MLM Company Evaluation – JewelWay

The following article is from the MLM Insider Magazine, August/September 1995 Issue.

Line: Jewelry
Birth: November, 1990 
Home: Tucson, AZ 
Original Review: 1992 1995 
Re-review by:
Len Clements & Rod Cook
 
MLM Company Evaluation
PRODUCT: The name says it all! Since the last review, JewelWay has increased its line to over 2,300 pieces of jewelry, including watches, rings, necklaces, lockets, charms, diamonds, and pearls.
 
The variety and design match or exceed most large jewelry stores in major cities. JewelWay showcases their products through an extremely well done four-color catalog. In years past this might have been a disadvantage. Today more and more people are shopping from home by catalog. It has been one of the fastest growing areas of direct marketing. Combine NetWork Marketing with a catalog, and bingo! You have two avenues of market penetration! Is it better to have a friend of a friend drop off a bright shiny catalog, or have the evil postman deliver the same mangled by postal machinery (surrounded by bills)?
 
Quality? As good as or better than most of the mass produced jewelry on the market today. Some of the vermeil plated items caused my jewelry experts to squint their eyes and mutter, meaning it was well done. That was on the low end. The higher end has some items that Liz Taylor would wear to the opening of “First Knight.”
 
The best diamonds aren’t killer quality, but the price isn’t either. The SI2 clarity diamonds fit into the mainstream of the American market. Imperfections are small, and the color is “I” which is in the middle of the color scale. Pearls are “A” (good) or “AA” (better) quality.
 
Catalog in purse, and several samples in hand (provided by local distributor), our “Secret Shopper” took off on her mission. I have to explain the qualifications of our “Secret Shopper.” She wears a five carat wedding ring that is worth more than the annual budget of most third world countries. The rest of her jewelry matches. Her poverty stricken husband stays that way not because of the jewelry, but because of her 24 hour body guards. When she walks in a jewelry store, the staff lines up and salutes. No covert jewelry shopping for her! She walked in, whacked the jewelry catalog (and pieces of jewelry) on the counter, and said, “Match this. What does it cost?”
The bad news is that the JewelWay silver jewelry did not fare well in San Antonio. Why? San Antonio is the gateway to Mexico and has some of the best silver artisans in the world. The competition beat out JewelWay silver. Not by a lot, but still no winners in silver. Other parts of the U.S. and Canada probably will do better.
 
The gold items are a different story. At retail prices they held their own with discount stores such as Service Merchandise and Zales. Some items lost, but at a narrow margin. Against most of the retail stores JewelWay gold and diamond articles won the majority of the time. Not by any killer margins, but enough to convince our critical “Secret Shopper” that this was in no way an MLM scam (she did the expose on “little Black Hats” in Amway). The picture changes though when you whack off the 30-45% markup the distributor gets. With that to play with, the typical distributor should be in good shape. No bargains, but a customer doesn’t have to get in a car, go to a mall to buy a ring, then lose it to a robber in the parking lot! Remember the “Popcorn Report?” Faith Popcorn said in her book, “For the first time in the history of mankind, it is more dangerous to be in the city than the wilderness!”
 
Returns are tough, but fair. You can get 100% of your money back through your local distributor during the first 15 days. Then it drops to 50% the next 45 days and then down to 0%. Warranty is lifetime with a $10 service fee, which matches or exceeds national chain store service.
 
JewelWay ships directly to the customer, if desired. The distributor can deliver from their own stock, but why? Ship¬ping is less than paying sales tax in most states. The best of both Marketing channels right? NetWork Marketing and catalog sales!
 
Now comes the Killer! JewelWay says product sales must be for retail purposes. They repeat this time and time again in their literature. But what if, just what if, you as a distributor purchased your favorite piece of jewelry out of that catalog for display and sales purposes? What if you put it on your schedule C (man’s best friend, forget the dog) when tax time comes? Depending on your tax bracket you would come out paying 30% of wholesale or less! When I asked our “Secret Shopper” about this, her eyes suddenly gleamed. She demanded a JewelWay distributor application. I quietly asked her how she could visit the IRS during an audit and justify spending the national budget of Tibet on display jewelry, without selling any. She’s still mulling that one over!
 
The jewelry rates an A-. That is a strong A- . It would have come out an A except for the silver items getting hit.
 
MARKET: We are rating the size of the market who will buy this product, from this company. We aren’t rating the market size of those who want this kind of product. The North American market is estimated at $30 billion a year. Interesting that the jewelry and the vitamin market are running so close to each other!
 
 
We studied the bonuses of the top twenty in JewelWay for the quarter preceding Christmas and the one in which Christmas fell. There wasn’t a dramatic difference! In fact we were surprised! We expected incomes to really jump at Christmas time!
 
Consumability is the major factor in rating the market for a product. Jewelry is very difficult to eat. A gruesome fact, but the majority of diamonds that leave the market each year are through burials of women. The six occasions when the average person buys jewelry are Christmas, Mother’s Day, Birthday, Anniversary (or wedding), and Valentines Day. The sixth is if you happen to forget one of the occasions in the previous sentence! Women buy jewelry based on emotion (we think it is genetic) and they like to do it as often as possible! A statistic we were given by JewelWay said women will buy or get a fine piece of jewelry every three years. We would add to that, if the budget allows.
 
The FDA isn’t going to hit JewelWay; jewelry isn’t even in their ball park! That contributes to one less NetWork Marketing threat. The primary regulator is the open market.
 
A number of neophytes buy jewelry when they join the organization. Later they drop out just like in any other NetWork Marketing program. That evens out the sales line for what otherwise might be peaks and valleys. Some guys may join just because they are getting married and want a ring at discount along with an opportunity! That is a far thinker!
 
Many jewelry stores offer easy credit, no down, and six months before you start paying on a wedding ring. This competition narrows the market for JewelWay in some areas. The good news is that JewelWay now processes credit cards. They include a nifty (but expensive) hand held credit card processor in their kit. This is a vast improvement over the 1992 review.
 
Line up 100 people and ask (a) who is going to buy a food in the next month and then ask (b) who is going to buy fine jewelry? Food would beat out jewelry by a wide margin. Jewelry is not consumable which is what builds long term income in NetWorking. Food would be an “A” market. Jewelry, which in general most would consider a high ticket luxury item, is about a B.
COMPANY: “Out of the fires of hell comes forged steel.” That quote comes from at least three sources in classical literature. The company principals came through those fires via American Gold Eagle and Fund America. They were major leaders in those organizations. A major leader knows pain and agony when his or her program goes down. One qualifier, if you like your fellow human beings! We think that the principals in JewelWay fall into this category. After an exhaustive review of their literature and after talking to corporate members, we feel their heart is in the interests of their independent distributors. Even JewelWay’s clause in their Policies and Procedures booklet (impressively small) is ah, well, casual about distributors joining other companies. With the rabid actions by some of the “big brother” companies in MLM, JewelWay looks like a Saint.
 
Since the review in 1992, the company has grown by about 45,000 distributors. In 1992, the majority of the distributors were in Arizona. Today, the majority are in the Western U.S. and Canada~ approximately one-half of the top bonus earners are now out of the Canadian Subsidiary Corporation. A Boomer? Not in comparison to the fast runners in NetWork Marketing. On the other hand we have seen those boomers implode in their second and third year. JewelWay keeps growing at a solid steady pace.
 
Considering the “evil eye” that gold gets from regulatory agencies, JewelWay has done well. Anything that is shiny or sparkles attracts the wrong kind of attention. To the best of our knowledge, no state Attorney General has slammed them. The Arizona Attorney General reports no complaints on file. The Tucson Better Business Bureau gave JewelWay a clean bill of health.
 
Because of the nature of the beast (Gold) and the way the company works hard to keep on the straight and narrow, we have to give JewelWay Corporate and Company a B+.
 
SUPPORT BASE: JewelWay has an excellent distributor kit. It is much better than in 1992. In fact, it ranks among the best in the industry. The training manual in the kit is extremely well done. Their policies and procedures manual is smaller than Big AI’s booklet, “Are You Walking Past a Fortune.” JewelWay uses SHELTER FROM THE STORM, as one of their recruiting videos, which is a good choice. The other training tape SILENT GIANT died in my new $2800 video mastering machine, leaving me a little upset while I fished the tape out piece by piece. Two audio tapes make up an excellent training set called the FIRST STEP. This coupled with the quality training manual, means if you were stranded on a desert island you could probably launch a business with only the distributor kit and a telephone. But don’t call the home office, the automated call routing system is unimpressive.
 
What is impressive is their corporate training schedule. Their Top distributors really have to work for a living! Their corporate folks do get out of the office! They all have to, a requirement is that all new distributors have corporate sponsored training before they can sell or sign anybody up! That keeps government hacks off their backs. A neophyte gets told what not to say and do!
The JewelWay automated call routing system is irritating if you are trying to find corporate. Having the training video disintegrate in my new mastering machine was irritating. In summary, the JewelWay support base is almost a B+ but gets a B because little things count to distributors.
 
COMPENSATION PLAN: JewelWay uses a Balancing Binary Lateral (BBL). The plan requires some thought and work as do most BBL’s. JewelWay calls income/business centers, “sales increments.” To activate a sales increment (center) you need a personal sales volume of $250. To open up your first three sales increments (centers) would cost $250 x 3 = $750. JewelWay has one interesting feature: No front end loading. However, if you want to be a bigger player, you can open up seven sales increments for 7x $250 = $1750. This could perhaps, be called a top load? No criticism intended here. Distributors need to have freedom of choice to be big or little players. From our survey of regulatory agencies there seems to be little or no abuse of the top loading feature.
 
001
pays when 002 and 003 match
set $$ amounts
 
LEGS AB          LEGSCD
         00                    00
         00                    00
         00                    00
         00                    00
         00                    00
         00                    00
         00                    00
         00                    0
         ox                    0
         0
         0
         0
 
figure 1 Binary Graphic:
LEG A generates 10 sales of $250 plus
LEG B generates 2 sales of $250. On the right side
LEG C generates 8 sales of $250 and
LEG D generates 4 sales of $250. The 001 Sales Increments commission check of $500.
 
Getting paid! To collect your first bonus check ( pay check), you will need 12 sales of $250 or more (per week) on each side of a leg to kick out $500 from the 00 1 sales increment (center). A distributor can earn more money and a bigger title each week with increasing productivity.
 
Figure 2 Binary Payout
Earnings Per Sales Increment Center based on sales per matching leg at $250 per sale
 
sales per leg          amount of bonus         title

12 x $250 = $3000       $500            Silver Executive
24 x $250 = $6000       $500            Gold Executive
36 x $250 = $9000       $500            Platinum Executive
 
total $1500 one week plus bonuses
This is with just one sales increment center. Remember if the illustration above is the 001 sales increment position, all those same sales are being accumulated on the 002 and 003 sales increment centers. When those centers match, the amounts paid will be the same as in the illustration above.
 
How does the company keep from going broke? A distributor may have one leg three miles deep and another only two people deep. They are out of balance. The beauty (and also deficiency) of the Balancing Binary Lateral is that it makes people work very hard to keep their short leg growing. The promise of the pot of gold is there, all they have to do is work. That’s why the BBL is the growth compensation plan of the 1990s. No freeloaders invited!
 
JewelWay finishes weekly on the sales increment (centers) that are paid. Excess sales under the balancing criteria are flushed away on Friday when the pay totals are calculated on the paid sales increment (center). Like other Balancing Binary Laterals in NetWorking sales increments (centers) that don’t draw a check save the unpaid balance if the distributor is qualified. The sales increment flushing (on paid increments) allows the company to payout consistent commissions. The payout on each bonus level is 8.33%. That is up to 25% commission income on each center. If this is a 001 center that means it shares in a 100% of the volume generated and paid in the other two leg’s sales increments (centers). The argument could be made that 002 and 003 can pick up 12.5% of the same money on the outside legs. That would result on a 50% payout on the same amount of money! Does this work in reality? Yes, if all legs are maxed out – a rare occurrence.
 
Did I forget the Diamonds? This is the top Distributor bonus level in JewelWay. The most interesting part of their quarterly requirement is that a Diamond has to generate 25 retail sales to non-representatives. That keeps the emphasis on retailing which keeps Attorney Generals happy. The rest of the quarterly requirement is $30,000 in sales and leadership bonuses. No more than $4000 can come from a single weekly check. That means that a Diamond has to be consistent. If they are and make Diamond they get 1 % of the gross sales quarterly sales by JewelWay.
 
The range of income for U.S. top reps was approximately $33,000 a month for#1 down to $13,000 a month for #40. Not killer incomes by MLM standards, but respectable.
 
Other bonuses are paid to Silver, Gold and Platinum Executives that are based on the sales bonuses of people in the legs below them. There is the ever popular car bonus and the latest twist in MLM, a house bonus.
 
JewelWay has a legal way of stating average income earnings: “The income earned by the typical Representative is $2,000 to $3,000 per year. A typical Representative is a Representative who has been involved with in the business one year or more.” That truthfully eliminates the people that sign up and drop out. Those would skew the statistics much lower. This statement may fallout of grace. Some states are pushing for a “truth in recruiting” disclosure that would include all distributors.
 
Re-entry AKA JewelWay Placement certificates. This is how you perpetuate yourself as your downline goes ever deeper! Every week that an Executive earns a sales bonus she/he gets another certificate. This is tremendously generous, but most people who have worked BBL’s with this feature have found they have a drawer full of certificates. You can work only so many positions!
 
Why JewelWay changed the name of their business centers to increment centers is beyond us. They were part of the establishment of the binary system in NetWorking. Why confuse the standardized language they helped create?
 
As far as binaries go, JewelWay’s pays out more than others, but there is a trade off. As with most binaries, if you don’t build your legs symmetrically, you could lose more than you gain due to liberal flushing. Be prepared to start with at least three positions and do some strategizing. Also, get ready to do some heavy retailing. As a result, the JewelWay comp plan rates a very liberal B-.
 
REPORT CARD: A-/B/B+/B/B- GPA = 3.12
3 months ago

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