25 reasons Avon Products is a pyramid scheme

tony

25 reasons Avon Products is a pyramid scheme 

Avon Products was previously hailed as an opportunity for people to earn income from beauty products but with further scrutiny of the business models in play, the company has proved to be a pyramid scheme in disguise. There are many pointers to that reality and they include:

Hidden handling fees

Distributors are charged by the company for any order that is placed and the company disguises it as handling fees for the order. This is a way to earn money from the unsuspecting distributors.

Sign up fees

Distributors are asked to pay signing up fees for them to join the team of distributors and get access to discounts when ordering from the company.

Encourages sales people

Avon encourages individuals to find sales people who can spend money below them which results in them climbing to the upper tiers of the company distribution system.

Costly to order alone

The ordering system for Avon makes it very costly to order alone which makes it the business of the individuals in the upper tiers to ensure they consolidate the orders of the lower ranked distributors. This is normally a ploy by the company which earns the higher ranked people commissions owing to the volume of the order.

Recruitment is key

All individuals looking to join Avon are instructed from the onset that recruitment is the ultimate way to make money from the company.

Pressure is on signing first agreement

The company usually entices the unsuspecting individuals by pressuring them to commit to the initial agreement after which an individual is usually tied to the company and driven to spend I order to earn.

Big orders earn big commissions

With Avon products, big orders translate to big commissions which incentivizes the distributors to spend more to earn the bonuses.

Distributors deal with reps

The top tiers of the company do not handle the daily running of the distributor system. Reps are the ones charged with handling any operational aspects that concern the pyramid system and how clients relate.

Emphasis is placed on inventory package

Upon signing up, a distributor is pressed to take up the inventory packages which indirectly earns the individuals in the upper tiers a commission.

Focus on buying to remain active

Whether a distributor is selling the products to a consumer or bringing in new clients, the focus is always on making the individual buy from the company to remain “active”.

Commissions for team orders

The individuals in the top tiers are given bonuses for team orders that are made by the individuals below them.

Minimum spending to move a tier

Avon dictates that there is a minimum amount one has to spend if they are to rise one tier above where they are and this amount is usually hugely significant in terms of worth.

Direct selling

Consumers cannot find Avon products on the shelves of any retail store and this means that one has to be inducted into the company and its products by a distributor.

Pitch of income opportunity for sales people

The clear giveaway for Avon as a pyramid scheme is the proposition that the company is bringing individuals a lucrative income opportunity which never materializes.

Representative earnings

Avon is a company that focuses on representative earnings which conveniently boosts sales while reducing their costs of operation.

Channel stuffing

One of the major angles Avon is using to remain relevant over time is channel stuffing which is a process that offsets declining demand for products by encouraging a recruitment drive.

Non-performing stock

When evaluated against other companies, Avon has non-performing stock which indicates the unwillingness of individuals when it comes to making an investment.

Promise to earn investment back in 30 days

One of the significant pointers of a pyramid scheme, Avon promises those who sign up that they will earn back their investment within 30 days.

Earnings are tied to efforts in inviting people

This is a trickery widely used by pyramid schemes where they tie the earnings that a person can get to the efforts done in inviting people into the team.

Promise of covering startup cost through family and friends

Another of the talk that attracts clients, Avon promises those who sign up that they will be able to cover their startup costs when they bring in family and friends.

Bonuses for campaign periods

As the norm with pyramid schemes, Avon offers bonuses for campaign periods depending on team growth.

Purchase quotas for new recruits

The most innovative way pyramids use to ensure new recruits work tirelessly is to set up purchase quotas that must be met if any bonuses are to be received.

No records of retail success

There is no pyramid scheme that offers clear figures and records of the retail opportunities and success that the company has experienced and Avon is not an exception.

Compensation is on product volume and not retail sales

Companies operating as pyramid schemes structure compensation to be dependent on the volume of product bought and not the capacity of retail sales.

Diminishing returns

Avon is experiencing diminishing returns which is the result of an unsustainable business model that depends on recruitment and not product sales.