Distributors Ride the Wave of Change With New Business Strategies

Distributors Ride the Wave of Change With New Business Strategies

Punk’s not dead, and neither is distribution. No matter how self-sufficient manufacturers become, sex toy distributors are still taking the headache out of million-dollar orders.

Part-reseller, part-sexpert team, and part-best friend, industry staples like East Coast News, Nalpac, Eldorado, and Williams Trading are keeping their fingers on the pulse of the market. If anyone can roll with the industry changes, it’s distributors who have seen the good, the bad, and the ugly in sex toy design for decades. As the waves of change come crashing, distributors are ready to surf.

Nowadays, the increased visibility and social acceptance of the adult industry has brought heightened competition and outsiders into the industry with fresh ideas and perspectives.

Before dildos were as commonplace as condoms, distributors and manufacturers sold more hippie-type fare and gag gifts. Eldorado’s original top sellers would never have made it into the same strip mall as their modern offerings.

“Eldorado Trading Company got its start by selling Native American jewelry in 1974,” says Allison Travers, director of marketing communications at Eldorado.

Nalpac also found a home in the heyday of free love and reefer madness.

“Nalpac originally started in the paraphernalia industry and enjoyed many years of success as both a manufacturer and a distributor of these products,” says Steve Craig, Nalpac’s new CEO.

A majority of adult businesses also dipped into the pool of pipe sales just as the industry was about to morph into a place for pleasure. The sex toy switch quickened the pace of industry sales and innovation, leading distributors to become the sexual wellness powerhouses they are today.

“Nowadays, the increased visibility and social acceptance of the adult industry has brought heightened competition and outsiders into the industry with fresh ideas and perspectives,” says Erin Viereck, marketing and vendor liaison at Williams Trading.

Large-scale warehouse operations are now juggling everything from Kickstarter startup companies with a handful of products to giant manufacturers that could easily fill a baseball field with sex toys. The barriers to entry are lower than ever, and many toy creators are skipping distribution channels altogether.

“It’s no secret there has been significant change in today’s adult industry community of distributors,” Viereck said. “Companies and end buyers alike often look to cut out the resellers, or middle people, to save money and sell more. This is to be expected, and many middle people that have not succeeded in proving their added value have gone out of business.”

Sex toy distribution isn’t what it used to be, though that’s not necessarily a bad thing. Stagnant environments don’t survive, and distributors are eager for a game-changing challenge. “If you don’t evolve, in any business, you die off. Our distribution process is constantly in flux, always adapted to better accommodate our partners,” says Anthony Pingicer, director of marketing at East Coast News.

Now that pleasure products have gone mainstream, multi-brand sellers have a lot of sex toy homework on their hands.

“One of the biggest changes (and challenges) in adult product manufacturing is product redundancy and volume,” says Viereck. “There has been a surge in the number of new manufacturers looking for representation in addition to new startup product lines.”

Some distributors have begun manufacturing their own sex toys.

“Throughout the years, ECN has acquired and started multiple well-known brands within the industry,” says Pingicer. “The driving force behind these decisions was to expand our customer base and apply our knowledge of the industry to better serve our customers and partners.”

As the authority on thousands of SKUs, distributors are uniquely positioned to understand the market and craft exactly what sells. “We get to see products come and go, what works, and what doesn’t work,” remarks Pingicer. “We’ve taken what we’ve learned and applied it to manufacturing better lines of toys, novelties and accessories.”

Though the trend has picked up its pace over the last decade, distributor-crafted toy lines aren’t a recent invention.

“Williams Trading has always offered a lower price point value brand under the Cloud 9 product label for over 20 years,” says Viereck. “We find that our customers prefer this option as a value product line alternative which allows higher gross margin on the retail floor.”

Not everyone is jumping on the manufacturing bandwagon. Old-schoolers like Nalpac and Eldorado are sticking with their distribution roots, a decision they haven’t taken lightly.

“I can imagine it causes a great deal of friction between a manufacturer who partners with a distributor who has chosen to directly compete,” Craig said.

Never daunted, these industry veterans instead find ways to keep up by bringing new ideas to the table.

“Increased competition in the industry is forcing both manufacturers and retailers to seek out higher margins, especially with the rise of ecommerce,” says Travers. “With this reality, Eldorado continues to stress and improve upon our value-added services.”

Aiming for unparalleled customer service, product knowledge and even sex education, pure distributors are adding to their repertoire to keep customers coming back.

“At Eldorado, we focus on the tools retailers can use to differentiate themselves from their competition,” says Travers. “We offer value to our retailers through competitive pricing, extensive product knowledge, superior delivery and excellent customer service. We also believe deeply in the importance of education and we are dedicated to providing resources to our customers through programs such as Elevate U, a recently launched e-learning program which is the first of its kind in the industry focused solely on sex education, not just product features and benefits.”

Thousands of products and hundreds of companies can leave manufacturers wondering how their latest lines will find shelf space.

“As a pure distributor, we offer manufacturers an outlet for product lines which will receive our full attention,” says Craig. “Nalpac offers the expertise of some of the best sales people in the industry that partner with customers to help them meet the challenges of today’s marketplace.”

Regardless of what path they choose, distribution outfits haven’t lost sight of the personal relationships upon which they’ve built an empire.

“What was once a small, insulated industry with its members acting more like family than business contacts, the adult industry is now a billion dollar global industry,” says Viereck. “But for Williams Trading, you’re still treated as family; Bob Pyne Sr. wouldn’t have it any other way.”

As channels change and evolve, those who embrace the flow will be the best prepared to keep their coveted spot in the supply chain.

“Every aspect of the industry will continue to change and we as a distributor need to continually adapt,” says Travers. “Larry [Garland] used to frequently quote the famous Greek philosopher Heraclitus; ‘The only thing that is constant is change.’ As to the boom years, we think we’re still in them and our best years are still ahead of us.”