted as a single window clearance for proposals on foreign direct investment (FDI) in India. It was
abolished on May 24, 2017, and was replaced by a new mechanism under which the proposals will be
approved by the ministries concerned as per the standard operating procedure approved by the Cabinet.
12
US$ 1 ≈ Rs. 70.17 as of August 2018.
13
The Asian economic situation refers to the financial crisis that prevailed between June 1997 and January 1998,
in which currencies of Southeast Asian states of Thailand, Malaysia, Singapore, Indonesia, Hong Kong, and
South Korea depreciated against the US dollar. These nations were forced to take the help of the International
Monetary Fund (IMF), which provided a massive financial assistance and created a series of bailouts (rescue
packages) for the most affected economies to enable the affected nations to avoid defaulting.
4
Strategy
impact on its sales. Additionally, government action in China and Korea against illegal pyramid
selling structures (See Exhibit IV for information on illegal pyramid selling structures) put
pressure on its Asian operations. These circumstances forced the company to streamline its Asian
operations wherever necessary, in order to maintain its financial strength.
On May 5, 1998, Amway India started its operations as a wholly-owned subsidiary of Amway and
launched about six products in four categories – Personal Care, Home Care, Nutrition, and
Wellness.
Amway India then appointed ABOs in the country. The company managed to attract more than
100,000 new distributors within a few months. After creating a base of ABOs, Amway India
adopted the ‘Amway Business Model’ used in other countries. The two major tasks of the ABOs
were to sell the products and recruit new ABOs. The ABOs visited households in India and made
sales presentations to sell the company’s products. As Amway India was a direct selling company,
its products were not available at retail stores and could be bought only through the ABOs.
Within two years, Amway India invested more than Rs. 1.51 billion in India. 14 It manufactured
approximately 85% of its products locally through third-party manufacturers. All products sold by
the company in India were manufactured at three small scale units in Pune, Daman, and
Hyderabad in accordance with stringent international quality standards. Amway India’s Head
Office was located in New Delhi.
Initially, the company’s distribution network comprised a central warehouse at Nagpur, India,
which consolidated all supplies from the various manufacturing units and then distributed the
products across the country. But in February 2002, the company restructured its distribution set-up
for the growth of business. In the new distribution model, Amway India closed the central
warehouse and created four regional warehouses or ADCs, which gathered supplies from the
manufacturing units directly. Gradually, the company opened various City Warehouses to cater to
around 400 cities and towns spread throughout the country.
The distribution system of Amway India comprised ABOs, ADCs, and City Warehouses. The
company expected the ABOs to place orders either on the telephone or through the company’s
website. After the order was received the company assured home delivery of its products to the
ABOs within 24 to 48 hours. If customers wanted to pick up the products themselves, it expected
the ADCs themselves to serve as PUCs. It thought that there would be just 20% of ABOs who
would visit an ADC and buy their products, thereby providing Amway India a limited number of
counter sales. The company expected almost 80% of the sales to happen through home delivery.
Gradually, Amway India realized that the Indian market conditions were unlike those of other
countries. It observed that most ABOs were not interested in home delivery; instead, they wanted
to visit the ADCs, to touch and check the products before they made any purchase. That prompted
Amway India to open several PUCs in larger cities and LOCs in smaller towns. These centers
enabled the ABOs to experience the products before they made a purchase decision.
Within two years of its launch, Amway India became India’s largest Direct Selling Company. 15As
of 2003, there were five ADCs – in Delhi, Mumbai, Kolkata, Bengaluru, and Chennai. The
company also had 48 PUCs and 39 City Warehouses, which were managed by Service Partners. 16
All the ADCs, PUCs, and warehouses were connected through the Internet, which enabled
inventory planners to have access to significant data related to real-time sales. For a more effective
information system, the company integrated the back-end of the supply chain (manufacturing,
planning, and material planning) with its front end, namely, PUCs and LOCs.
14
“Amway Too Joins the BPO Bandwagon,” www.rediff.com, November 21, 2003.
15
“Amway In India: Leading The Direct Selling Industry,” www. businesswireindia.com, February 16, 2001.
16
“Amway India Enterprises,” www.mafiadoc.com
5
Strategy
William S. Pinckney (Pinckney), Former Managing Director & CEO, Amway India, added, “A
crucial and essential element of efficient supply chain management is quality of information.
Manufacturing facility, warehouses and transport system alone do not make an efficient supply
chain by itself. The vision is to have a fully integrated and seamless supply chain, in which a
product sale at one end generates an order for a raw material at the other end.” 17 To improve its
home delivery coverage, the company set up a hub and spoke system 18 through its CFAs (clearing
and forwarding agents)19, transporter network, and local logistics service providers.
Amway India also realized that the ‘one-size-fits-all’ strategy that it followed in other countries
was not acceptable in India. It learnt that Indians preferred to try a small sample of a product to see
if they liked it and only then buy large product packs. So, even though Amway had a portfolio of
450 products available only in one large size, it re-launched its products in various sizes i.e. big,
medium, small and even sachets. Thus, the company’s product sizes ranged from 4 ml sachets to 5
liter economy packs. That was the first time in Amway’s history that it had opted for such a
strategy.
In tune with its global practice, in India too, Amway began selling most of its products in
concentrate form. However, that meant that the company’s products were priced higher. But
selling in small sizes enabled the company to provide its products at lower price points. That
aspect enabled the company to attract price conscious customers and thereby appeal to a large
section of the market.
In May 2003, focusing on the needs of the distributors, the company tied up with ICICI Bank Ltd. 20
and launched a co-branded international credit card. The card allowed distributors to purchase
Amway products and to earn and redeem through incentives. In 2003, Amway India also entered
into tie-ups with big companies like Bharat Petroleum Corporation Limited (BPCL) 21 and Standard
Chartered22 to provide value added services to its distributors. In association with BPCL, the
company launched a customer loyalty program and a co-branded Amway–BPCL petro-card for its
distributors. In association with Standard Chartered, Amway India offered a co-branded Amway–
SCB credit card to its distributors.
Amway India also developed various India specific brands such as Attitude, Dynamite, Satinique,
Persona, and Dynasty. The ‘Attitude’ brand catered to personal care and skin care respectively and
included products like foot creams, face washes, and moisturizers. The ‘Dynamite’ brand included
products like shaving creams, deodorants, and face washes. The ‘Satinique’ brand included
personal care products like shampoos and conditioners. The ‘Persona’ brand included products like
toothbrushes, talcum powder, and a bar soap. The ‘Dynasty’ brand covered cosmetics and the
personal care segment and included the male grooming category.
17
“Amway Overhauls Supply Chain,” www.thehindubusinessline.com, March 20, 2002.
18
The hub and spoke distribution system refers to a centralized, integrated logistics system designed to keep
costs down. Hub and spoke distribution centers receive products from many different origins, consolidate
the products, and send them directly to destinations.
19
Clearing and forwarding agents (CFAs) refer to specialized people or experts who are well versed with
the customs and shipment procedures. They provide a range of services to exporters to ensure smooth and
timely shipment of goods.
20
ICICI Bank Ltd. is an Indian multinational bank and financial services company founded in 1955. It
provides a wide range of banking products and financial services to corporate and retail customers in the
areas of investment banking, life, non-life insurance and asset management.
21
Bharat Petroleum Corporation Limited (BPCL) is a Government of India controlled oil and gas company
incorporated in 1928. It refines crude oil and markets petroleum products in India. It operates through
two segments, Downstream Petroleum and Exploration and Production of Hydrocarbons.
22
Standard Chartered Public Limited Company is a UK-based multinational banking and financial
services company, founded in 1969. It has operations in consumer, corporate, and institutional banking.
6
Strategy
Unlike in other markets, Amway India aggressively promoted its products in the country. In the
early 2000s, the company launched two promotional drives under the names ‘Operation Gaadi’ and
‘Operation Ghar’ with the aim of providing better service to the customers and distributors.
‘Operation Gaadi’ was launched in Uttar Pradesh, India, and later extended to West Bengal. Under
that drive, a store mounted on a truck made trips to different regions on different days. That
initiative helped the company avoid overhead costs such as rentals and furniture and provided all
the aspects of an office.
Similarly, ‘Operation Ghar’ was launched in 19 state capitals to simplify the distributor-consumer
model without high investment costs being incurred. The initiative sought to offer convenience in
placing orders, delivery, and payments.
The company spent Rs. 60 million on advertising in 2006, of which more than 60% was invested in
TV advertising. In 2008, Amway India launched its first TV campaign in which the company used
the slogan “We are listening” to imply that Amway understood the Indian consumers and its
products were derived from that understanding. The objectives of that campaign were to help the
ABOs in countering initial customer resistance and convince people to join Amway as ABOs. In
2009, the company took the help of the print media and released the Hindi slogan ‘Humara Apna
Business (Our Own Business)’ for promoting its Persona brand.
AMWAY – EDUCATING ITS INDIAN DISTRIBUTORS
In the 2000s, Amway India took the help of various organizations and e-learning centers to educate
and train ABOs about the Amway business and motivate them. Joining hands with those
organizations Amway formed Amway Motivational Organizations (AMOs), which were
independently operated by senior distributors of Amway (Refer to Exhibit V for Details of
Organizations Those Became AMOs).
The AMOs provided business support materials (BSMs) like cassettes, books, CDs, seminars,
systems, and business tools to the ABOs. They also offered tickets for events at which successful
distributors talked about their business practices. BSMs were promoted to a captive market of
ABOs and they served as an additional and independent source of income for certain senior
distributors.
Amway India also provided free training from experts to all of its ABOs. This included training in
specific skills such as selling skills, business development skills, and team management skills. As
of 2017, the company had conducted more than 34,000 training sessions in eight languages across
more than 20 states.23 Amway India also offered a digital learning portal (E-learning) for direct
sellers. The training support empowered direct sellers and educated them about Amway products.
This helped them in advising customers while making a sale.
THE OMNI-CHANNEL STRATEGY
As of 2007, Amway India was Amway’s seventh ranked market in the world. It sold 75 products
in four categories in India – nutrition and wellness, beauty, personal care, and home care.24
In 2008, Amway decided to adopt an omni-channel strategy. As part of the strategy, Amway India
started its own B2B e-commerce platform for distributors. The company partnered with Microsoft
Corporation (Microsoft)25 and launched its website – www.amway.in. The aim of launching the
23
“Amway Wiki – Amway India,” www.amwaywiki.com, September 17, 2017.
24
“The History of the Amway India Enterprises Franchise,” www. amwaybusinessindia.blogspot.com,
xxDecember 11, 2010.
25
Microsoft Corporation is a US-based multinational technology company founded in 1975. It develops,
licenses, and supports software, services, devices, and solutions worldwide. Its best known software
7
Strategy
website was to leverage the online medium to further expand the distribution network of Amway.
The website helped ABOs to automate the manual process of ordering goods and eliminate the
process of physically traveling to pick up orders from the PUCs. Describing the benefits for the
ABOs from the website, Sanjay Malhotra, Vice-President (IT and e-business), Amway India stated,
“The new URL26would provide our ABOs with a round-the-clock, single touch point making it
possible for them to access information about their business and place orders any time.”27
To further educate the ABOs and reach out to them, Amway India opened Brand Experience
Centers (BECs). By 2010, Amway India had opened 10 Brand Experience Centers (BECs) in
different locations in the country. Through the BECs, the company provided consultancy services
to its ABOs on nutrition (wellness) and beauty. The BECs also displayed all the products in
Personal care, Homecare, Cosmetics, & Health & Wellness categories. Talking about the BECs,
Achinta Banerjie, Vice President, Amway India (West), stated, “…Since Amway products are not
available on retail shelf, these brand centers will communicate Amway product’s feel, features and
values through live demonstrations and unlimited training. BEC is a unique experiential branding
initiative to enhance brand visibility and awareness on Amway products.” 28
Over the years, the company tried to decrease the number of cash transactions and offered
innovative payment solutions to the ABOs. In 2015, Amway India signed an agreement with ITZ
Cash Card Ltd.29 for a group card solution. Due to poor infrastructure, lack of connectivity, and
low levels of banking penetration in some parts of the country, Amway India often failed to collect
its payments through bank cheques. The company also experienced difficulties with Cross Border
Funds Transfer (CBFT)30 for service payments. So, joining hands with Standard Chartered Bank
and Citibank India31, Amway India removed the necessity of paper-based submissions and
digitized the end-to-end CBFT payments cycle.
As a part of its growth strategy, Amway India planned to manufacture a wide range of products
simultaneously in India. It also expected the strategy to enable it to control its product prices. On
December 28, 2015, Amway India opened its first manufacturing plant in India in the southern
state of Tamil Nadu, at an investment of US$ 100 million.32 This was the company’s third
manufacturing plant outside the US, apart from China and Vietnam. The plant had nine production
lines for nutrition, oral care, and cosmetic products.
At that plant, Amway India manufactured most of its nutrition and beauty products sold in India.
This helped the company reduce its dependence on imports and contract manufacturers. The plant
was also expected to be a regional hub for Amway, from which it wanted to serve the European
and African markets. Describing the new manufacturing plant, Doug Devos (Doug), President,
products are the Microsoft Windows line of operating systems, the Microsoft Office suite, and
the Internet Explorer and Edge web browsers.
26
Uniform Resource Locator (URL) refers to the global address of documents and other resources on
the World Wide Web.
27
“Amway India Deploys E-Commerce Platform,” www.cxotoday.com, December 2, 2008.
28
Tushar Pawar, “Amway Plans 25 New Brand Experience Centers,” www.business-standard.com, January
20, 2013.
29
ITZ Cash Card Ltd is India’s first multi service prepaid card company and was founded in 2005. It
provides prepaid payment solutions to consumers and various business entities in India.
30
Cross Border Funds Transfer (CBFT) refers to a payment made electronically to the beneficiary’s bank
using one of many different clearing systems to process the transaction.
31
Citibank NA/India is an Indian private sector bank founded in 1902. It is a subsidiary of Citigroup, a US-
based multinational financial services corporation. It offers consumers and institutions a broad range
of financial products and services, including consumer banking and credit, corporate and investment
banking, securities brokerage, and wealth management.
32
“History Timeline,” www.amway.in.
8
Strategy
Amway Global, said, “We believe that the facility is among the very best in the nation. The state-
of-the-art operations will further strengthen our efforts to develop India-specific products, which
should support greater growth and meet the increasing demand of consumers.” 33
REACHING OUT TO THE CUSTOMER – MOVE INTO THE B2C SPACE
In 2015, Amway India signed on leading Indian movie actor Farhan Akhtar (Farhan) as the brand
ambassador of its Nutrilite range of products. In almost two decades of its presence in India, Farhan
was the company’s first brand ambassador. Anshu Budhraja (Budhraja) Amway India CEO, said, “In
India, Nutrilite has firmly established itself as the leading brand in the vitamins and dietary
supplements category. The brand contributes more than 50 per cent of Amway India’s turnover. We
are confident that Farhan’s association will provide a further fillip to the Nutrilite brand in the
country.”34 For almost a year, Amway went in for a glitzy TV, print, and outdoor campaign.
The heavy marketing campaign was done prior to the company expanding its omni-channel
strategy to encompass customers apart from ABOs. The company had experienced a fall in sales to
Rs. 16.29 billion at the end of December 2016 from Rs. 19.9 billion in 2014 (Refer to Exhibit VI
for Amway’s revenues from 2012- 2018).
The fall in sales was due not only to heavy competitive pressure, but also to certain of its products
havnig been banned due to their non-adherence to certain standards issued by the Food Safety and
Standards Authority of India (FSSAI)35. In addition, a fast changing retail landscape, continuing
regulatory hurdles, and a rising threat from online marketplaces prompted Amway India to seek
new ways to reach out to the end customer.
By 2015, Amway India had 150 PUCs across the country. From 2015 onward, the company took
steps to convert some of the PUCs, which had earlier been strictly serving the ABOs, into retail
centers that catered to the needs of the end customer. The particular initiative marked the
company’s move from the B2B segment to the B2C segment. India was only the second country
after Thailand where the company had ventured into the B2C segment. 36
On October 14, 2015, Amway India upgraded its existing PUC at Anand, Gujarat, to its first
‘Express Pick & Pay Store’ also known as XPP stores. The XPP stores were designed as ‘mini
shopping centers’ that would allow both Amway consumers and ABOs to touch and feel the
products and purchase them over the counter. The XPP stores also increased the accessibility and
visibility of Amway products to consumers in different parts of the country. Speaking about the
benefit of XPP stores, Sandeep Prakash, Regional Head (West), Amway India, stated, “The
Express Pick-Up Centre will give our distributors (an opportunity) to touch and feel the products
and purchase them over the counter. For the customers, there will be zero wait period as they could
get their orders delivered immediately.”37
Amway India shared the contact details of the customers at its XPP stores with a few of its ABOs.
The company then provided certain incentives and discounts to customers if they became part of
the Amway chain and engaged with an ABO. That prompted many of them to show an interest in
33
“Amway India’s First Manufacturing Plant Goes on Stream,” www.thehindu.com, December 28, 2015.
34
“Amway India Signs Farhan Akhtar as Nutrilite Brand Ambassador,” www.thehindu.com, March 24, 2016.
35
Food Safety and Standards Authority of India (FSSAI) is an autonomous body established under
the Ministry of Health & Family Welfare, Government of India, in 2011. It protects and promotes public
health through the regulation and supervision of food safety.
36
John Sarkar & Sidhartha, “Amway to Sell Directly to Consumers,” www. retail.economictimes.
indiatimes.com, September 7, 2015.
37
Sharamana Ganguly, “Amway India to Launch First Express Pick – Up Center in Gujarat’s Anand
District,” www. economictimes.indiatimes.com, October 13, 2015.
9
Strategy
engaging with an ABO for future purchases. It was observed that many customers chose to engage
with the brand through the ABO, as the ABOs gave customers who purchased large quantities or
were likely to give repeat orders, additional discounts from their own margins.
In March 2016, Amway India again partnered with Microsoft and launched its first digitally-
enabled experience center (Refer to the Exhibit VII for Technologies of Amway Digital Stores).
The stores were designed as tech havens with a giant LED screen that served as a live product
catalogue for Amway. The store offered in-person consultations, health assessments, and virtual
makeovers to customers.
ABOs were expected to conduct business meetings at the centers. The stores also offered free
fitness advice and exercise sessions. The company expected 10-15% of the people who joined the
fitness programs to eventually turn into ABOs or customers. Customers were also allowed to add
products to virtual carts and exit the store with a cashless checkout. Budhraja added, “Amway is
reshaping its strategy in tune with the times. A lot of focus is now being given on the usage of
digital media to reach out to the distributors as well as consumers.” 38 Budhraja also added that the
company had plans to launch a mobile app.
Amway India’s aim of designing the store was to provide a better experience to its customers and
distributors. Describing the new initiative, Karan Bajwa, Managing Director, Microsoft India, said,
“…Amway’s digital transformation is centered around the consumer and we are creating
experiences which excite them in whole new ways. This is made possible by understanding
customer’s behaviors captured through various sensors, Internet of things and natural user
interface like touch and gestures.” 39 Over the next decade, the company planned to open 10 such
digital stores.
In 2016, Amway India started offering all its products, except for its cosmetic brand Artistry,
through its website. That move enabled both consumers and ABOs to select products and place
their orders online. Speaking about the company’s e-commerce platform, Saloni Nangia, President,
Technopak40, stated, “A lot of people didn’t have access to Internet earlier. So, multi-level
marketing (MLM) thrived in such a scenario. Amway is a well-recognized brand. Going B2C
makes more sense for them.”41
Consumers were required to sign up on the website, so that the company could assign them an
ABO who would fulfill their order. The online venture enabled consumers from semi-urban areas
to get direct access to Amway’s expanding product range. The ABOs felt that the new store
openings and the company’s website being opened for e-commerce helped generate additional
customer leads without effort. Budhraja said, “I would say it complements my channel, and doesn’t
conflict with it. Any consumer can walk into the store and buy Amway products seamlessly like in
any other store. At the back end, we assign a local distributor to help customers know more about
the products that they can buy later. The distributor then becomes a good touch point for further
discussions about the brand.”42 The company also worked to make the delivery of its online orders
faster. It claimed that it delivered within a day in the top 20 Indian cities.
38
Arindam Majumder, “Amway Wants India to Be among Its Top Three Markets globally,” www.business-
standard.com, September 11, 2015.
39
Shramana Ganguly, “Amway Teams up with Microsoft for Digitally - Enabled Experience Centers in
India,” www.economictimes.indiatimes.com, March 15, 2016.
40
Technopak Advisors Pvt. Ltd. Is a India-based management consulting firm founded in 1992. It provides
services in the areas of business strategy, start-up assistance, performance enhancement, capital advisory,
and consumer insights to retail and consumer products sectors across the world.
41
Himanshu Kakkar, “Touch And Feel,” www.outlookbusiness.com, May 2, 2017.
42
Ibid.
10
Strategy
After creating a leading position in health and personal care segments, in January 2017, the company
launched a new line of cookware and fitness equipment targeted at the upper end of the market.
CHALLENGES GALORE
Even though Amway India followed the highest standard of the industry code of ethics and offered
different schemes for protection of consumers, it faced several challenges in its direct selling
business in the country. The lack of clarity in the definition of ‘direct selling’ was the biggest
challenge it faced, primarily where people in semi-urban areas were concerned. Unlike other
countries such as Malaysia, Thailand, Vietnam, Singapore, and Hong Kong, there were no specific
directives to define legitimate direct selling and no regulatory framework on consumer protection
in the Indian direct selling industry. That created difficulties for Amway India in acquiring new
customers and retaining customers for long time periods.
Another challenge for the company was unauthorized selling by some of its distributors through e-
commerce platforms like Amazon.com43, Flipkart Pvt Ltd.,44 and eBay Inc. 45 Such activities
diverted the sales of honest Amway distributors, and affected their income. The company believed
that if its products were sold on e-commerce websites, then its position as a direct selling company
would be adversely affected in the long run. Even though it issued notices to those e-commerce
sites, it became difficult for Amway to restrict those activities.
The absence of a legal framework highlighting the difference between an illegal pyramid scheme
and a legal multi-level marketing program in India also impacted the company adversely. In
September 2006, Andhra Pradesh police raided the offices of various Amway distributors on
allegations of the company violating Prize Chits and Money Circulation Schemes (Banning)
(PCMCS) Act46. As an impact of the arrest, Amway distributor offices were shut down and the
company’s Indian headquarters were forced to cease operations for some time. They were
reopened after a few days.
In 2013, Pinckney along with two directors of Amway India were arrested by Kerala Police for
money laundering and cheating distributors of its direct sales network in Wayanad district, Kerala,
India. But after a few days they were released. Again in 2014, Pinckney was arrested by Andhra
Pradesh police on allegations of unethically circulating money through the pyramid scheme and
selling of low-priced products at inflated prices. Certain ABOs accused the company of not
returning the money they had invested in its products after they had failed to sell them through the
MLM structure. Pickney was eventually released when it was proved that Amway was not a
pyramid scheme and it was some distributors who had made false promises about the returns to be
expected from being an ABO.
In both instances, the arrests happened because of a lack of clarity about the MLM activity and
pyramid schemes. However, the arrests created a negative impression about the company. As a
result, some distributors were scared of recruiting new people. That resulted in a decrease in the
number of distributors in total.
43
Amazon.com, Inc. is a US-based electronic commerce and cloud computing multinational company
founded in 1994. As of 2017, it was the largest internet retailer in the world in terms of revenue and
market capitalization.
44
Flipkart Pvt Ltd. is an Indian electronic commerce company founded in 2007. As of June 2018, it is one
of the leading e-commerce companies in India.
45
eBay Inc. is a US-based multinational e-commerce corporation founded in 1995. It manages eBay.com, an
online auction and shopping website in which people and businesses buy and sell a wide variety of
goods and services worldwide.
46
Prize Chits and Money Circulation Schemes (Banning) (PCMCS) Act was enacted by Parliament of India
in 1978. The aim of the Act was to ban the promotion or conduct of prize chits and money circulation
schemes.
11
Strategy
Finally, in September 2016, the Ministry of Consumer Affairs, Food and Public Distribution 47
released ‘Model Guidelines on Direct Selling’. These guidelines highlighted the definitions,
identical procedures, and parameters to help a common man distinguish between a genuine direct
selling business and a Money Circulation scheme and safeguard consumer interests. The new
guidelines also governed the principles and responsibilities of direct selling firms and their
obligations to the consumers.
Those guidelines helped Amway India get the certification of a legitimate Direct Selling firm from
the Indian Government. Budhraja added, “The guidelines on direct selling, issued by the Ministry
of Consumer Affairs, represent an important step which will safeguard the interests of consumers,
as well as identify and help protect ethical direct selling companies. We also believe that
legislation will help the industry actualize its potential.” 48 The guidelines also disallowed
ecommerce platforms from offering the products of direct selling companies without their consent.
The company also faced heavy competitive pressure from large FMCG companies like Hindustan
Unilever Limited49 and P&G India50, as well as strong online players (Refer to Exhibit VIII for list
of Amway competitors(Direct Selling)). To beat the competition, Amway India launched products
similar to those of large FMCG companies in the beauty and personal care segments and opened a
number of XPP stores in premium locations across several cities.
The high price of Amway India products also created difficulties for ABOs in some parts of the
country. Amway India’s products were in concentrated form, because of which they were priced
higher than the products of its other direct selling competitors. The prices of some of the Amway
India products were on a par with US prices, which was considered costly by Indians.
THE ROAD AHEAD
By the end of 2017, Amway India was considered to be one of the leading players in the Indian
direct selling industry. For the FY 2017-18, Amway India had sales of Rs 1.8 billion, and this was
expected to touch Rs 2 billion in FY 2018-19.51 In this, each segment contributed significantly (Refer
to Exhibit IX for Amway India’s Segment Wise Contribution). According to a KPMG52 report, the size
of the Indian direct selling industry was expected to reach Rs. 645 billion by 2025.53
As of March 2018, Amway India offered more than 140 products in five categories i.e. nutrition,
beauty, personal care, home care, and consumer durables (Refer to Exhibit X for different
categories of products available in India). The company had five Rs. 100 crore (0.1 billion) brands
47
The Ministry of Consumer Affairs, Food and Public Distribution is a government ministry of India,
established in 1942. It undertakes various activities, such as procurement of food items, their storage,
movement, and delivery to the distributing agencies.
48
“New Direct Selling Guidelines To Spur Growth In Sector: IDSA,” www.moneycontrol.com, September
12, 2016.
49
Hindustan Unilever Limited is an India-based consumer goods company founded in 1933. It is a
subsidiary of Unilever, a UK-based company. It manufactures and sells home and personal care, food, and
refreshment products.
50
P&G India is a US-based multi-national consumer goods corporation founded in 1837. It operates in five
segments i.e. beauty, grooming, health care, fabric & Home Care, and Baby, Feminine & Family Care.
51
“Amway India Aims to Be a Billion Dollar Company By 2025,” www.outlookindia.com, July 4, 2018.
52
Klynveld Peat Marwick Goerdeler LLP (KPMG) is a Netherlands-based professional service company
founded in 1987. It is considered to be one of the ‘Big Four’ auditors in the world. It offers accounting,
auditing, internal audit, regulatory and compliance, corporate recovery, forensic accounting, and risk
management services.
53
“Future Of Direct Selling: It Is No More Door-To-Door, It’s Now Mobile-To-Mobile,”
www.indianretailer.com, January 11, 2018.
12
Strategy
in its portfolio, which included Nutrilite All Plant Protein Powder, Nutrilite Daily, Amway Queen
cookware, and Glister toothpaste. The company planned to introduce more products in the future
and expected its omni-channel strategy to provide it with a unique competitive advantage. Amway
India also intended to further promote the brand in future by roping in more personalities
associated with adventure and sports.
In March 2018, having witnessed the increasing demand for herbal products in the FMCG sector,
the company launched its traditional herbs range under the Nutrilite brand with the target of
achieving revenues of Rs. 1.2 billion by 2020. 54 The company also wanted to increase its focus on
the under-35 segment.
Amway India also planned to enter various segments like children’s nutrition, women’s health and
wellness, and the sports nutrition category, with products such as energy drinks and energy bars. It
also had plans to enter the beauty segment. Besides, the company planned to enter new segments
like the air-purifier segment through an air-purifier named ‘Amway Drive’, targeted at car owners
in the consumer appliance space. It also wanted to enter the water purifier segment.
Amway also had plans to invest around Rs. 1 billion in India over the next 2-3 years, out of which
Rs. 0.7 billion would be allocated for R&D, Rs. 0.1 billion set aside for manufacturing, and Rs.
0.2–0.3 billion was to be spent on digital initiatives to promote e-commerce. 55
As of 2017, the company derived 65% of its revenues from retail stores, while 35% was derived
from online stores. It expected the contribution ratio to become 50:50 in the next two years (2018-
2020).56 The company’s stores were its fastest growing distribution platform. Talking about the
company’s future investment plans, Budhraja stated, “Over the past 10 years we have made
significant investments of about $10 million to enhance our digital presence through our own
online store and app. We will continue to invest about $3-5 million in the next three-four years.” 57
As of July 2018, Amway India operated 140 XPP stores in the country and had plans to open 500
more XPP stores by 2025. 58 The company had till then focused on converting its PUCs into stores.
In the future, it planned to acquire fresh space for its stores. It did not intend to open stores in large
malls; instead, it intended to focus on neighborhood areas which were frequented by people to
meet their daily needs.
Furthermore, it planned to open stores in areas where it observed that its ABOs were having high
sales. The company planned to open at least two stores each month with an investment of Rs. 5
million per store as a part of aggressive expansion. “We want to place the company in a position of
strength where it is well-entrenched in the click and brick model. These consumer-centric stores
are located in high footfall mom-and-pop setting where the brand will have high visibility.”59
However, some analysts thought that having a large offline presence would put pressure on
Amway India’s margins. Countering that argument, Sujit Jain, Netsurf Communications 60, said,
“Retail expansion in India is an expensive strategy. Both salaries and rents are increasing. But now
54
“Amway India Launches Nutrilite Traditional Herbs Range,” www.mediainfoline.com, March 1, 2018.
55
“Amway India Aims to Be a Billion Dollar Company By 2025,” www.economictimes.indiatimes.com,
July 4, 2018.
56
Ibid.
57
Meenakshi Verma Ambwani, “Amway India Looking at New Avenues for Growth,”
www.thehindubusinessline.com, May 11, 2018.
58
“Amway India Aims to Be a Billion Dollar Company By 2025,”www.brandequity.economictimes.
indiatimes.com, July 5, 2018.
59
Himanshu Kakkar, “Touch and Feel,” www.outlookbusiness.com, May 2, 2017.
60
Netsurf Communications Pvt. Ltd. is an Indian group of companies contributing three distinct business
industries i.e. direct selling, biotechnology & entertainment founded in 2000. It provides online distribution
of natural and herbal products in health care, personal care, home care, and agriculture sectors.
13
Strategy
that consumers can buy directly, Amway will be able to retain some of its margins to set off against
the cost of opening retail outlets.”61
In July 2018, Amway India launched its first digital campaign ‘IAmwayForward’, which
highlighted the growth opportunities and achievements of ABOs and the advantages of becoming
an ABO as a full time career option. Speaking about the campaign, Angad Singh Manchanda, Co-
founder of Chimp & Zinc62, said, “Since it was the first campaign that Amway was launching
regarding their business model on digital we had to make it grand. The communication
IAmwayForward was chosen keeping in mind the entrepreneurial aspiration of people who are
willing to take a step forward in life.”63
Being optimistic about the growth of the Indian economy, Amway India expected to reach revenue
of Rs. 60 billion in the next seven years, thereby becoming a billion dollar company. 64 Speaking
about that, Budhraja stated, “We are eyeing a three-fold growth in our business by 2025, fueled by
innovations and digital and digital penetration along with our strong direct seller’s network and
focus on engaging young customers.”65
61
62
Chimp &Z Inc. is an India-based digital advertising agency. It provides end-to-end creative content
marketing services and products for business growth.
63
“Amway Celebrates Amway Business Owners in New Campaign,” www.socialsamosa.com, July 6,
2018.
64
“Amway India Targets Revenue of Rs 6,000 Cr By 2025,” www.business-standard.com, July 4, 2018.
65
Varun Jain, “India to Be among Top 3 Markets for Amway by 2025: India CEO,”
www.retail.economictimes.indiatimes.com, July 4, 2018.
14
Strategy
Exhibit I:
Growth of Direct Selling Industry in India as Of 2018
History
15
Strategy
In the 1990s, the Direct Selling industry witnessed major growth post-liberalization with many
global players entering the Indian market. Amway was one of the first major global direct selling
companies to enter India in the year 1995. In 1996, Avon Products, Inc., Oriflame Holding AG,
and Tupperware Brands Corporation were the key direct selling companies that entered into
India. In the late 1990s, a few India-based companies like Modicare Limited 66 and RCM
Business67 also launched their direct selling business.
Growth
Direct selling involved lower sales and distribution costs, a direct and effective channel of
distribution, and greater direct interaction with consumers. That offered huge benefits to the
direct selling companies and also became the reasons of growth of the direct selling business in
India. As a result, India became one of the fastest growing direct selling markets in the world by
the end of the 20th century.
Direct selling offered benefits to consumers in terms of high quality products at the consumer’s
convenience, often at his/her home or workplace. Rising urbanization, supportive policy
framework, expanding consumer base, and widening acceptance of the direct selling industry
were the factors responsible for the growth of the direct selling business. According to a report
of the Associated Chambers of Commerce and Industry of India (ASSOCHAM) 68, the Indian
Direct Selling industry had almost doubled during 2011-2016. 69
Direct selling had also gone through tough times. For example, taking advantage of the fact that
there were no regulations in place, many companies floated a speculative business using the
elements of direct selling and indulging in irregular business practices. Over a period of two
decades, India witnessed a large number of money circulation schemes/ scams.
According to ASSOCHAM, the Indian direct selling industry was expected to grow at a
compounded annual growth rate (CAGR) 70 of about 4.8% to reach Rs 159.3 billion in 2021.71
Key Products Sold
Earlier, the direct selling companies were offering a variety of cosmetics, personal care,
household goods, accessories, health and wellness products, but over the years, the portfolio of
products swelled to include other categories like water purifiers, kitchen products, jewelry,
clothing, organic gardening supplies, spa products, scrapbooking supplies, rubber stamps, web
hosting, video email, coffee, and tea. Crypto currencies were also included in it.
Contd…
66
Modicare Limited is an Indian direct selling company founded in 1978. It has a diverse range of
businesses including cosmetics, network marketing, salons, fashion, restaurants, and ravel.
67
RCM Business is an Indian direct selling company. It offers a range of daily consumable products in
FMCG – Food & Non-Food (household, home care, personal care, eatable and edible products), nutrition,
fashion, and accessories.
68
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) is the apex trade
associations of India founded in 1921. It promotes both domestic and international trade, and reduce trade
barriers while fostering a conducive environment for the growth of trade and industry of India.
69
Jaideep Shenoy, “Direct Selling Industry May Reach Rs 15,390 By 2021: ASSOCHAM,”
www.timesofindia.indiatimes.com, January 2, 2018.
70
The compound annual growth rate (CAGR) is the mean annual growth rate of an investment over a
specified period of time longer than one year.
71
Jaideep Shenoy, “Direct Selling Industry May Reach Rs 15,390 By 2021: ASSOCHAM,”
www.timesofindia.indiatimes.com, January 2, 2018.
16
Strategy
Contd…
Contribution to Economy
The growth of the direct selling industry was supported by the engagement of women as direct
sellers. These women considered this opportunity as a means of empowerment and self-reliance.
In 2017, according to the WFDSA, the Direct Selling industry in India comprised 53% women
and 42.4% men.7273 The industry made a significant contribution to employment generation,
especially for women, by creating income opportunities for them. In 2017, this industry
generated sales of US$ 1.5 billion and provided entrepreneurship opportunities to 5.1 million
people of whom 2.7 million were women. The direct selling industry was expected to provide
self-employment opportunities to 18 million Indians by 2025, of whom 60 % could be women.74
It also contributed to several other flagship schemes launched by the Government of India like
Make in India, Digital India, and Startup India.
Key Players
According to a KPMG–FICCI75 Report, as of 2017, Amway India was the leading player in the
Indian direct selling industry achieving a market share of 29%, followed by Oriflame Holding
AG (9%), Tupperware Brands Corporation (9%), and Avon Products, Inc. (7 %). 76
Compiled from various sources
Exhibit II:
Multi-Level Marketing Structure of Amway
Amway
End Consumer ABO 1 or Master Distributor
End Consumer ABO ABO
ABO ABO ABO ABO
ABO ABO ABO ABO ABO ABO ABO ABO
Source: “The Truth behind Amway, Goldquest and Other Pyramid Schemes,” www.guruprasad.net, August
31, 2018.
72
Dilip Kumar Jha, “53% entrepreneurs in Indian direct selling industry are women: Report,” www.business-
standard.com, August 19, 2018.
73
www.dsa.org
74
Dilip Kumar Jha, “53% Entrepreneurs in Indian Direct Selling Industry Are Women: Report,”
www.business-standard.com, August 19, 2018.
75
Klynveld Peat Marwick Goerdeler LLP (KPMG) is a Netherlands-based professional service company
founded in 1987. It is considered to be one of the Big Four auditors in the world. It offers accounting,
auditing, internal audit, regulatory and compliance, corporate recovery, forensic accounting, and risk
management services.
76
17
Strategy
Exhibit III:
New Structure of Amway
Alticor Inc.
Amway Fulton Innovation Access Business Quixtar Inc. (Amway

Corporation LLC Group LLC Global)
(Amway) Pyxis Innovations Inc., Access Business Group Quixtar Inc. was a US-
was a US-based LLC is a US-based based subsidiary of
subsidiary of Alticor subsidiary of Alticor Alticor Inc. founded in
Inc., incorporated in Inc., founded in 1934. 1999. It operated as an
2001. In 2006, the It operates as a contract online retailer of health
name was changed to manufacturer and and beauty products. In
Fulton Innovation supplier of personal May 2009, the Quixtar
LLC. It provided care and home care name was changed to
wireless power products in the United Amway Global. It
technology that States and Canada. supported independent
included eCoupled businesses in the
intelligent wireless
United States, Canada,
power, Splash power,
and various territories.
mini hydroelectric
power, and Alkemi-
Insights Web listening
and engagement
software.
Exhibit IV:
Information on Illegal Pyramid Selling Structures
Definition
A pyramid scheme refers to a business model in which recruitment of members is done through
a promise of payments or services for enrolling others into the scheme.
In a pyramid scheme, an organization attracts individuals, who are then asked to make payments
like participation payments to join. In exchange, the organization offers its members a portion of
the money taken from every additional member that they recruit. The directors of the
organization also receive a portion of these payments.
Making money through the pyramid scheme becomes possible only when the company’s
network expands indefinitely. But it is difficult to recruit people indefinitely. The scheme
collapses when it has no more new recruits.
As a result of the failure of the scheme, members from mostly the bottom layers lose money.
People in the upper layers make more profit as compared to people in the lower layers.
Therefore, this scheme is considered unsustainable and often illegal.
Regulations in US
To stop such illegal activities, the US government implemented various state level legislations.
Along with that, the country formed the Direct Selling Association (DSA), a national trade
association of the leading firms that manufacture and distribute goods and services sold directly
to the consumers – to monitor the activities of both the manufacturer and the distributors.
Contd…
18
Strategy
Contd…
Regulations in India
In order to protect the consumers and distributors, the Indian direct selling sector is also closely
monitored by different ministries/ departments of the central government. There were also various
laws governing consumer protection that includes The Prize and Chits Money Circulation
(Banning) Act, 1978; the Consumer Protection Act,1986; Food Safety and Standards Act, 2006
(‘FSSA’); Competition Act, 2002; and The Legal Metrology Act (‘LMA’) 2009.
Source: “Direct Selling – A Global Industry Empowering Millions in India,” www.assets.kpmg.com.
Exhibit V:
Details of Organizations those Became AMOs
Company Founded IN Particulars
 The brainchild of Dexter Yager, the first Amway distributor
to create his own system and motivational organization.
InterNet 1979  Known as mother of all AMOs as it produced thousands of
successful distributors.
 A training and support organization for distributors working

with the Amway business
Network 21 1989  It provides training to Amway IBOs on web applications
and multi-media products designed to make a profitable
Amway business.
 One of the largest education and training companies spread
Britt across the world
Worldwide
1998  Provides education and training with the objective of
India Pvt Ltd
(BWWI) helping its business affiliates achieve success in their
business building endeavor
Exhibit VI:
Amway’s Revenues From 2012- 2016 (Rs. in billions)
Source: Himanshu Kakkar, “Touch and Feel,” www.outlookbusiness.com, May 2, 2017 and “Amway India
expects I billion dollar sales, three - fold growth by 2025: CEO,” www.business-standard.com, July 4, 2018.
19
Strategy
Exhibit VII:
Technologies of Amway Digital Stores
Categories Features
 Allows the consumers/ distributors to watch engaging
Augmented Reality
videos/content on products/solutions offered by Amway
 Provides users a unique learning experience on how to remain
Gamification
healthy.
 Allows the users to share their virtual makeover images on
Virtual Makeover Solution
social media
 Allows the users to view media by looking down at the
interactive table.
Digitally Interactive Table
Application  Reveals product details like product features, value
proposition like a projector, when a product is placed on the
Interactive Table.
 Allows the users to add products to a personalized virtual cart
Virtual Cart and make payments online, rather than moving with a
physical cart around the store
Source: Abhrajit Ray, “Launching a First – Of –Its Kind Store in the Digital Era,” www. enterprise.
microsoft.com, May 8, 2017.
Exhibit VIII:
List of Amway Competitors (Direct selling)
Company Founded in Particulars
 A UK-based direct selling company
Avon Products,  It manufactures and markets beauty and related products
1886
Inc. in Europe, the Middle East, Africa, south Latin America,
north Latin America, and the Asia Pacific.
 A Sweden-based cosmetics company
Oriflame Holding  It manufactures and sells personal care, accessories, and
1967 nutritional products online and directly through a multi-
AG
level marketing model in more than 60 countries across
the world.
 A US-based multinational direct sales company
Tupperware
Brands 1946  It manufactures and sells kitchen and household
Corporation products, particularly plastic containers for food storage
and preparation.
20
Strategy
Exhibit IX:
Amway India’s Segment-Wise Contribution for 2018
Source: “Amway India Aims to Be a Billion Dollar Company By 2025,” www.indiatoday.in, July 4, 2018.
Exhibit X:
Different Categories of Amway Products as of 2018, available in India
Categories Brands Types of Products
Personal Care Satinique Hair care (Hair oil, Shampoo, Conditioner, Gel), Oral
Dynamite Care (Toothbrush, Toothpaste, Mouth Freshener spray),
Body Care (Soaps, Lotions Deodorants, Talcum powder
Persona
etc.), Fragrances
Glister
G&H
Home Care DISH DROPS Household Cleaners (Dish cleaners, Surface cleaners,
Zoom Multi-purpose cleaners, Accessories – Dispensers),
Laundry (Detergents), Automotive Cleaners
LOC
SA8
Car Wash
Nutrition & Nutrilite Vitamins & Supplements (Iron/ Calcium Tablets, All
Wellness XS Energy Drink plant Protein Powder), Traditional Herbs Range
(Brahmi, Tulsi etc. Tablets), In Body Band XS Energy
XS Whey Protein Drink (Orange, Apple, Cranberry apple Juice) XS Whey
Protein Powders (Vanilla, Chocolate)
Cosmetic Artistry Cleansers, Toners, moisturizers, Eye Care Treatments
Attitude (Serum, Lotion), Makeup (Foundation cream, Powder,
Lipstick, Nail Enamel)
Great Value Dynamite Shaving Cream, Coconut Oil
Products Persona
Other Products Ollivando Oilve Pomace Oil
Source: www.amway.in
21
Strategy
Suggested Reading and References:
1. “Amway India Aims to Clock Rs. 6K Crore Topline by 2025,”www.businessworld.in,

August 29, 2018.
2. “Amway India Partners with Skill Development Ministry,” www.indianexpress. com,July
15, 2018.
3. “Amway to Launch over 15 New Products in Next 12 Months,” www.businesstoday.in,
July 5, 2018.
4. Maverick Martins, “Amway to Open 500 Stores By 2025, Eyes $1 Billion Revenue,”
www.in.fashionnetwork.com, July 5, 2018.
5. “Amway India Aims to Be a Billion Dollar Company By 2025,” www.economictimes.
indiatimes.com, July 4, 2018.
6. “Amway India Looks to Enhance Online Sales,” www.dailypioneer.com, May 14, 2018.
7. “Amway India Looking at New Avenues for Growth,”www.thehindubusinessline.com,
May 11, 2018.
8. Stephanie Chan, “The Amway Generation: Struggling Workers Find New Calling in
Direct Sales,” www.theglobeandmail.com, May 11, 2018.
9. “Amway Launches ‘Made in India’ Nutrilite Traditional Herbs Range,”
www.avenuemail.in, March 28, 2018.
10. “Amway Launches Herbal Nutraceuticals,” www.mydigitalfc.com, March 1, 2018.
11. “Amway’s Digital Investments Key to Strong Momentum Heading Into 2018,”
www.amwayglobal.com, March 1, 2018.
12. “Amway India Opens Express Pick & Pay Store in Pune,” www.nrinews24x7.com,
February 5, 2018.
13. “Future Of Direct Selling: It Is No More Door-To-Door, It’s Now Mobile-To-Mobile,”
www.indianretailer.com, January 11, 2018.
14. Ratna Bhushan, Chaitali Chakravarty, “Easier to Do Business in India: Doug Devos,
Amway Corporation,” www.economictimes.indiatimes.com, December 2, 2017.
15. Suman K Jha, “We Are Developing India as a Manufacturing Hub for Other
Countries,” www.businessworld.in, November 22, 2017.
16. “Amway India Launches E-Commerce Portal Based on Microsoft Solns,”
www.firstpost.com, January 31, 2017.
17. Ratna Bhushan, “Amway Planning 50 Retail Stores by End-2018 For Greater Visibility
and Easier Access,” www.economictimes.indiatimes.com, January 30, 2017.
18. “Amway India Enterprises, Winner, Judges’ Choice,” www.treasurytoday.com, January
2017.
19. “Top 10 Direct Selling Company in the World,” www.topdirectsellingbusiness.com, 2017.
20. Namrata Singh, “New Direct Selling Guidelines to Spur Industry Growth: Amway India
CEO,” www.timesofindia.indiatimes.com, September 12, 2016.
21. “Amway Maps Growth Strategy,” www.telegraphindia.com, March 28, 2016.
22. Umesh Singh, “How Amway Opportunity Is a Well-Planned Big Scam,”
www.investmentschool.in, March 28, 2016.
22
Strategy
23. Shramana Ganguly, “Amway Teams up with Microsoft for Digitally-Enabled Experience
Centers in India,” www.economictimes.indiatimes.com, March 15, 2016.
24. Thomas K Thomas, “Amway Targets Sales Of $1 Bn in India,”
www.thehindubusinessline.com, February 16, 2016.
25. “Amway Opens First Manufacturing Plant in India,” www.industryweek.com, January 5
2016.
26. “Amway India’s First Manufacturing Plant Goes on Stream,” www.thehindu.com,
December 28, 2015.
27. J.M. Emmert, “The Big History of Direct Selling,” www.directsellingnews.com, May 30,
2014.
28. “Amway India To Launch Low-Cost Products,” www.business-standard.com, January 29
2013.
29. “Amway Targets Rs 2,500 Cr Turnover By 2012,” www.business-standard.com,January
20 2013.
30. “Amway India Deploys E-Commerce Platform,” www.cxotoday.com, December 2, 2008.
31. Meenakshi Radhakrishnan – Swami, “What Amway Learnt in India,” www.rediff.com,
April 13, 2005.
32. “Amway Corporation – Company Profile, Information, Business Description, History,
Background Information On Amway Corporation,” www.referenceforbusiness.com.
33. “The Amway Story: Our Rise to the World #1 Direct Selling Company,”
www.amwayglobal.com.
34. Rhonda Abrons, “What Is the Difference between Direct Sales & Multilevel marketing,”
www.smallbusiness.chron.com.
35. “Amway Announces Layoffs,” www.cs.cmu.edu.
36. “Amway Success story,” www.successstory.com
37. “History Timeline,” www.amway.in
23

Amway - Onmichannel Strategy

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Amway - Onmichannel Strategy

Hochgeladen von

Copyright:

Verfügbare Formate

Amway India – From Direct Selling to Omni Channel Business

AMWAY’S FORAY INTO INDIA

THE OMNI-CHANNEL STRATEGY

REACHING OUT TO THE CUSTOMER – MOVE INTO THE B2C SPACE

THE ROAD AHEAD

End Consumer ABO 1 or Master Distributor

End Consumer ABO ABO

ABO ABO ABO ABO

ABO ABO ABO ABO ABO ABO ABO ABO

Amway Fulton Innovation Access Business Quixtar Inc. (Amway

Compiled from various sources

 A training and support organization for distributors working

1. “Amway India Aims to Clock Rs. 6K Crore Topline by 2025,”www.businessworld.in,

Das könnte Ihnen auch gefallen