Tom Stewart and the team at Sportsheets may have been in the right place at the right time, but they’ve masterfully parlayed their brand into the perfect real-life complement to the “Fifty Shades of Grey” phenomenon. In this extensive two-part interview, we sit down with the man behind the bondage to discuss ... everything.
(A continuation of part one found here.)
One of my biggest peeves in the industry is having our products knocked off, then having our prices devalued.
Part two of the XBIZ interview with Sportsheets Founder and CEO Tom Stewart continues. This section of our extensive conversation focuses on the future of the industry, international threats and the endless battle against piracy.
XBIZ: What does the industry’s future hold?
STEWART: This ship is definitely turning in the right direction as the old-school bookstores are challenged to keep pace with the innovators. The innovators are finding it relatively easy to attract customers to new concept stores.
The biggest challenge for an adult retailer has always been location and the tolerance of the local city council. The bigger chains that can do a better job of merchandising, marketing and branding will find it easier to gain entry into geographical markets where they have been previously locked out. As the corporate chains can point to their successful stores and make the pitch to the next city council that their stores provide a service to the community and not bring about trumped up secondary effects of the old days, more cities will give green lights to adult boutiques.
I believe that the newer concept adult stores will obviate the need for say a Victoria’s Secret department store to start selling adult products. More mainstream investment money will start flowing into the adult market as we’ve seen in the past and again in just the past few years. Stores will be able to improve, stores will change and will absorb smaller chains to become the bigger national chains.
XBIZ: What, if anything, are you able to do as a company to limit the problem of knockoffs and piracy?
STEWART: It’s hard not to be bothered by it. A long time ago we picked our mode of business, which was to be inventive and innovative — not a “me too” copycat business. Peter Phinney is a an attorney who launched a legal pilot program with us and Bushman Products (Screaming O) a year and a half ago to help reduce Internet knockoffs, product piracy, counterfeit goods, etc. What they ran up against was a little company called Amazon. The more we get knocked off, the more we have to innovate. It is very frustrating to see knockoffs of products that we’ve invented.
With Amazon there’s nothing much that we can do because Amazon is not interested in doing anything about it. We’ve had some knockoff products sent to us with a letters of complaint saying that the products they purchased on the Internet fell apart after the first use, and turns out that it’s not our product. There will always be the consumer that’s willing to buy a fake Rolex watch. You can’t change that part of their human nature. For the people that want a real Rolex watch though, they have to be willing to pay the price and shop with a reputable dealer.
So it goes with sex toys — if you see The Under The Bed Restraint System listed for $69.95 on the Internet and there’s one from China for $19.95 you absolutely have to know you’re not getting the genuine article — and you’ve got to be okay with what you get. Don’t whine when the bezel on your fake Rolex flies off the face.
XBIZ: We know several manufacturers find their products sold on websites for less than MSRP, etc. How do you see this issue playing out for Sportsheets, and the industry as a whole, in the near future?
STEWART: There is a new contestant in the race to the bottom, and it’s a big competitor to all of us. One of the most interesting things I’ve experienced in the last couple years is the ability of manufacturers to ship from China directly into the United States, one product at a time. I see China as the biggest competitor and the next participant in the race to the bottom. If you haven’t experienced it directly, it’s almost unfathomable that they can manufacture and sell their products and ship them overseas (one product at a time) for almost little to no postage.
As part of his research, Ed Hayes, our operations officer ordered a phone case from a website in China. He paid a $1.99 for it and it came via the mail, postage included! Ed and I looked at each other when he received it and we asked how is this possible? The free-fall low-balling of product price on the Internet is painful to watch and almost impossible to stop.
I know some manufactures that try to maintain a strict policy of MSRP and have to hire staff to police the Internet all day long. One of my biggest peeves in the industry is having our products knocked off, then having our prices devalued. If it was only price that affected the sales of our products, online or brick and mortar, I think we’d all be in trouble as retailers and manufacturers. You talk to savvy retailers and they say that people still love to come in and touch it, talk about it, get help from sales people, things that you can’t replicate on the Internet — at least not yet (laughter).
XBIZ: You’re involved in a non-profit — what is Drumming for Drummers and why is this cause important to you?
STEWART: Our father Carl Stewart, was a drummer his whole life. He passed away last November. He left his two drum sets without saying what he wanted to do with them. My nephew Brian, a high school teacher, said that he would like a set for his school. They had a rock band and their drum set was thrashed. That got me thinking that if I gave one drum set to his high school how many other high schools could also use a set of drums, and wouldn’t that be something that Carl would absolutely love to do.
Kimberly and I started a non-profit, Drums For Drummers (www.DrumsForDrummers.org) to honor my father Carl Stewart and in his memory, give back and help young aspiring student drummers to get behind a drum set that they otherwise would not have access to.
XBIZ: What’s the most significant lesson you’ve learned in business? And in life?
STEWART: There are so many lessons. Most of them I’m still learning. New lessons keep popping up. I think the most important one has been to never make a phone call or a decision when I’m upset. Sit on it for a day. In life I’d say, spend more time with the ones you love. When you think about our industry function (providing pleasure products) that’s what we are all trying to do anyway.
