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| Company type | Private |
|---|---|
| Industry | Multi-level marketing |
| Founded | 1999 |
| Headquarters | Ada, Michigan |
| Key people | Steve Van Andel Doug DeVos Jim Payne |
| Website | www.quixtar.com |
Quixtar is a multi-level marketing or Network marketing company, founded on September 1, 1999. It is privately owned by the families of Rich DeVos and Jay Van Andel through Alticor which is the holding company for Amway, Quixtar and a manufacturing and distribution company Access Business Group. After the launch of Quixtar, it has replaced the Amway business in United States, Canada and the Caribbean, while the Amway business continues to operate in other countries around the world. Products distributed by Quixtar include Nutrilite dietary supplements, XS Energy Drinks and Artistry cosmetics.
In 2006, Internet Retailer ranked Quixtar.com as the number one site in the "health and beauty" category and 18th largest e-commerce site (for revenue) overall. In a survey of the top 40 e-commerce sites, ForSeeResults ranked Quixtar.com equal 5th for customer satisfaction. Total Quixtar sales for fiscal year 2005 were $1.058 billion, slightly down on the previous year. Web generated sales of $753 million were up less than 1% from sales of $748 million in fiscal 2004. $76 million in revenue were generated for Quixtar’s Partner Stores, a record.
Quixtar is also a member of the Direct Selling Association and the Better Business Bureau. The BBB Reliability Report for Quixtar can be found here.
Some aspects of the company and its connected distributor organizations have been controversial, in particular the sale of "Business Support Materials" (books, recordings, and the like) to distributors.
Products
Quixtar is the exclusive distributor of Alticor products in the United States and Canada, including Nutrilite dietary supplements, XS Energy Drinks, air and water purifier and Artistry cosmetics.
Quixtar also markets through their website products from partner stores such as Dell, IBM, Circuit City, Barnes and Noble, Bass Pro Shops, Wireless Marketplus, Choice Hotels, Disney Store, Office Depot, Shop.com, Avis, PacSun, FTD, Bank of America etc. Quixtar utilizes the Employee & Affiliates Purchase Program discount pricing structure for purchases from most of these third-party partner stores and purchases from some of them may not gain the P/V & B/V normally associated with an IBO's purchases.
Business model
Quixtar is the successor to the Amway business in the United States and Canada. In 2001, after the majority of Amway IBOs ("Independent Business Owners" is the term used for Quixtar distributors) had transferred to the new company, Quixtar completely replaced Amway as the marketing venture for Amway/Alticor products in North American regions. The Quixtar business model differs from the Amway business model in many aspects, such as the way distribution is performed. Rather than ordering product from a distributor who delivers them in person, Quixtar customers place orders online and have the products shipped to them directly. This new method has altered the Amway business model by allowing IBOs to stop spending time distributing and allowing them to focus their energies on building their business, which is developing communities of other IBOs.
The way to buy products at Quixtar's web site is with a referral number from an IBO. In addition Quixtar gives IBOs the option to create free personal website to help grow their business. Quixtar offers site pages that can be personalized to create Health, Beauty, Health & Beauty, and/or Gift & Incentive e-commerce site. The referring IBO then receives the retail/wholesale difference (usually upto 30%), and a percentage ("bonus") of the cost of the sold goods (up to 25%), with Quixtar-exclusive products yielding a higher bonus per dollar in PV/BV Point Value and Business Value. Quixtar offers a wide range of products for its IBOs to purchase for personal use and/or to sell to customers through Quixtar.com and IBO personal e-commerce sites.
Formerly, people could join Quixtar as "Clients", "Members" or IBOs. "Clients" would pay retail price for products and services from Quixtar.com, "Members" would pay a reduced price but would not have the ability to receive bonuses from Quixtar. As of July 2006, Quixtar eliminated the "Members" option, and "Clients" are now referred to as "Customers". IBOs pay a registration fee and build their businesses through retail sales to customers, referring business to Quixtar.com, and by helping other IBOs build similar businesses. Their earnings are based on their business' sales and the volume of sales and purchases of IBOs registered by them.
The structure of a Quixtar organization is hierarchical, but an individual can earn more than those who bring them into the organization. Pin levels are the same as in Amway. There are several major pin levels in the model - Silver, Gold, Platinum, Ruby, Emerald, Diamond, Executive Diamond, Double Diamond, Triple Diamond, Crown, Crown Ambassador. Each level denotes a particular level of success in building their IBO business.
In the 1979 ruling In re. Amway Corp., the Federal Trade Commission determined that Quixtar predecessor Amway was not an illegal pyramid scheme because no payments were made for recruitment. In addition, Amway (and later Quixtar) rules required distributors to sell to at least 10 retail customers per month, or have $100 in product sales, or a total of 50PV from customer purchases in order to qualify for bonuses on downline volume. Quixtar IBOs are required to report this customer volume on Quixtar.com or they do not receive bonuses on downline volume. Furthermore, an IBO must also personally sell or use at least 70% of the products personally purchased each month. The FTC established that these rules help prevent inventory loading and other potential abuses of the marketing model.
Quixtar reports that the average income for an active Quixtar IBO in 2005 was $115 a month. The FTC has required this information to be provided to all prospective Quixtar business owners since the 1979 FTC ruling clearing the Amway business model as legal (see litigation below). However, the order was violated with a 1986 ad campaign, resulting in a $100,000 fine . It is documented in The Quixtar IBO Compensation Plan and on a Quixtar website. The "average income" is calculated using all "active" IBOs, which in a 2001 survey represented 66% of all recorded IBOs. An active IBO under this survey covers a wide range of commitment, however, as any IBO who attempted to make just one retail sale, or presented the Business Plan at least once, received a bonus check, or attended a company meeting once in the previous year. The average annual Quixtar income for an IBO that qualified at the Platinum level in 2005 (0.1683% of IBOs) was $47,472 and for a Diamond (.0120% of IBOs) it was $146,995. The largest single annual bonus (in addition to monthly incomes) for a Diamond was $1,083,421.
Controversy
In 1983, Rich DeVos, one of Amway's founders, made recordings which, among other things, communicated his displeasure with several issues regarding some of the high ranking distributors/IBO's. These recordings are entitled "Directly Speaking" and were addressed to Direct Distributors (now called Platinums), who are considered leaders with various responsibilities for their downline group. Rich DeVos expressed concern about the level of income on tools (tapes, CD's, books, and functions) compared to the income on Amway products that the high level distributors were making. He stated his legal team was concerned if the tool income exceeded 10% of their Amway income, but he could accept twice that amount.
Amway cofounder Rich DeVos and some distributors like Dexter Yager appeared in a 1982 CBS 60 Minutes show. A 1985 Forbes magazine article quoted Dexter Yager as stating that about 2/3 of his income is from tools.
In 2004, Dateline NBC aired a report, alleging that some high-level Quixtar IBOs make most of their money from selling motivational materials rather than Quixtar products. Quixtar declined to respond on camera, instead publishing an official Quixtar Response website. Quixtar states on its response site that Dateline declined their request to link to the site.
Much of the controversy highlighted by Dateline is in regard to some of the affiliated companies that support Quixtar IBOs rather than the Quixtar company or business opportunity itself. These companies, dubbed Amway/Quixtar Motivational Organizations (AMOs or AQMOs) by critics, supply Professional Development Programs (PDPs) and Business Support Materials (BSM or tools) to IBOs. The companies are generally owned and operated by successful, high level IBOs, separate from their Quixtar Independent Businesses and the Quixtar Corporation. Bill Britt, the owner of the support company highlighted in the report, and other high level IBOs in his organization declined to be interviewed on-camera. Their lawyer stated in a letter to Dateline that the amount of income made from tools was not available.
During the registration process for a new IBO, Quixtar contracts clearly inform prospective IBOs that BSM are optional and that the producers and sellers of the BSM may make profit or loss from their sale (like any other business). This is also publicized on Quixtar websites. Quixtar also requires the buy-back of any defective or unwanted BSM within a reasonable time frame. In a video posted on the Quixtar Facts website, Quixtar explains the details from their perspective.
One affiliated company, known as TEAM or Team of Destiny was founded in 1999 by Michigan businessmen Orrin Woodward and Chris Brady. According to a 2006 article, Woodward recommended buying Quixtar products even you don't need just to reach higher levels within his company. He is quoted as saying: "It got to a point where, if I have to buy these products and bury them in my back yard, I'll do it for two years. I'm not saying do bury them, but it made sense to me." The article goes on to state that the Ohio Attorney General's office has received a number of complaints since TEAM pitch meetings have occurred in that state.
In 2006, Quixtar, in partnership with the IBOAI (IBO Association International) launched the "Quixtar Accreditation" program in order to address concerns about the companies that provide BSM to Quixtar IBOs. North American Diamonds (high-level IBOs) and their associated training companies may apply to Quixtar to be accredited by the corporation. Among other things, accreditation specifically states that promotion of particular religious or political viewpoints is unacceptable. Additionally, accredited programs must agree to a range of other guidelines, including "full" transparency in any compensation paid for "tools". The "full" transparency only applies to the IBO's who are participants in the tool income, for most groups this means Platinums and above, representing a very small percentage of IBO's. Accreditation lasts two years and is enforced through reviews of materials and surveys of IBOs. The full guidelines are listed in the IBO Communications Platform. In April of 2006 eFinity became the first Quixtar affiliated support organization to receive accredited status.
Quixtar is currently involved in litigation with the tools businesses of Former Crown Distributor Kenny Stewart and Double Diamond Brig Hart. There is another class action lawsuit in California that has been acknowledged by Quixtar.
Some current and former Quixtar IBOs question the merit of the company and are seeking legal action. Former Emerald Eric Scheibeler accuses the company of fraud and mind control practices. He filed a suit against Quixtar, which was referred to arbitration.
Promotion
Athletes who have promoted Quixtar or its products include Jamaican sprinter Asafa Powell, heavyweight boxer Evander Holyfield and the NFL player Emmitt Smith. Tim Foley, a member of the undefeated 1972 Miami Dolphins, is a Quixtar Founders Crown Ambassador.
Author and leadership expert John C. Maxwell, who writes leadership books including The 21 Irrefutable Laws of Leadership, is known to support Quixtar support organisations such as Worldwide DreamBuilders and co-authored a book, Becoming a Person of Influence, with Jim Dornan, Quixtar Founders Crown Ambassador and founder of Quixtar support organisation Network TwentyOne. Paul Harvey, a radio broadcaster, known for his 'The rest of the story' tagline, has long been associated with the Quixtar program that is advertised on his show.
In the summer of 2004, some Quixtar leaders allegedly launched a Web initiative designed to make their web pages more prominent in search results, aka Google Bombing. Quixtar denies wrongdoing and states that its practices are in accordance with search engine rules. Many of the comments and websites that are claimed to be part of a Google Bomb by Quixtar are actually attributed to IBO leaders who do not officially speak for, or make public relations decisions for the Quixtar Corporation.
As a guest speaker at the Quixtar LIVE! conference in 2003, Dr Phillip McGraw reportedly described Quixtar as "one of the greatest success stories in American business history.". In a 2006 settlement involving a class-action lawsuit brought against McGraw and his Shape-Up diet products, plaintiffs could receive a share of $6.0 million in Quixtar-brand Nutrilite vitamins and $4.5 million in cash.
References
- The 2006 Online Holiday Shopping Season: Winners and Losers
- Quixtar reports flat web sales for fiscal 2005, news article from Internet Retailer
- Statistics from ThisBizNow
- http://www.espring.com
- Quixtar Biz Reference Guide (PDF)
- The Quixtar IBO Compensation Plan (PDF) from quixtarfacts.com
- ^ IBO Statistics from thisbiznow.com
- http://www.quixtarfacts.com/us-en/Opportunity/success.html
- Directly Speaking, January 1983, Rich DeVos Amway Cassette Series VA-2160
- mp3 Listen to Directly Speaking II
- Behar, Richard (March 25, 1985). "Cleaning up". Forbes Magazine.
- Dateline NBC report on Quixtar
- official Quixtar Response website in response to Dateline NBC
- http://www.quixtarfacts.com/us-en/IBOs/bsmrole.html
- Renner, James (March 1, 2006). "The False Profit: There's No 'i' In Team. But There Is One In 'pyramid.'". Free Times.
- Nitro et.al. v Alticor et.al.
- http://amquix.info/pdfs/quixtar_class_action/quixtar_class_action.pdf
- http://media.alticorblogs.com/2007/01/25/ordering-the-courts/
- Quixtar IBO Tim Foley Comments About the Quixtar Business Opportunity
- Glaser, Mark. "Companies subvert search results to squelch criticism." June 1, 2005. USC Annenberg Online Journalism Review. Accessed December 1, 2006.
- http://www.lawyersandsettlements.com/case/shape_up_settlement
- http://www.metrotimes.com/%5Ceditorial%5Cstory.asp?id=9791
External links
Corporate Sites
In the news
- MiBiz article about Quixtar corporate blogging and First Circle Initiative
- CNET article about Quixtar launch
- NY Times article about Quixtar launch
- eWeek - Quixtar: Cleaning Up
- Taipei Times article about Quixtar "Ditto" Program
- Online Journalism Review Companies subvert search results to squelch criticism
- The False Profit: There’s No “i” In Team. But There Is One In “pyramid.”
- "In pursuit of the almighty dollar" MSNBC Dateline, May 7, 2004
- MSNBC reports about Quixtar 2004.