With the COVID-19 pandemic turning businesses upside down all over the world due to shutdowns and new social distancing rules, many companies in all industries are doing their best to adjust to this “new normal.” For the Russian and Ukrainian adult goods marketplace, this period was all about going into survival mode.
As the world attempts to return to life as we formerly knew it, SexShopers.ru — the adult industry news portal for the Russian market, recently surveyed members from the Russian and Ukrainian adult goods market about how their business is surviving in a pandemic.
Meet our respondents:
Dmitry Schepin of Kazanova69, wholesale company and internet retailer
Yesenia Shamonina of Prezervativnaya and Spielie-Willie and the Jade Rod retail stores
Ivan Knyazev of Intim69, an internet retailer from the Moscow region
Nadezhda Frolova, who operates an online sex shop in Moscow
Olga Kotova of LogicGroup LLC, and retail store Samara
Alexander Sinyukov and Georg Safaryan of LUXLITE Group of companies, and a manufacturer
Igor Tikhonov, who operates the online retail store Lovestor from Moscow
Alexander Khanzhin, who operates the sex shop Fun for Adults in Magnitogorsk, Russia
Elena Aksyonova from wholesale company Impacto Group LLC and online boutique, 50 Shades
What has changed in your business since the beginning of the mandated self-isolation period?
Schepin: On one hand, a lot has changed, and on the other, the built-in systems have helped to weather all external changes quite easily. We redirected our business to online, reorienting a fairly large part of our physical retail employees for online services.
Also, we immediately started working on advancing safety requirements in-store, having converted all stores into a non-contact format, now our sellers communicate with buyers only through a small window.
Shamonina: We currently have three stores, all offline. Two are condom stores in Myasnitskaya and Arbat, and one Spielie-Willie and the Jade Rod in Belorusskaya. Naturally, we closed all three stores. We have a small online store "Preservativnaya" (our condom store). There are no sex toys, only cosmetics, condoms and lubricants. Initially, we did not particularly position this as an online store — it was like an offline warehouse, so now people who are already our customers have a convenient opportunity to order without leaving home. Accordingly, online we had an increase — double the number of orders. And the offline store is completely closed now and we are waiting for it to open.
Knyazev: We all realized that insufficient attention has been paid to online trading.
Frolova: In early April, I stopped making shipments to the regions, leaving only delivery within Moscow. Regional orders with me amounted to about 60 percent, and as soon as the restrictions on the movement of ordinary people began to get introduced, I had to stop regional shipments. Formally, logistics companies work, and it seems that it is possible to deliver orders. But I predicted a very large share of returns due to restrictions, up to 50 percent. And I decided not to risk it.
In addition, the Russian post office increased the shelf life of parcels to two months, i.e. the mail return will be back in about three months. For two weeks, the parcel makes its way to the post office, then the recipient waits for two months, and if the recipient changes his mind, then after two months it will only be sent back, plus time for the return trip, plus a double delivery tariff.
Courier regional home door-to-door delivery also began to work poorly, and entry was closed to many locations in general. Even if the client retained his intention to receive the order, in many cases he would simply not be able to do it technically. And in addition to problems with restrictions, there is also the problem of a sharp drop in incomes from people, and now when people try to save money, which could cause some shoppers to likely change their mind.
Kotova: We began to actively develop online, and think of how to improve and what changes to make the site. We also came up with ideas on how to make delivery convenient and safe for the client. We developed marketing campaigns to attract and retain customers. We focused on newsletters and social networks.
For the first two weeks of self-isolation we have worked only for delivery and processing of orders. Then, after consulting with a lawyer, we opened in compliance with all safety standards, such as masks, gloves, restrictive lines and warning posters. We now offer antiseptics and some essential goods. We made a schedule of disinfection too.
Sinyukov and Safaryan: Most of the employees work remotely, and almost everything is being done from home. This complicates communication and solving operational issues. On the other hand, these conditions helped us optimize parts of our business processes, which in the future will facilitate the work of the company when isolation stops.
Tikhonov: The business did not change, but simply almost stopped.
Khanzhin: At first there was fear of work ban. Then we found an alternative, posted a notice on the door that we were working only as a pick-up point, and we service through a window. The administration could not object.
Aksyonova: I had to make changes to almost all processes —imports, warehouse operations and the sales process itself. I had to dramatically redistribute responsibilities within the team and change priorities.
It is good that our team (except for the warehouse) works remotely from different parts of the world — this made it easier to adapt to new conditions.
Do you notice a decline or increase in sales?
Schepin: We do not see either. The growth is at the level of previous years, but it is clear that these are the fruits of our work, and not the state of the market.
Shamonina: Naturally, there is recession, and sometimes we have barely enough to pay our employees. Everything else is at a loss.
Knyazev: Sales fell about four or five times.
Frolova: Since the beginning of April, I have had a sharp increase in sales, despite the rejection of regional shipments. The growth is twofold compared to the traditionally festive season: December, January, February and March. If you compare the number of orders in Moscow specifically with the previous holiday months, then in April I had a fourfold increase.
But it so happened that at the end of March there was a time when our programmers finished some kind of development that we had been working on since December. This development helps to optimize traffic. And at the end of March I put it into practice. For example, for 300 visitors a day, I had 20 orders in April through May. However, I cannot know now what caused this growth. It may be that retail stores closed and their visitors went online. It may be that people were locked up in their homes instead of work, and they got a lot of free time. I did not have the opportunity to compare sales before and after the introduction of the new technology under the same conditions, and I don’t know which factor influenced the sales growth in April and May. I think that combined effect of all factors gave such a result.
Kotova: Due to the general decline, offline revenue fell significantly. But online business has grown by 40-50 percent.
Sinyukov and Safaryan: Of course, there has been a decline in sales in some areas. Some regions work part-time, but somewhere work stopped completely. Now the regions are gradually recovering. As for sales in sex shops, the situation here is not very good. Many stores have closed, which cannot help but affect the sales of our condoms in this distribution channel.
But at the same time, several of our outlets show an increase in sales (our online store and sales through marketplaces). In general, we sank, but not very much.
Khanzhin: At first there was a recession for about 10 days, people rarely left their homes. Then, the situation improved.
Aksyonova: Growth. For all three months (March, April and May), we are on the rise. Of the three crisis months, the most significant growth was recorded in April — we grew by 65 percent compared to last year.
What mode are you currently working on?
Schepin: To be the optimistic one!
Shamonina: There is one online store. For a couple of hours a day, employees come to our location, collect orders and send them with couriers.
Knyazev: Out of our 12 stores, six are open — access to the sales floor is restricted, we only process orders.
Frolova: There were a few days of very active surges in which I realized that this was the ceiling for my structure. I simply cannot physically “eat” more orders, and for further growth it is necessary to change the architecture of the business.
Kotova: We are now working in our normal mode, in compliance with safety rules.
Sinyukov and Safaryan: Now, 80 percent of employees are working remotely, 20 percent are in an office, as shipments come every day. Now there is no difference, whether it is Friday or Sunday, most of the employees are working not on a schedule but on demand.
Tikhonov: Of our 22 stores, five are “half-open” — they work as pick-up points for internet orders, but we do not have the increase in the number of orders that everyone is shouting about. Sometimes retailers try to sell something extra, but it is risky because inspectors are everywhere now. Already many others and myself have been fined. That’s how they help small business.
Aksyonova: We redoubled our efforts, adapting to new conditions.
I really wanted to relax a little after the holiday season, but it didn't happen. The changes affected mainly the warehouse — we tightened security measures (masks, gloves, sanitizers) and the warehouse personnel work in shifts to ensure social distance between employees. In addition, all deliveries to the warehouse are quarantined for 24 hours. This slightly slowed down the process of acceptance of goods. And for the rest, everything is as usual.
Are there any delays in supplies?
Shamonina: We are not refilling our stocks right now. We are selling everything that is available, because we always have good leftovers. We hope that the situation will change soon.
Knyazev: So far we are managing with old stock.
Frolova: No. I was very lucky with the supplier. In this difficult period, I expected a mess and problems with shipments, or even a complete stop of shipments. It is clear that employees must work to get salaries, and other partners are very dependent on supplies, and indeed we can be closed any day. In April, I was preparing for the worst. However, [Russia’s largest distributor] Supplier of Happiness is very advanced in internet technologies, and it has focused its entire business on working with online stores. I don’t know what they did and how they stood on their feet at that time, but shipments for online stores went without any problems at all. There were, of course, small problems, but nothing out of the ordinary. And given the difficult situation that was on the verge of bringing business to a complete halt for most companies in the country, they generally did the impossible.
Kotova: No, fortunately, none of the suppliers failed. On the contrary, they tried to make concessions, offered marketing support and additional training for employees.
Sinyukov and Safaryan: Unfortunately yes. But for the most part, these delays do not exceed two weeks, so for most items we have enough stocks to ensure smooth operation. In general, we will survive!
Tikhonov: There are no delays in deliveries as there are no purchases and deliveries themselves. And, apparently, this may last long.
Aksyonova: Unfortunately, there are delays. Our goods are mainly from Europe and the situation has hit our European suppliers badly.
There are failures in their supply and production chains, and there are limitations for warehouse personnel. This significantly slowed down the speed of interaction and order processing.
How do you plan to return to normal?
Schepin: We came out with a lot of new ideas that were born during the isolation period, in particular on scaling the influence of our projects — the IT Museum, COFFEE 18+ and the Kazanova69 training club. All of these worked excellently in the online format, and we never stop developing!
Shamonina: Naturally, we will proceed with caution. We will not resume our previous mode, in terms of hours of work. Convenience stores, most likely, for some time will not work around the clock. The Arbat shop is also a question, because it was designed only for walking traffic, tourists — it is a souvenir shop. Let's see what will happen to people, firstly. And secondly, what kind of rent there will be after the opening. We do not yet understand what will happen to this store. We don’t want to close anything. We will reduce the number of shifts, probably. There were two or three people in the store in Arbat, because there were a lot of people. Most likely we will leave only one store.
Knyazev: We will gradually open previously closed stores. With the lifting of lockdown restrictions, the number of people on the streets began to increase. In this regard, we increased the number of working stores from four to eight.
After a long “vacation,” we resumed training for sellers. We review the goods, sales techniques, and we train on each other. We organized video conferences between the staff with product presentations from each employee.
Frolova: When all restrictions are removed, I will resume work with the regions. But already the volume of orders has reached the limit, my structure simply cannot cope with a larger number, we have been working on our limit these months. I cannot change the structure momentarily. I will optimize some processes and strengthen weak links. But all the same, it will be necessary to limit the number of orders, if the regions also give fourfold growth. I will probably increase prices and the minimal order amount from 900 to 1,500 rubles in order to pool the most profitable orders. I don’t know what exactly influenced the growth of orders in Moscow in April through May, and how many orders will be there after the restrictions are lifted, when retail stores open and people — now poorer — will need to leave the house in search of work.
Kotova: We hope that in the near future the situation will stabilize, and this will positively affect sales.
Sinyukov and Safaryan: This is probably the most difficult question. It all depends on when this regime will end, and what will happen to the epidemiological situation in Moscow. On the one hand, it is very important for us to begin full-time work as soon as possible, on the other hand, the health of employees is important even more. There are only two options: full access to the office, or gradual. We will make the final decision 1-2 days before the restrictions are lifted. Now we are developing a plan for a gradual exit.
Tikhonov: Planning in our country is just stupid! We will open the stores if we can recuperate the dispersed buyers. Most likely, the previous demand for the product will no longer return. We will reduce office staff and cut salaries. We will conduct the next round of negotiations with landlords to reduce the rents.
Khanzhin: According to the 10 years of statistics, May is usually the most disastrous month — but not this year. Most likely this is due to the fact that people didn’t go anywhere, clothing stores and shopping centers are closed. People have some money left, so we have a certain rise both online and offline.
Aksyonova: We removed all unnecessary processes, clearly defined the goals and focus of each team member. We will come out updated and transferred to a qualitatively different level.
