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Happy Friday: Buy vs. Sell

September 19, 2008

It’s Happy Friday again! As you dust off your suit for tonight’s team meeting. BTW, when was the last time you took your suit to the dry cleaners?

Please don't stock your garage full of products

Please don't stock your garage full of products

In the Amway business, there seems to be a product tailored for everybody. You can drink XS Energy, eat Nutrilite bars and vitamins, use LOC and SA8 at home, and buy Ribbon gifts for friends and family.

My question today is how much are you buying for yourself versus selling to others? What if instead of drinking XS Energy, you drank water (not Perfect Water) and sold XS Energy to others? How much would you both (1) save by not self-consuming and (2) earn by selling retail to others? Perform the same exercise with the other products that you purchase on a monthly basis.

The key to any business is to maximize profits and minimize expenses. What’s the bare minimum you need to keep your business at humming along at its greatest efficiency?

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16 Comments leave one →
  1. September 19, 2008 7:40 pm

    What a stupid post. You buy products for your own use to set an example, enable you to promote them, etc.

  2. September 19, 2008 7:49 pm

    There are limits to setting an example. I don’t believe stocking your garage full of product to be a good thing to do if the products are for self-consumption instead of retail. I found many times that was the case… people purchased cases of product only to end up consuming them themselves instead of selling them. This behavior does not maximize profit potential and is not good business.

  3. September 20, 2008 5:19 am

    stocking your garage full of product is against the rules. If you can’t use and/or sell 70% of it in one month, then you shouldn’t be getting a bonus.

    If folk are consciously breaking the rules then IMO it’s their own idiot fault if they don’t make any money.

  4. September 20, 2008 9:03 am

    ibofightback – stocking one’s garage I bet is still a practiced held by some IBOs, whether it’s against the rules or not. Check out the screenshot from the XS Gold teaser video that I posted in the post. Vinny’s garage looks like it’s packed full of XS Energy cases. It’s okay, however, if an Emerald or Diamond stocks his or her garage? Come on.

  5. September 20, 2008 11:18 am

    Firstly, an Emerald or Diamond (or to a lesser extent, Platinum) could easily have a deal of stock, but use it in a month helping supply downline with fast stock when necessary. As for Vinnie in the video, I see only 3 boxes, one of which has XS. The other 2 could be old clothes in storage for all we know.

    Secondly, I never said there’s no IBOs practicing it. What I said was that it’s against the rules and as such they’ve nobody to blame but themselves if that screws up their business, which ultimately it probably will.

    Right from day 1 we were adamantly taught never to buy stock just to qualify for something, better to miss a qualification than to do it with bad business practices, you’re sacrificing long term success for short-term recognition, and we’re in it to build a business and an income, not get a pin.

    [Editor: Corrected for clarification]

  6. September 21, 2008 6:33 pm

    I didn’t bring up stocking your garage full of products, YOU did. All I said was to use your own products to set an example and promote them. Nice try to attempt to change the subject.

    Most IBO’s don’t stock products anymore, shipping to each IBO/customer is too easy now. I suspect you haven’t been around for a while and have no concept how the business works any longer, but that doesn’t keep you from spewing out false ideas, does it? Even if a Diamond DID stock products, they have probably been around for a while, and could easily build the 30%/month into quite a lot of stock. Get a clue.

  7. September 21, 2008 9:01 pm

    Tex and ibofightback – Would either of you want to detail your personal purchases over the past several months?

    The purpose of the post was to place a higher emphasis on retail sales than personal consumption.

    How much have either of you sold this month vis-a-vis personal purchases?

  8. September 22, 2008 3:19 am

    sure, your post comments on income vs expenses, but bizarrely appears to include personal consumption of XS energy drink as an expense. Unless you’re drinking it at an event where your selling it, I’m hard pressed to see how drinking XS can be considered a business expense.

    On the other hand, as Tex points out you’d be hard pressed to sell anyone any XS if they asked you what your opinion of it was, and you said you don’t know, you don’t drink it. The result of cutting back on some (personal) expenses may be that you decrease income and overall profit. Maximising profits and minimising expenses does not happen in a vacuum with no influence on each other.

    What’s your purpose for asking our personal customer vs personal use volume? Personal use volume will be dramatically influenced by ones financial position entirely apart for purchasing desires. A couple with good incomes who have been involved a while and learned about the products might easily do 500PV in legitimate personal purchases. An 18yr old college kid might struggle to do 50PV. Yet they might both have put in the exact some effort and into customer volume, and indeed gotten the same result.

    Your comparison also ignores the fact that for longer-term income, wholesale volume (ie group volume) is far more important that retail volume. Even outside active IBOs, what about “passive” IBOs. This week for example I placed an order for a downline IBO. They’ve never sponsored anyone, shown the plan, sold a product. They however purchase products. We follow them up on this regularly, treating them as customers, and they placed an order this week for some more Nutrilite Daily and Omega-3. It’s registered under their IBO#, but we ordered, we delivered it to them, and we get a volume markup on it – profit. This type of thing is very common, however in your false dichotomy it would be ignored.

  9. September 22, 2008 8:57 am

    Money that goes out of your pocket = Expense

    Money that goes into your pocket = income

    I’m not talking about claimable business expenses. I’m not talking about your downline. I’m talking about your personal consumption versus your retail income. If you want to add in your downline IBO who does nothing but buy products, fine.

    What’s your purpose for asking our personal customer vs personal use volume?

    Because I’m curious. You still haven’t answered the question.

  10. September 22, 2008 2:11 pm

    No.

  11. September 22, 2008 4:05 pm

    If one is treating Amway as a business, as one should, then income and expenses from personal activities should not be incorporated in any balance sheet.

    As a rule I generally don’t answer personal business questions, because past experience shows it tends to lead to a cycle of further questions and proof demanded and accusations of dishonesty etc etc.

    But since I happen to have it in front of me for other purposes (developing a new tracking tool for my group), Customer PV:Personal PV this month is currently at 14:1, with one personal order and 9 customer orders processed. We have further customer orders to process as well as further personal purchases. We tend to order at the end of the month (no ditto here), which will even things out a little, but it will still likely be at least 4:1 at the end of this month. A quick look at the previous 3 months finds about a 3:1 customer:personal PV ratio.

  12. September 24, 2008 9:55 am

    Thank you for posting this information.

    What can you do to increase the customer to personal PV ratio? What ratio, in your opinion, is good and practical to have?

  13. September 24, 2008 2:58 pm

    I don’t think customer:personal PV ratio is a particularly useful measure of anything and as mentioned what is sensible depends on the individual circumstances, particularly when you have differences like whether you can dropship to clients or not. We can’t here, so unless you want to spend a lot of time on deliveries, or a lot of many reshipping, then too much customer volume simply isn’t sensible for a part-time business. Long term the profit (and time benefits of the business) come from the volume markup rather than retail markup.

  14. Joecool permalink
    September 24, 2008 4:57 pm

    Too much customer volume? LOL, you’re not running a business then are you? You’re running a product based pyramid.

  15. September 24, 2008 7:51 pm

    Just a historical note: People built huge Amway businesses in the days before drop shipment.

    Why is it that Amway Global doesn’t offer drop shipment in your part of the world? Doesn’t that only hurt the business for you?

  16. September 25, 2008 5:36 am

    Yes, people built huge Amway business without drop shipment, and continue to do so today, however an individual Amway business is built to a large volume with wholesale customers (NB:wholesale customers, not “wholesale price” customers), not retail customers, something some folk seem to struggle to understand.

    Why no drop shipping for customers? No idea, it’s dumb if you ask me. We can actually sign them up as “members”, effectively for free, and then they can order direct etc – however they also get IBO pricing. So we still have to treat them like customers, with all the work involved in marketing etc etc, but we make no retail markup!

    Just silly – it can’t develop wholesale profit through duplication, and it doesn’t provide retail markup. Not surprising, our LOS doesn’t promote the membership option at all.

    Client access to the web portal is hopefully coming in the next 18 months, which changes things.

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