Quixtar/Alticor Results 2005

Alticor, the parent company to Amway and Quixtar reported a 3.6% rise in sales for 2005.  Alticor's growth slowed markedly from the 26% rate recorded last year, fueled mainly by growth in China.

Chairman Steve Van Andel attributed the leveling off of sales in the world's most-populous country to changes in Chinese laws affecting direct sales.

"Because no one knew exactly what the new rules would look like, they just stopped selling for a while," according to Van Andel.  With the pyramided compensation plan in question, people probably stopped recruiting other sales people.  If sales were flat in China because people we waiting for the outcome of the new rules, sales will most likely fall as the seductive pyramiding feature of the Amway plan has been eliminated.

Quixtar, Alticor's replacement for Amway in North America, suffered its first set back as it was hit with a 3.8% sales drop, despite having product price increases and recruiting over 150,000 new distributors.   Quixtar minimized the Quixtar sales drop by rounding down the drop to 3%, and saying that they are still above the billion dollar mark, even if it is only by a hair.   Quixtar's North American sales are still below Amway's North American sales in 1999. Quixtar's sales from Partner Stores are still below their debut peak in 2000.

Quixtar reported partner store sales were a record $76 million, or just $6 million higher than 5 years earlier.  The Quixtar partner store sales growth rate since the year 2000 is just under 1.7% per year; hardly keeping up with inflation. 

IBO's pay-out decreased from 31.9% to 30.4%  of sales. The pay-out margin decrease was probably due to fewer Diamond and Emerald Growth bonuses since sale actually fell 3.8%.

Distributors earned $30 million less in 2005.  Quixtar reported gross pay outs to IBOs dropped from $373 million in 2005 to $343 million in 2004.  Bonuses fell 7.5% versus the 3.8% sales drop.  of $343 million but did not report the number of IBOs who shared in the pay outs. Quixtar still reports that the typical IBO earned $115/month; the same as for the previous five years.  Quixtar did however make public that 380,400 IBOs shared in the 2004 pay out of $373 million or just $82/month. 

After 6 years, WWDB's DuncanBrad Duncan's and PuryearRon Puryear's prediction that Quixtar will be a $100 billion company in 5 years is still far from view. Despite completely cannibalizing the sales from the North American Amway business opportunity, Quixtar just surpassed 1% of that prediction and has not yet surpassed Amway's 1997 North American sales peak.

Quixtar Q12 Business Statistics reported in August 2004 and October 2002 Quixtar Emerald Report 128K

1. 67.8% of IBOs who registered in 2003, did not renew in 2004.
2. The average IBO had just 0.23 members and clients registered
3. Only 18.4% of IBOs registered even one person.
4. The average IBO had 38.5 PV/month. (100PV is shown in the plan)
5. 65.6% of IBOs never once attained 100 personal PV in the previous 11 months.
6. 21.5% of IBOs had a ditto delivery profile
7. Only 1.9% of Members and Clients had ditto delivery profiles.
8. The average PV point cost $2.70.

Derivations from the data:

A. The average IBO had $104/month in sales.
B. There were 881,410 IBOs. ($1,100 million/$104/month)
C. Each PV point generated about $0.92 in bonuses.
D. 38.5PV would generate about $35.28 in bonuses.

What are all these statistics of low average IBO sales, and high turnover really saying? It says to me that the typical consumer can't find enough deals or superior value through Quixtar to shift their buying habits from where they currently shop.

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