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2016 Retail Report: Mobile Advances, Data Analysis Fueling E-Commerce

2016 Retail Report: Mobile Advances, Data Analysis Fueling E-Commerce

March 3, 2016
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" Retailers need to ensure that their online experience and all core actions work seamlessly on iPhones, Androids and tablets. Being able to help customers accomplish what they’re trying to via their mobile device is paramount to success. —Megan Wozniak, Adult Empire "

For many years, brick-and-mortar sex shops dominated the sale of sex toys, pleasure products and adult videos or magazines. Adam & Eve, a company that was way ahead of its time, had a lucrative adult mail-order business back in the 1970s and 1980s, but for the most part, brick-and-mortar stores reigned supreme during the pre-Internet era of adult retail. These days, however, consumers like having both physical and digital options when it comes to sex toys or sexy attire. Consumers are likely to be using either physical stores or Internet websites for purchasing anything from dildos, cock rings and vibrators to floggers, blindfolds and latex corsets. A consumer who purchases butt plugs in person at a brick-and-mortar store is likely to be shopping for them online as well; a BDSM enthusiast who buys paddles and riding crops in physical adult shops is also likely to be using the well-known Stockroom.com, which remains a popular site for purchasing a wide variety of BDSM-related sex toys and fetish attire. And for online retailers in the sex toys/pleasure products space, 2016 is shaping up to be a year of ever-increasing mobile activity, careful data analysis, stiff competition (especially with expensive high-end items) and paying close attention to the mainstream e-commerce giant Amazon.com.

Alice Little, head of online trading for the U.K.-based Lovehoney, noted that she is seeing “saturation in the luxury end of the market” for sex toys — and with that saturation comes stiff competition for online customers. Little told XBIZ that “even LELO has recognized this and boosted their RRPs to position themselves above the influx. Consumers have higher expectations and standards. Something doesn’t justify a €100 price tag just because it’s silicone and waterproof. It has to have the build and quality that comes from a trusted brand like Fifty Shades of Grey.”

Asked to reflect on important online retail trends for sex toys and pleasure products in 2016, Little replied, “In: male toys and true technological innovation. Look back at 2015 at Womanizer, Eva. Sqweel XT nails both of these points: male and innovative. Out: gimmicky app-controlled toys. People want instant gratification, and unless the app adds functionality, it’s just more phone clutter.”

The huge demand for smartphones and other mobile/wireless devices had a major impact on the adult entertainment industry in 2015, inspiring a long list of online adult companies to be as mobile-friendly as possible. And whether an adult e-tailer is selling sex toys or adult videos — or perhaps a combination of the two — mobile optimization will no doubt become even more important as 2016 moves along.

Megan Wozniak, marketing director for Adult Empire, asserted that “mobile commerce sales are set to skyrocket” and that for online adult retailers, mobile optimization will be essential in 2016. Adult Empire sells a variety of items online, ranging from adult DVDs and video-on-demand erotica to penis pumps, sex dolls, condoms, lubes, cock rings and strap-on dildos. The Pittsburgh-based company is a perfect example of an online retailer that is known for both its porn sales and its sex toy sales — and in 2016, customers are likely to be making those purchases on mobile devices.

“Given the rise of smartphones, mobile commerce will continue to grow,” Wozniak told XBIZ. “Retailers need to ensure that their online experience and all core actions work seamlessly on iPhones, Androids and tablets. Being able to help customers accomplish what they’re trying to via their mobile device is paramount to success.”

For mainstream e-commerce, there is no name on the Internet more prominent than Amazon.com. The e-commerce heavyweight maintains a formidable online presence whether one is looking to purchase cosmetics, thermal shirts, music, or DVDs of mainstream movies. And Amazon’s activity is not limited to mainstream items: Amazon sells plenty of sex toys and pleasure products as well, offering products from Doc Johnson, Nasstoys and other manufacturers.

Tom Nardone, president and founder of PriveCo. and Vibrators.com, noted that Amazon.com is showing no signs of slowing down in 2016 and that the name “Amazon Prime” will continue to be used extensively in connection with sex toys. Nardone told XBIZ: “Prime will be the most important word in e-commerce for 2016 because Amazon is skimming the most lucrative customers away from other retailers.”

Dave Levine, a.k.a. Sex Toy Dave (founder and CEO of CNV.com, Inc.), stressed that in 2016, the online sex toys/pleasure products market must find ways to use Amazon.com to its advantage. “The Amazon juggernaut is growing exponentially,” Levine told XBIZ. “Differentiate from Amazon or partner with Amazon. If you try to compete with Amazon or ignore Amazon, you will surely be destroyed.”

Levine observed that with sex toys and pleasure products being so plentiful in 2016, the online competition for sex toy sales is bound to become even more challenging. “Suppliers are increasing faster than the market of buyers,” Levine told XBIZ. “Although more toys are being sold, more companies are making and selling them. Church & Dwight — Trojan — Walgreens, Walmart, and other huge companies have entered the market. New York City hedge fund and private equity companies have invested or are looking to invest in the industry as well. This trend will help the best and smartest grow, but will hurt the small and slow companies more severely.”

According to Levine, careful data analysis is crucial for online adult retail this year. Websites selling sex toys need to know as much as possible about their customers, and sites without a sufficient amount of data will be at a major disadvantage in 2016.

“It’s a data arms race,” Levine emphasized. “Most sites do not have enough traffic to run split tests. In addition, algorithms like ‘people who bought also bought’ require more traffic and sales data than most websites can generate. And without a lot of traffic, sites can’t accumulate enough reviews — which have become super important. Without enough data, your website falls further behind the sites that do have and use the data, which then grow and accumulate even more data.”


LEGAL PERSPECTIVES

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