Amway’s Web Venture Enjoys Strong Launch Despite Glitches

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, but the change didn’t come without some growing pains.

The volume of people logging on to https://www.Quixtar.com quickly overwhelmed the site, causing it to jam and making it difficult to buy anything.

Senior Vice President Ken McDonald said the problems are being corrected, and he isn’t worried. Quixtar has since added 24 servers to deal with the demand, and McDonald estimates that 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 friends and relatives, 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 new site’s name, the company chose to go with Quixtar and create a sister division by the same name to manage it.

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,” 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.

Last year, China banned all direct selling because of general concerns that such operations promote illegal activity. Amway has since set up special retail stores there but is still prohibited from direct selling.

And, in recent weeks, Web sites such as https://www.deja.com 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 into this thinking Amway,” 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.

Direct sellers Tupperware and Avon already sell their products online, but Quixtar is designed to showcase more than Amway products.

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, McDonald said. Paul Miller of Raleigh, N.C., is one of them.

“The way people are so busy . . . what we’re seeing with e-commerce is that’s where people are going,” said Miller, who sold Amway products for 25 years before joining Quixtar.

“It’s the same company but a different look. This is sort of an upscale version,” he said. “You can already go shopping on the Internet. Now you can make money on the Internet.”

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

Indeed, the early numbers for the traffic on the Web site appear strong. Customers have spent a weekly average of 47 to 50 minutes on the Quixtar site since its launch, according to Sean Wargo, an analyst at PC Data Inc., which tracks e-commerce activity.

“If you rank the week ending Sept. 11 by average time spent, Quixtar would be at No. 20,” Wargo said. “I would say that’s pretty high. The sites in the top five are auction sites, gaming sites, Yahoo and other finance sites.”

He also said Quixtar visitors who were unable to get on the site because of the initial problems may be willing to give the site a second chance.

That’s a sentiment McDonald shares, despite some of the early complaints about Quixtar.

“People went to the site because of their relationship with an independent business owner,” he said. “They’re going to keep going back because of their friend’s recommendation, and people have read enough about the Internet to know these types of problems aren’t uncommon.”