Amway – A Direct Selling Industry
Amway in India is a direct selling industry. Direct selling is a rapidly expanding channel of distribution of products and services to customers directly. They are either marketed to customers by independent selling through in-house product demonstrations, parties and gatherings and one-on-one selling. However, the Indian laws are insufficient in dealing with direct marketing strategies. There are no proper rules for governing multi-level marketing in India. Only if the government formulates new laws, then Amway can stay in business in India by following the same set of guidelines. Amway sells its products in India through direct selling also to avoid to hassle and the cost involved in large advertisement campaigns. But even this did not result in lower prices for the end customers. If you are not interested in doing the business but want to use the great quality products then see Amway India Offers and Discounts
Amway India – Extreme High Prices
In the year 2013, during a raid at the offices of Amway in Kochi, the Crime Branch came across a list of 119 items for which the company had been charging prices exorbitant prices which is almost 4 to 12 times the cost price. A calcium-magnesium tablet was sold by Amway for Rs.639, whose production cost was only Rs.60.76 only. Mascara costing Rs.73.14 only, was sold at Rs.445. Amway does not have retailers as their distributors sell their products directly. Therefore they have earned a maximum profit with no share to be given out as commissions to the distributors.
Unethical and Illegal Business Practices
Earlier, in 2007, The High Court of Andhra Pradesh found that Amway India’s operations, especially of direct selling, were not permissible under the Prize Chits and Money Circulation Schemes (Banning) Act 1978, as they examined the petitions. People had started buying Amway products not to use them but for the business purposes. Unlike many claims of the company, Amway products are not only produced in the special farms of U.S but also in the factories in India. I have an intelligent idea for you. How about becoming Amway member for FREE but earn good money along with discounts? See Join Amway India Membership FREE for more details
The arrest of the CEO of Amway India
Amway India was also in the process of setting up their new facility at Madurai, Tamil Nadu at an investment of Rs.550crore. The legal tracking of the company in India goes back to September 2006. After a public complaint from the Reserve Bank of India, the company’s business practices came into question. Andhra Pradesh Police raided the offices of various Amway distributors. Officials said that Amway disobeyed and disregarded the Prize Chits and Money Circulation Schemes (Banning) Act of 1979, which outlaws the pyramid schemes and other similar money circulation scams. The periodic raids continued to occur till May 26, 2014, when William S Pinckney, CEO, and Chairman of Amway India was arrested in connection with a complaint against the direct-selling firm by the Andhra Pradesh Police. He faced serious embarrassment and was arrested twice under Prize, Chits and Money Circulation Schemes (Banning) Act. He was also charged with cheating and other financial fraudulent activities. Two other company directors also faced similar charges on financial irregularities. The police seized the Amway Indian headquarters, distribution center, distributor offices, stock point, the products and the accounts as part of the investigation.