Amway to take business to Web

Amway, whose army of independent distributors has made it synonymous with the direct-sales model, confirmed today that it is launching a consumer e-commerce venture.

As previously reported, the $5.8 billion company has been working on plans to create Quixtar, a site where consumers can buy Amway and other products at retail prices, and Amway distributors can purchase the items at wholesale prices.

The site, scheduled to launch on September 1, is an attempt to replicate Amway's tiered marketing model on the Internet without alienating its distributors, who sell the company's products, including cosmetics, household cleaning supplies and nutritional supplements, directly to consumers. The products are not available in retail stores.

Quixtar will add other offerings to the goods it sells, such as phone and financial services. Amway is already a partner with MCI WorldCom, selling long-distance calling service, and Columbia Energy, which markets residential electric service, said Ken McDonald, regional vice president of Amway North America.

Amway also hopes the site will expand its distributor network by giving potential distributors an easy way to sign up online. They must still be referred by an existing independent distributor to obtain a code that provides access to the wholesale section of the site, however. That model closely follows Amway's tiered offline distribution network.

Amway is also going to give its independent distributors credit for online customers who visit without a referral. "Should someone cruise in, we'll take their order and assign the credit on a random fashion to a business owner located relatively close to them," McDonald said.

Although Amway has distributors throughout the world, Quixtar membership will initially only be available to distributors in the United States and Canada. The company said "business leaders" among its almost 1 million U.S. and Canadian distributors have endorsed the plan.

Those same distributors will drive traffic to Quixtar, giving it an advantage over other e-commerce sites, according to Amway. "Business owners will talk to friends and neighbors, and those people will be more inclined to visit the site and help out their friend or neighbor," said McDonald.

Already, he added, more than 150,000 people have registered with the Quixtar promotional site, Countdown9199.

Amway is devoting 100 employees to Quixtar and expects that number to grow quickly. "We're going to be profitable right out of the box," said McDonald, who cited the company's 10 distribution centers in the U.S. and Canada as another way for the company to keep costs low.