amway india project report

7/31/2019 Amway India Project Report

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Amway is a direct selling company and manufacturer that uses network

marketing to sell a variety of products, primarily in the health, beauty, and

home care markets. Amway was founded in 1959 by Jay Van

Andel and Richard DeVos. Based in Ada, Michigan, the company and family

of companies under Alticor reported sales growth of 9.5%, reaching

US$9.2 billion for the year ending December 31, 2010. Its product lines

include home care products, personal care products, jewelry,

electronics, Nutrilite dietary supplements, water purifiers, air purifiers,

insurance and cosmetics. In 2004, Health & Beauty products accounted for

nearly 60% of worldwide sales. Amway conducts business through a number

of affiliated companies in more than a hundred countries and territories

around the world. Amway was ranked No.114 among the largest globalretailers by Deloitte in 2006, and No.32 among the largest private

companies in the U.S. by Forbes in 2010.

Headquarter in Ada, Michigan

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Founding

Amway Japan Head Office Amway Vietnam (Hồ Chí Minh since 2008).

Jay Van Andel and Richard DeVos, friends since school days, had been

business partners in various endeavors including a hamburger stand, air

charter service, and a sailing business. In 1949 they were introduced by Neil

Maaskant (Van Andel's second cousin) to the Nutrilite

Products Corporation. Nutrilitewas a California-based direct sales company

founded by Dr. Carl Rhenborg, developer of the firstmultivitamin marketed

in the United States. In August 1949, after a night-long talk, DeVos and VanAndel signed up to become distributors for Nutrilite food supplements. They

sold their first box the next day for $19.50, but lost interest for the next two

weeks. Shortly thereafter, at the urging of Maaskant, who had become

their sponsor , they traveled to Chicago to attend a Nutrilite seminar. The

meeting was at a downtown hotel, with over a hundred people in

attendance. After seeing promotional filmstrips and listening to talks by

company representatives and successful distributors, they decided to pursue

the Nutrilite business opportunity with enthusiasm. They sold their second

box of supplements on their return trip to Michigan, and rapidly proceeded

to develop their new business further.

In 1949, DeVos and Van Andel had formed Ja-Ri Corporation (abbreviated

from their respective first names) for importing wooden goods from South

American countries. After their trip to the Nutrilite seminar, they

dropped this business and Ja-Ri became their Nutrilite distributorship. In


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addition to profits on each product sold, Nutrilite also offered commission on

the sales of products by new distributors introduced to the company by

existing distributors—a system today known as multi-level

marketing or network marketing. By 1958, DeVos and Van Andel had built

an organization of over 5,000 distributors. However, following concerns

about the stability of Nutrilite, in April 1959 they and some of their top

distributors formed The American Way Association to represent the

distributors and look for additional products to market.

Their first product was called Frisk , a concentrated organic cleaner

developed by a scientist in Ohio. DeVos and Van Andel bought the rights to

manufacture and distribute Frisk, and later changed the name to LOC (Liquid

Organic Concentrate). They subsequently formed Amway Sales

Corporation to procure and inventory products and to handle the sales andmarketing plan, and Amway Services Corporation to handle insurance and

other benefits for distributors (Amway being an abbreviation of "American

Way"). In 1960 they purchased a 50% share in Atco Manufacturing

Company in Detroit, the original manufacturers of LOC, and changed its

name to Amway Manufacturing Corporation. In 1964 the Amway Sales

Corporation, Amway Services Corporation, and Amway Manufacturing

Corporation merged to form a single entity, Amway Corporation. Amway

bought control of Nutrilite in 1972 and full ownership in 1994.

International expansion

Amway expanded overseas to Australia in 1971, to Europe in 1973, to parts

of Asia in 1974, to Japan in 1979, to Latin America in 1985, to China in

1995, to Africa in 1997, to India and Scandinavia in 1998, to Russia in 2005,

and to Vietnam in 2008.

Quixtar

In 1999 the founders of the Amway corporation established a new holdingcompany, named Alticor, and launched three new companies: a sister (and

separate) Internet-focused company named Quixtar, Access Business Group,

and Pyxis Innovations. Pyxis, later replaced by Fulton Innovation, pursued

research and development and Access Business Group handled

manufacturing and logistics for Amway, Quixtar, and third party clients.

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The main difference was that all "Independent Business Owners" (IBO) could

order directly from Amway on the internet, rather than from their up

line "direct distributor", and have products shipped directly to their home.

The Amway name continued being used in the rest of the world. After

virtually all Amway distributors in North America switched to Quixtar, Alticor

elected to close Amway North America after 2001. In June 2007 it was

announced that the Quixtar brand would be phased out over an 18 to 24

month period in favor of a unified Amway brand (Amway Global) worldwide.

In 2006, Quixtar published The Quixtar Independent Business Owner

Compensation Plan, in which the company reported that the average

monthly gross income for "Active" IBOs was $115.

AFFILIATIONS

Amway is a prominent and active member of the regional and national directselling associations worldwide. Doug DeVos is vice-chairman of the WorldFederation of Direct Selling Associations (WFDSA), and serves on the WFDSACEO Council. He is also past chairman of the board of directors for the U.S.Direct Selling Association. Globally, direct selling is an industry with morethan $113 billion in estimated retail sales and more than 66 million salespeople.

COMMUNITY SERVICES

Amway has a long history of sharing with the communities where it doesbusiness, both through volunteer efforts and charitable contributions. In2003, Amway launched the One by One Campaign for Children to focus itsphilanthropic efforts on children. Today, in every country and everycommunity where Amway operates, thousands of employee and distributorvolunteers support hundreds of charitable organizations to offer children theresources they need to live, achieve, learn, and play.

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Type Private

Industry Direct selling

Founded 1959

Founder(s) Rich DeVos

Jay Van Andel

Headquarters Ada, Michigan, United States

Area served Worldwide

Key people Steve Van Andel (Chairman)

Doug DeVos (President)

Al Koop (Chief Operating Officer)

Russ Evans (Executive Vice

President and Chief Financial

Officer)

Revenue US$ 9.2 billion (2010)

Employees 13,000

Parent Alticor

Website Amway.com

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COUNTRY’S NO 1 DIRECT SELLING COMPANY

Amway India is the country‘s leading direct selling FMCG-company whichmanufactures and sells world-class consumer products. Its business

opportunity and all its products are covered 100 per cent Money Back

Guarantee'. If not completely satisfied with the product, the consumer can

return it for a refund.

CORPORATE CREDENTIALS

Amway India is a wholly owned subsidiary of US $ 8.4 billion Amway

Corporation, Ada, Michigan, USA. Amway Corporation is one of the largest

Direct Selling companies in the world. It has a presence in 88 countries &

territories.

Established in 1995, Amway India commenced commercial operations in May

1998 and has emerged as the largest Direct Selling FMCG Company. The

Company has its headquarters in the National Capital Region of India - New

Delhi.

Amway has invested in excess of US $ 35 million (Rs. 151 crore) in India of

this; US $ 6 million (Rs. 26 crore) is in the form of direct foreign investment.

Amway India has 450 full time employees and has generated indirect

employment for 1,650 persons at all the contract manufacturer locations.

The Company has provided income-generating opportunities to over 550,000

active independent Amway Business Owners.

Amway India provides free and unlimited training to all its distributors to

help them grow their business. Amway India conducts over 29,000 training

sessions during an average 12-month period with an attendance of over 1.5

million Amway Business Owners and prospects.



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Amway India recorded a sales turnover of over Rs. 1407 crore during Jan-

Dec 09.

Amway India is a member of the Confederation of Indian Industries (CII)

and Federation of Indian Chambers of Commerce (FICCI).

The World Blind Union presented an award and citation to Amway India in

2003, for its peerless work for the blind child.

NATIONAL PRESENCE

In twelve years of commercial operation, Amway India has established a

nation-wide presence of over 130 offices and 55 city warehouses and four

regional mother warehouses. The distribution and home delivery network set

up with the support of independent logistics partners is spread across over

4000 locations.

MANUFACTURING

Almost all Amway India products are manufactured in the country through

seven third party contract manufacturers. To bring the identified contract

manufacturers‘ production facilities and skills to international standard,Amway has invested in excess of US$ 4 million (approx. Rs 17 crore*). The

transfer of this state-of-the-art, world-class technology, has been free of

cost.

PRODUCTS

At present, Amway India offers over 115 products in five categories. They

are Personal care category, Home Care category, Nutrition & Wellnesscategory, Cosmetics and Great Value Products.

With the exception of Cosmetics range (Artistry*) and some products in

Nutrition and Wellness category, all Amway India products and bottles are

manufactured in India.



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The products match Amway‘s global quality standards. They carry a tamper-

proof seal and a ‗100 per cent Money Back Guarantee'. If not completely

satisfied with the product, the consumer can return it for a refund. Amway

products are environment friendly, and are not tested on animals. Amway

encourages the return of its used product bottles for re-cycling and to

prevent their misuse.

PROMOTING FREE ENTERPRISE AND SELF-EMPLOYMENT

Amway distributors follow a Code of Ethics and Rules of Conduct consistent

with the World Federation of Direct Selling Associations (WFDSA), which

defines the goals, principles and responsibilities in building and operating an

Amway business. Amway India is a member of the Indian Direct Selling Association (IDSA).

The IDSA is an industry regulatory body, with several reputed international

and Indian Direct Selling companies as members.

Vision

Inspiring people to live better lives.

Mission

To provide the best business opportunity. To deliver exceptional qualityproducts to urban and semi urban homes in the areas of nutrition andwellness, cosmetics, personal care, home care, home tech and insurance.

Values

Amway has established some simple shared values that unite the entirecompany, and all of the Business Owners that are associated with Amway.We believe that these values guide our actions and help us to achieve

everything we are capable of without compromise or harm.

Integrity

We will uphold the highest personal and professional integrity whichdemonstrates honestly, loyalty, respect and high ethical standards in all ourresponsibilities, obligations and other activities. We are committed to behaveat all times in accordance with the ethical practices of the organization.



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Trust

Building reliability and dependability for self by displaying commitment,honesty, confidentiality and consistency in all actions.

Transparency We will promote a culture of openness and mutual trust by interactingobjectively and without underlying personal interests.

Service Orientation

We are committed to serve our customers to fulfill their needs by focusingefforts on discovering and thereby meeting stated and unstatedrequirements.

Partnership

We will collaborate across boundaries and find common ground by sharingideas and resources, with a wide range of stakeholders. We will developnetworks and build long term alliances with internal and external customers.

Recognition

We are committed to honor, encourage and support individuals and teamswho contribute, through their behavior and actions, to the success of theorganization.



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Gift Catalogue 2011 (Coreline)

Gift Catalogue 2011 (Non-Coreline):

In order to ensure that maximum numberof ABOs are able to buy the Catalogue

products, we have decided to ―limit‖ the quantity of each Non Coreline

Item that an ABO can order.

Nutrilite: NUTRILITE® is the world‘s leading brand of vitamin, mineral,

and dietary supplements, grown harvested, and processed on its own

certified organic farms.

Artistry: ARTISTRY® is one of the world‘s top five largest-selling

prestige brands of facial skin care and colour cosmetics.

Attitude: All products of Attitude contains Skin Vitalising Complex thatsynergistically combine to cleanse, Replenish & Moisturise the skin

making it soft & supple.

Dynamite: Dynamite's range of male grooming products, formulated

internationally is designed to deliver the ultimate grooming

experience.

Glister: Glister Toothpaste is a revolutionary Multi-Action Toothpaste

with Sylodent that offers seven benefits. Persona: Persona Premium 3 in 1 Soap is a complete soap for the

entire family promises refreshing confidence. Satinique: Satinique Advanced Range with unique Ceramide Infusion

System uses nature's own renewing technology to rejuvenate,

strengthen and protect your hair.

SA8: SA8 Gelzyme is India's only 3-in-1 laundry detergent which

pretreats, cleans and softens. G & H: G&H Range enriched with the goodness of Glycerine and

Honey, deeply nourishes and hydrates the skin for a healthy glow. LOC High Suds: LOC High Suds is a multipurpose household liquid

cleaner.

Dish Drops: Dish Drops is a concentrated hand dishwashing liquid

with a powerful "Triadic Detergency System". Great Value Products: Great Value Product Range offers you Great

Quality, Great Performance, Great Price and a Money Back Guarantee! BSM (Business Support Material)



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Are you working towards a better life for you and your family? Areyou in control of your future? Are you getting the rewards your hardwork deserves?

Your life doesn't have to be a trade-off between making the money you needand having the flexibility and time to live your life to the fullest.

The Amway Sales and Marketing Plan puts you in control, allowing you theflexibility to work where and when you want, giving you time for family andfriends as well as the opportunity to earn a good income. It adapts easily toyour needs and ambitions, and grows with them, offering you all the

personal support and assistance you require to become the Business Owneryou want to be.

With Amway you are Connected to the global leader in multilevelmarketing, with over 40 years of experience, Supported by great productsand people who will help you succeed, and finally In Control of your life.

Amway is a business with a proven track record and the ability to help youget the best out of your hard work. With Amway, you are on your own butare never alone.50 years of global experience and 10 years of experience

in India , we are there to help and guide you. We know the pitfalls of running a business and are there to help you avoid them, and to reward youwhen you do well.

At the heart of your business are Amway‘s market-leading products, eachtailored to the needs of individual market and culture. Amway‘s products arerecognized all over the world for their high quality, value and performance,all supported by the Amway Satisfaction Guarantee.

Our role supporting your business extends into product and business

training, helping to ensure that you are able to reach your personalpotential.

At Amway we believe that to sell a quality product you need to understand itand use it with confidence. We spend lakhs of rupees helping our BusinessOwners become product and brand ambassadors, enabling them to sellAMWAY products with conviction and run their businesses effectively.



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Amway really does enable you to be in control of your own life. With theAmway business opportunity, you work for yourself, not for Amway or yoursponsor. It‘s entirely up to you how much time and effort you put into your

business. Like anything else in life, the amount you achieve reflects theamount you put in.

People all over the world value the freedom of choice and flexibility thatAmway offers. In 2007-08 there were more than 4.5 lakh Business Ownersin India . Each one of these is an independent business, connected to aworldwide network of support and advice that is available as and when it‘s

needed.

The Amway Sales and Marketing Plan is a low risk, business opportunity thatis open to everyone. It allows you to build your business through retailingproducts and sponsoring other people who, in turn, can retail products andoffer the business opportunity to others. By passing your sales andmarketing knowledge to your developing team, you not only build your ownbusiness network but also enable others to build one of their own.

The Amway Sales and Marketing Plan has been operating for over 51 yearsand is available in over 80 countries and territories around the globe.

The core of the Amway Sales and Marketing Plan's income opportunity is thesale of quality AMWAY products to retail customers. As your Amway businessgrows, the rewards you earn grow in proportion. The Amway Sales andMarketing Plan do not compensate anybody for simply recruiting others asAmway Business Owners.

Amway is one of the global leaders in direct marketing. The name Amway

derived from the words "American Way " . Amway was established in 1959

by Jay Van Andel and Richard Devos. Amway global now have a presence in

over 88 countries and has a $6.5 Billion turnover.

Amway was established in India in 1995 and commenced operation in 1998.

Currently the company have 80 products in 4 categories. Amway operates in



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But after the promotion, when the distributors approached first-time buyers

to resell the cleaning product, they thought we'd hiked prices! If we had

taken feedback from the distributors before launching the product, we would

have realised the need to emphasise the promotional nature of the lowered

prices in a way that would be clearly known and remembered.

We realised that we hadn't looked at the promotion from the point of view of

the person who actually sells the product.

"Our biggest challenge is not how to expand the market in India, but how toconvince the indifferent Indian consumers about the world-class quality of

Amway Products. The quality of the product is Amway's strength."

- Sudershan Banerjee, CEO & MD, Amway India in 1999.

A Dream Gone Awry

In the late 1990s, the global direct selling giant Amway had to contend withincreasing doubts regarding its survival in India. The company that hadbecome synonymous with network marketing or multi-level marketing

(MLM)1 the worldover was beset with problems.

Media reports were quick to point out Amway's failure to sell the basic

concept of direct selling to the Indians. Though the company managed to

rope in a substantial number of distributors, the attrition rate was at an

alarming high of 60-65%. Most of the products that the distributors bought,

they consumed themselves. Estimates put the percentage of self-

consumption at almost 50-60% of the total volume. (There were rumors that

some distributors enrolled just to take advantage of the distributor's margin

of 18-30%). In the initial stages, when trials were the only criterion, thisworked well. However, this self-consumption did not translate into repeat

purchases. This was because the percentage of 'active' distributors at any

given point of time remained at a low level of 35-40%.

Many people who joined in the initial frenzy returned the product kits withinthe first month. Company sources claimed that the returns constituted just

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1% of the total strength, but rivals and ex-employees put the figure at over5%. Of the total distributors, only about 10% showed reasonably high levelsof activity. To top it all, Amway was burdened with an image that had littlebasis in fact. Its products began to be perceived as being very expensiveand meant only for the premium segment. This was identified as the single

biggest reason for the high attrition rate. What was overlooked was the factthat almost all Amway products were concentrates.

When used in the proper diluted form, the cost per use of each productworked out to be at par with (and in some cases, even lower than) thenearest competitor's products. For instance, the product named LOC (pricedabove Rs 320 for a 1-liter pack), when diluted gave around 165 bottles. Thecost per usage was thus very low. Either the distributors were themselvesnot aware of this fact, or they were unable to communicate this to thecustomers.

Since the distributors themselves were unsure about the price-valueequation of the products they were selling, they could not effectivelyconvince the consumers either. Amway also had to contend with customerscomplaining of poor customer service on the part of the company.

Analysts commented that as long as the volume of products that movedthrough the network was high, network market such as Amway weresatisfied. Even though customers complained of the lack of services, thecompany deemed it more beneficial to go for higher salesforce motivationprograms rather than undertake customer service initiatives. This was

largely due to the fact that the company was almost never involved directlywith the end-consumers and the sales volumes were the end of alldiscussions.

Making of the Dream

Privately held by the DeVos and Van Andel families of US, Amway, short forAmerican Way, was set up in 1959. Amway and its publicly traded sistercompanies supported 53 affiliate operations worldwide. About 70% of Amway's sales were outside North America. With over 12,000 employees

around the world, Amway was renowned for its strong R&D centre inMichigan, which had 24 laboratories.

Amway was present in over 80 countries and its manufacturing plants were

located in US, Hungary, Korea, China and India. The company had over 3

million distributors across the world. Besides its direct selling portfolio of 450

products, Amway promoted around 3,000 products through catalogue sales2

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as well. Amway had received permission from the Foreign Investment

Promotion Board (FIPB) in 1994, to invest $15 million in the Indian

operations and to source products from India. The company began with

identifying small and medium-scale companies to source its products from.

Commercial operations began in May 1998 with a partnership arrangementwith Network 21, a company, which acted as a support system and assisted

in organizing training, seminars and meetings.

Besides its extensive internal research efforts before entering India, Amwayalso conducted market research through agencies such as Pathfinders andORG-MARG. Though prior to its entry into India, Amway did recognize theneed for a special India-specific pricing strategy and eventually there were just a few marginal cuts in the prices, which were still almost 20% higherthan those of the competing FMCG products.

The company began with appointing distributors in the country by adoptingthe 'NRI sponsored' by getting NRIs to rope in their friends/relatives in Indiainto Amway distributorship. These distributors were duly provided withstarter business kits containing products, training material, and salesliterature.

The company's introductory product range comprised four home care andtwo personal care products, made available to distributors at the AmwayDistribution Centers (ADCs) or through tele-service. A significant portion of Amway's investment was on transferring state-of-the-art technology and

processes to third-party manufacturers from the small and medium-scalesectors for the indigenous production of its product range.

(A sales catalog refers to a list of products/services provided by companies.These are sent to selected addresses.The consumers then place the orders based on the information provided inthe catalog. The global catalog sales marketstood at $ 87 billion in 1998)

Amway assisted its three manufacturing partners, the ISO 9001-certifiedJejuplast at Pune, Naisa Industries at Daman, and the Hyderabad-basedSarvotham Care, to achieve benchmarking levels of product development,engineering and quality. These facilities were equipped with advancedmachinery and world class technologies for production, packaging, and waterfiltration. Amway scientists and engineers at the India Technical Centreprovided assistance in the processes of technology transfer and qualitycontrol. The company supported its independent distributors with five fullservice ADCs at New Delhi, Bangalore, Chennai, Calcutta and Mumbai. ADCs



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'Networking its Way into the Future’

By 2004, Amway planned to become a Rs 1000 crore company with aphysical presence in 198 centers across India. The company also revealed

that by 2002, it would be selling all the 450 Amway products that wereavailable abroad, in India. As part of its plans to tap unexplored markets,Amway announced an ambitious expansion of its distribution infrastructurein Andhra Pradesh, which included setting up a warehouse. Once themarketing business in urban areas was strengthened, Amway planned toturn tis attention to untapped rural areas as well. Even as Amway wasestablishing its roots in India, it was already facing troubles abroad. Thevery concept of network marketing was being threatened by the growingpopularity of e-commerce and the Internet.

Through the World Wide Web, manufacturers had the opportunity of engaging in one-on-one direct selling in an even simpler way. This posed amajor threat to multilevel marketers. However, the real threat seemed to bethe merging of telecom networks with the cable television operators. Thisbrought the customer directly in touch with the company throughtelemarketing tools. This would naturally make the salesperson obsolete.Ofcourse, given the pace of developments on the Indian telecommunicationsfront, network marketers could take it easy for least some more years.However, Amway prepared to meet these challenges by taking initiatives tofurther strengthen its online presence.

With Internet usage levels increasing and little spare time for shopping,Amway believed that the Indians would gradually move to online shopping.But it thought the process would take time, as het pleasure of window-shopping and the actual shopping experience could not be replaced veryeasily. Amway provided graphics and three-dimensional views in the productdisplay sections on its website. The company also planned to have portals invarious Indian languages to ensure wide coverage.



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The Indian MLM Journey

MLM was the fastest growing sector of the direct selling industry worldwide.In 1988, the total revenue generated by MLM was $ 12 billion, which

doubled to $ 24 billion by 1998. The direct-marketing industry in India wasabout Rs 6 billion in 1999. This was a growth of 62% over the previous year.In the pre-liberalization era, network marketing in India was usually in theform of various chit fund companies like Sahara India. These had a systemof agents, who simultaneously mobilized deposits and appointed sub-agentsfor further deposit mobilization. Companies such as Eureka Forbes andCease-Fire pioneered the direct selling system in the country with a salesforce that was trained to make direct house-to-house sales.

Oriflame International was the first international major to begin networkmarketing operations in India in 1995. This was followed by the entry of Avon India in late 1996. Tupperware, with a product portfolio comprisingplastic food storage and serving containers, also entered India in 1996.Later, Avon's decision to opt out of the MLM setup came as a major setbackto the industry.

(Avon was the world's largest seller of beauty products operating in 135countries. The company opted for MLM inIndia while worldwide it was known for its door-to-door direct sellingsuccess. Avon's decision to adopt MLM was led bythe belief that in India, door-to-door salespeople were treated with a strange

indifference. However, this led to Avonlosing its focus on its stronghold of having a strong end-user focus. Besides,the company could not make the shift inmindset that multi-level selling required, as MLM required a strongdistribution push mentality, which was very different from the hard selling tothe end users that Avon was good at. Avon had also significantly lowered itsadvertising expenditures. Avon's ManagingDirector, David F Gosling said, "It was a mistake to adopt multi-level systemwhen we weren't good at it. We soonrealized that we should stick to what we knew best." He claimed that MLMhad simply turned into a recruiting machineand it was difficult to ensure that the distributor down the chain was notthriving on the performance of his recruitswithout actually performing (selling) himself. Also, Avon held back themuch-needed distribution push as the companygradually lost faith in the system. Within two years, Avon switched back todoor-to-door selling, putting in place athree-tier network of beauty representatives (BR), beauty advisors (BA) and



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independent sales managers, whichestablished clearer relationships between the distributor and the company)

The first homegrown MLM major was Modicare, started by the house of Modis in 1996. Modicare's network was spread across northern and westernIndia. Commenting on the Indian MLM experience, S.K.Gupta, COO said,"The concept is especially relevant for India because of the highlyfragmented retail structure, high brand proliferation which limits shelf-spaceand massive brand wars both at the trade and advertising level." The directselling industry in India was in its initial stages even in early 2001. BesidesAmway, Oriflame Avon and Tupperware, other players included LotusLearning, LB Publishers and DK Learning, all selling books.

All the direct selling companies were members of the Indian Direct Sellers'Association (IDSA), and were bound by its code of conduct.4 While ininternational markets, a wide range of products was successfully solddirectly to homes, this was not the case in India.

In the mature economies, customers were fully aware of the competingproducts available, whereas in developing economies such as India,awareness levels were comparatively low.

Industry observers commented, "The way the market is booming, no directsale company can meet all its customers only through its own sales force."

However, MLM companies opted for direct selling as against the highvisibility retail set up for competitive cosmetics players such as Revlon,aiming to get an image of exclusivity. There was some resistance to thenetwork-marketing concept in India, as Indians preferred the security of a job. Being a salesperson in an MLM setup did not provide this security. Thishampered the company's ability to attract competent personnel.

The problem was aggravated by the fact that companies treated directselling as 'just another' promotional tool, while it was mainly about

motivation. One positive aspect of network selling was that it was veryconvenient for women as the job could be done part-time and at hours of their convenience. Also, the products sold also usually targeted at women,and this made it easier for the Indian women to accept the distributorships.

Most Indian direct selling failures stemmed from the fact that they did notunderstand the concept thoroughly. Companies who opted for advertising inthe media soon found that it had a negative impact. Advertising created a

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suspicion in the mind of the salesperson that the company was taking directorders and thus, reducing commissions. In some cases, it also negated theimpact of demonstrations. Eureka Forbes handled this carefully, when itadvertised not its product, but the salesperson as a friend of the customer.Advertising went hand in hand with retail, as people ought to be told where

to go and get the product.

In an MLM setup, advertising was not the best way to spend money. Thoughthis did sometimes result in inadequate product exposure, the money whichwould have been spent on advertising was usually diverted into training andmotivating the salesperson to contact as many customers as possible.

Though Oriflame and Avon did advertise, it was mainly attributed to theirbeing prima-facie into cosmetics and personal care, thereby involving animage factor.

Amway, which was into home care products in a big way, had decided not togo in for advertising on a scale as large as adopted by Oriflame and Avon.Competition was intensifying in the industry in the early 21st century.

Amway seemed to be faring better than competitors like Modicare - a factattributed mainly to its premium brand image. Both Amway and Modicarewere not the typical door-to-door selling companies, as they sold only tocustomers known to their distributors. While Amway targeted only the uppersection customers, Modicare targeted the middle and the upper middle classcustomers. Some of Modicare's products were priced at one-fourth of the

price of Amway's products. Modicare sources said this was because itsproducts were priced for the Indian market, while Amway's pricing was morein tune with its global counterpart. Modicare was even willing to reduce itsmargins in certain cases. Also, Modicare offered 100% refund even when theproduct had been used, unlike the 75% refund offered by Amway. This couldturn out to be a cause for concern for Amway in the long run.

Amway India’s Target Market & Customers:

The Range of consumers group is very large which is from Babies to Elders. Women are the main consumers.



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Research Methodology:

In completing the project of “Distribution strategies of Amway India”, I have used the

Secondary Data Collection Method.

It is part of a descriptive research, in which we came to know the distribution strategiesof Amway in Indian Scenario, the problems that they are facing & also with some goodalternatives to tackle with those problems.

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Findings & Conclusion:

Amway set up a distribution system that is parallel to whatAmway uses in other countries.

Home delivery within 24 hours of products that are orderedby customers either through the Internet or on telephone.

Amway India‘s success is through the use of an elaboratepyramid-like distribution system in which independentdistributors of Amway products received a percentage of themerchandise they sold and also a percentage of the

merchandise sold by recruited distributors.

A lot of Amway strategy in India is based on the trial-and-error experiences.

Like other multinationals, Amway also been guilty of

misjudging the Indian market at times. Even after misjudging the Indian market, Amway India has

become a successful brand in India.

References:

amway india project report

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