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The Changing Front Lines of Adult Commerce

The Changing Front Lines of Adult Commerce

September 18, 2013
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" Businesses have had to adapt to a quickly changing landscape from the economic downturn to the rise of Amazon. These two factors alone have impacted the adult products industry in ways that were not imagined five years ago, when we felt we were “recession proof.” -Eric Van Riper, Technology developer, Honey’s Place "

The adult industry has long been in the forefront of technological advances, from DVDs to membership sites, from editing software to programmable sex toys. In step with the producers, the industry’s retail segment has made use of technology to enhance sales. Especially in the essential area of e-commerce, they have met with great success.

XBIZ contacted representatives of four retail giants — CNV.com, ECN/IVD, Honey’s Place and Williams Trading Company—for their thoughts on how tech advances have transformed the way adult products are sold.

According to Eric Van Riper, technology developer at Honey’s Place, technology impacts retailers “in many different facets: from inventory management, reordering, sales forecasting and analytics to having an online presence. Not having all the right tools can mean the difference between success and failure.”

He pointed to some interesting statistics. “According to research firm Forrester, ecommerce will generate $262 billion in 2013, up from $231 billion in 2012. For U.S. retailers, the growth of e-commerce already accounts for 8 percent of total retail sales and is expected to outpace sales growth at brick-and-mortar stores over the next five years, reaching $370 billion in sales by 2017.”

Van Riper also provided some back story. “Businesses have had to adapt to a quickly changing landscape—from the economic downturn to the rise of Amazon. These two factors alone have impacted the adult products industry in ways that were not imagined five years ago, when we felt we were ‘recession proof.’

“Those retailers that primarily used data to understand their customers and marketing efforts saw a far less severe impact from these two major shifts. Looking for Software as a Service (SaaS) solutions is one way many retailers are pushing a lot of the work off their plates to remain relevant in an increasingly online world.”

Dave Levine, owner of CNV.com Inc. and its retail arm SexToy.com, agreed. “Local search is growing quickly and being integrated into phones. Businesses not only need a website, but one that comes up for local search. The key to that is getting listed in Google, Yahoo local, Yelp and others, and then getting some positive reviews on those profiles.”

Levine emphasized how technology has changed the way business proceeds. “The Internet brought down store prices, but things seem to have settled and now pricing in stores and online are mostly in line with each other. But brick-andmortar stores (and online stores) are all thinking—or better be—about what to do about the Amazon.com juggernaut.”

Technology, said Bob Pyne Jr., vice president of Williams Trading Company, “keeps retailers on their toes. Brick-and-mortar stores need to keep up with all the new products that the Web owners can just throw up on a website and start selling immediately. This makes communication between the distributor and the retailer much more important than in the past.

“All retailers have to be on top of their game more now than ever,” he continued. “With the number of products on the market and the increased value in technology, retailers, whether brick and mortar or web-based, need to present product in a way to make it easy for the consumer to research, recognize and in the end, purchase the product.”

Dan Shaw, WTC sales specialist, added, “Our customers are taking advantage of today’s technologies to help their business succeed. Whether it is brick-and-mortar or online stores, the ability to reach across geographic areas is easier to do making business transactions more lucrative.”

According to WTC sales manager Rich Pyne, “Most people are online ordering now, which is huge for us, this means less mistakes in processing orders. Still, one of our challenges is in convincing the more seasoned customer to order online. They still prefer the old-fashioned route.”

Social media, Internet-based, has had a profound effect on adult retailing as in every other aspect of the world we live in.

“Most traffic comes from Google,” said CNV’s Levine. “Google is starting to use social signals from Facebook and Twitter and Google Plus to affect rankings in the search engine. Social media can drive sales, but if they make you appear as an authority with conversations about your keyword, this will help you come up in Google, which is the real driver of customers.”

“Honey’s Place,” Van Riper pointed out, “has active social media campaigns ongoing through every major channel to reach our customers. It has always been that communication with customers is key. What has changed is that customers want to be communicated with when they are ready. That could mean 3 a.m.—or 3 p.m. Having a strong social media presence to let customers know what specials or information about ecommerce trends is a critical path to our success.”

Kelly Szwed, marketing coordinator for Williams Trading, added, “Social media provides an additional avenue to reach our target market as well as the potential market in a more relaxed, less sales-ey way. Facebook and Twitter create an awareness and also drive leads that might not otherwise been tapped into.”

One of the most significant recent developments in adult retailing has been the widespread and successful implementation of white-label sites.

Build The Store, the white-label platform at Honey’s Place, was the creation of Eric Van Riper. “We have a large number of features that go beyond standard adult-distributor thinking,” he said, “such as the ability to add your own products, editing existing ‘system’ products, best-practices SEO capabilities and more. Even something as simple as renaming categories can make a huge difference in organic search-engine rankings. Our customers that are using BuildTheStore.com have been greatly benefiting from these capabilities for almost a year now.”

One of the most talked about platforms in adult retail is Adult Drop Shipper (ADS), the fulfillment service from IVD and ECN. According to its director, Jamie Horne, “ADS offers a number of technology services to adult businesses, from data feeds to turn-key ecommerce solutions.

“From our perspective, technology has had a tremendous impact on retail business. Adult retailers have most definitely become part of the ‘on-demand’ customer culture. To support the buying public’s need-it-now behavior, many businesses are setting up websites or utilizing our fulfillment services to ship the product directly to their customers.

“We offer two state-ofthe-art, white-label solutions: Adult Drop Shop, a wholesale-based, fullycustom web-store option, and MyFreeSexStore, an affiliate-based platform. Both services deliver an array of features and are designed to make getting online an easy experience for business owners.”

For CNV’s Levine, traffic is paramount. “I strongly recommend anyone to use a white-label store and focus on getting traffic. Unless you are ready to spend many tens of thousands and years of work, there is no way you can build a store that can compete with Amazon on converting traffic to sales. Meanwhile, getting traffic online is its own big project and is where the money is.”

Levine pointed out that “we created the first affiliate program for adult products back in 1995 and we remain the leader in this space. We build these for online marketers as well as brick-and-mortar stores.”

He concluded, “I wish I had the profit margin my affiliates have. They get the lion’s share of the profits, because traffic is where the value is.”


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