Amway Holds on to the Crown, But…
Since 2012, Amway has been the largest direct seller in the world from the sales point of view. 2012 was the year when Avon and Amway changed places at the top.
Not only this, the figures below also show that this company is a direct sales giant from various aspects:
* Operates in more than 100 countries and territories
* Employs over 17,000 staff globally
* Owns 15 manufacturing and processing plants
* Holds in excess of 800 patents
However, things have not been so good at Amway lately. To be more precise, its global sales has been declining since 2013 when it peaked at $11.8 billion. While 2017 marked the lowest decline in % in this four-year period, it was still a drop.
Company’s two most senior officers Steve Van Andel and Doug DeVos explain what they did when sales began declining as “prioritizing spending more on technology”.
Amway’s President Doug DeVos said after 2017 results, “We have weathered a challenging period for our business in China that, combined with less than favorable exchange rates, have impacted our sales for a few years. That downward trajectory has leveled off and now, with our China business rebounding faster than expected, we are forecasting sales growth in 2018. Several factors further support the company’s 2018 forecast, including steady growth in bellwether markets like South Korea and Thailand, expanding investments in digital platforms and distributor tools, and new product launches that are exceeding expectations.”
Amway is private company that has been founded by Jay Van Andel and Rich DeVos in 1959. It has been owned and run by these two families’ members since then. In July 2017, Co-CEO Steve Van Andel announced his retirement at the end of 2018 on a letter he wrote to employees. He said he was making this announcement almost 18 months in advance so there would be plenty of time to decide who would take over his role. Van Andel has been working for 23 years at Amway since he took over when his dad retired in 1995. Van Andel plans to remain as company’s Chairman while stepping away from its day-to-day operations.
Amway’s Product Categories
Nutrition products category accounted for 50% of Amway’s global sales in 2017. In the recent years, nutrition category has been strengthening its position against others. This category’s share was 46% in 2015 and 49% in 2016. Amway reports its energy drink and sports nutrition brand XS Energy’s sales was up 30% in 2017 from previous year. Euromonitor shows Nutrilite Amway’s famous nutritional product line as the world’s #1 selling vitamins and dietary supplements brand. Amway reports, Nutrilite Double X is the company’s top-selling multivitamin/multimineral supplement.
26% of Amway’s 2017 sales came from beauty and personal care (up 1% from 2016), 21% from home products (down 1% from 2016), and 3% from others.
Amway’s Top Markets
Amway’s top 10 markets in 2017 were China, United States, South Korea, Japan, Thailand, Taiwan, India, Russia, Malaysia and Hong Kong.
This list was almost the same in 2016, with only two markets changing places: China, United States, South Korea, Japan, Thailand, Taiwan, India, Malaysia, Russia and Hong Kong.
China has been Amway’s largest market for several years. As a sign of this market’s significance, management had the former US President George W. Bush speak at Amway China’s 20th anniversary in 2015 for a crowd of over 12,000 distributors. However, China is not a problem-free market for the company. According to a New York Times article, the conduct of some Amway sales distributors had prompted an investigation there.
2018 and Beyond
Will Amway be able to keep its leadership position in the global direct sales industry in 2018, too? Well, looking at close competitors’ recent performances, I would say, “Most probably.” The gap is too wide to be closed.
On the other hand, can Amway come up with a record sales in 2018 to exceed the $11.8 billion of 2013? That’s very unlikely!
Hakki Ozmorali is the Principal of WDS Consultancy, a management consulting firm in Canada specialized in providing services to direct selling firms. WDS Consultancy is a proud Supplier Member of the Canada DSA. It is also the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki is an experienced professional with a strong background in direct sales. His work experiences in direct selling include Country and Regional Manager roles at various multinationals. You can contact Hakki here.