Why isn't it appropriate to compare Wal-Mart with Amway? I think
you grossly underestimated the scale and the range of products that
Wal-Mart is selling. Wal-Mart, in fact, sells everything from
groceries to household products, from electronics to CDs/DVDs, from
books to toys, and from jewellery to pharmaceuticals in their
hypermarts! In fact, the things Amway sells are parallel to what
Wal-Mart sells. As long as they sell similar products, how could it
be an unfair comparison? It's not as if we are comparing McDonalds
to Charles and Keith. MLM is just a sales model, not an isolated
industry.
Wal-Mart was founded in 1962 while Amway was founded 1959, so Amway
actually had a headstart.
So how are they doing now?
Wal-Mart raked in US$256 billion of sales in the year 2004(2 times
the size of Singapore's GDP), and have actually been growing at a
rate of more than 10% a year for the past 10 years and beyond. In
the same year, they also made a pre-tax profit of US$15 billion in
the same year.
Amway, on the other hand, only raked in US$6.2 billion of
'estimated retail sales'(A term used by them since 1963), in the
year 2004. 'Estimated retail sales'? They couldn't even know for
sure themselves how much worth of products they themselves have
sold!? Furthermore, they have been languishing at this level for
the past 10 years!
For every dollar worth of products that bought from Wal-Mart, 77.4c
of it goes to the cost price, and that means Wal-Mart keeps only
22.6c of it. After paying the controversially low wages to their
employees, rentals and everything, the actually earned 5.8c for
every dollar of products they sold, after taxes, the figure would
further reduce to just 4c.
So how does Wal-Mart earn so much, when they keep so little of what
they receive? The answer is simply 'volume'. They buy their
products in bulk, in order to get them at a lower price than other
competitors, so that they can pass the benefits to the consumer.
And with such low prices, and good service, people couldn't compete
with them. Just think of Kmart, which got beaten badly, and
declared bankrupt. If you've read the papers and TIME/Newsweel(not
tabloids ie new paper), even bookstores and toy specialists such as
toys 'r us are also struggling to keep up with them now.
How could Amway compete with them, when commissions to agents
actually marked up the price much higher? If Amway agents were to
compete with Wal-Mart, they probably would have to undercut their
commissions such that they don't earn enough to feed themselves.
Firstly, Amway, as long as they are selling other people's product,
can't get their goods at the same competitive price as Wal-Mart
does, because they don't have as much of a bargain power as
Wal-Mart. Secondly, as long as total commissions to the so many
layers of agents is more than 16.8%(a high likelihod in MLM; 22.6 -
5.8 = 16.8 ) of the selling price, they will also fail to compete
with Wal-Mart in terms of staff and operating costs.
Wal-Mart worried of Amway? 
It's not
an apple to orange comparison. More like an elephant to mouse
comparison. 
Of course, there probably will plausible scenarios that MLM may
work. But companies should decide their sales model accordingly to
the products they are selling, and the industry they are in, to
best serve the consumer. Many MLM start-ups, at least in SG, are
either scams or just MLMing for the sake of MLM.
