Friday, September 24, 1999

Selling-giant Amway makes leap online

Quixtar site also offers other firms' products

The Associated Press

        ADA, Mich. — The soaps, cosmetics, vitamins and friendly neighborhood sales force that made Amway Corp. into a billion-dollar success story are now just a few computer keystrokes away.

        The direct-selling giant launched Quixtar, a new e-commerce site designed to sell its and other companies' products, on Sept. 1.

        “We're looking at the biggest change in 40 years” since Amway was founded, said Ken McDonald, a senior vice president. “We're going to have the ability to combine high-tech ... with high-touch, which is what the independent business owners provide.”

        But the change didn't come without some growing pains. The volume of people logging on to quickly overwhelmed it, causing it to jam and making it difficult to buy anything.

        Mr. McDonald said the problems are being corrected, and he isn't worried. Quixtar has since added 24 new servers to deal with the demand, and he estimates there were $1 million in sales during the site's first two weeks in operation.

        In many ways, the new site is still classic Amway. The company's freelance sales force, which Amway calls independent business owners, will continue to sell products to their friends and families as they always have, but with the option of selling products online for Quixtar.

        Online customers will be asked to identify their Quixtar independent business owner so commissions are credited. Those who come to the site without a dealer will pick or eventually be assigned one.

        There is one significant change, however. Instead of using the word “Amway” in the site's name, the company chose to go with Quixtar and start a new sister division by the same name to manage it.

        Mr. McDonald said the Quixtar name is not intended to distance the Web site from Amway. Rather, he said, it's an effort to reflect the breadth of non-Amway products that will be available, such as electronics, jewelry and other products.

        “We're convinced we can make more money ... by building two businesses that are different than just by tweaking one business,” Mr. McDonald said.

        The Federal Trade Commission cleared the company 20 years ago of charges that its sales structure was a pyramid distribution scheme. But the controversy about direct selling persists.

        And, in recent weeks, Web sitessuch as, have been abuzz with postings from Amway and Quixtar supporters and detractors.

        Scott Moore, a University of Michigan School of Business professor, said Amway is not the first company to use a different name for its e-commerce site.

        The idea, he said, is that a new name will attract customers who might have been put off or less intrigued by the old name.

        “With the name Quixtar, you wonder who is it? You don't walk in to this thinking Amway,” Mr. Moore said. “This could appeal to ... someone who doesn't like Amway or has a negative feeling about Amway.”

        The real challenge will be whether the one-on-one salesmanship central to Amway's success can make the transition to e-commerce, said Chris Merritt of Kurt Salmon Associates, an Atlanta-based retail consulting firm.

        Amway dealers will have a choice of remaining traditional independent business owners or joining Quixtar, where they can use the company's Web site as a platform to build their own e-commerce site.

        So far, 40,000 people, including many current Amway dealers, have signed up to be independent business owners for Quixtar, according to Mr. McDonald.

        Amway is privately held, and won't discuss costs for Quixtar, other than to say early sales and interest have been above and beyond their expectations.


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