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August 26, 2016

The Pleasure Center: Distributors Talk About Innovation

This article originally ran in the August issue of AVN magazine. By his own admission, Larry Garland used to buy every pleasure product that was released to distribute through his Eldorado Trading Company. It was practically necessary given the desire to be an industry leader. But it just doesn’t make sense anymore. “There is too much duplication or pricing and quality issues, so it is essential that we buy only the best new products that hit the market,” says the CEO. “There has also been an increase in the number of distributors. This has changed the landscape of the market and eroded margins if you try to compete on price alone. Eldorado aims to be a thought leader in the industry, and strives to stay ahead of the competition with our value-added services, including same-day shipping, exceptional customer service, extensive product knowledge and sexual health and wellness education.” While the number of products may seem overwhelming, Garland notes that if you have a good team of buyers who collaborate with the sales team, they can sort the products they see will sell from the duplicate products they already carry. The most important thing to look for? “Uniqueness above all else. Since there is so much duplication in the marketplace, we get excited when a new and innovative product comes out. A bonus is when we find a company that shares our guiding principles.” But Garland admits that many pleasure product manufacturers—while competing hard with each other and providing plenty of products for distributors to choose from—aren’t doing that enough. “From our perspective, there is too much duplication and not enough innovation happening. Some manufacturers are re-releasing the same products and just repackaging them with different names. We have also noticed that there are a few manufacturers that are competing with distributors by selling direct.” That’s one of the reasons motivating distributors to develop their own product lines: “They can appreciate larger margins, no brand competition, not have to compete with our own vendors to win business with larger chain stores, the ability to control the factors of production, can more easily follow a trend, to name a few. It also helps diversify a distributor’s revenue source by not having their eggs all in one basket.” Williams Trading Co. has had its own brand of Cloud 9 Novelties for more than 20 years, but Director Sales and Marketing Scott H. Dantis notes this is not a new trend. “Cloud 9 is offered as a value-entry price point brand choice. Our first priority is always to support and grow our business with the key manufacturers that helped create this business. Pipedream, Doc Johnson, CalExotics and Nasstoys have a very strong and loyal following with our dealer base and the consumer.” In addition to looking for unique feature sets in comparison to other offerings, Dantis notes that they also want to make sure the brand has the resources to support the marketing and product launch with training support for Williams Trading Co. retailers. They also look to make sure that the brand has a distinct channel plan for the “adult channel,” with adequate margins to compete with online e-commerce offerings. Dantis adds that they have a very pragmatic approach to focus with their manufacturers that support the brand. This includes a full year merchandising calendar, new monthly introductions and e-learning for customers. Williams Trading Co. focuses on building brands with good store velocity, and working with new partners with unique concepts to help build distribution. “The distributor model is constantly changing due to the landscape of the adult novelty business. We focus on our partnerships with our long-term brands by offering new programs, including e-learning and a new WTU Store Builder program for all brick-and-mortar retailers. Our focus is to have the widest range of products in stock for quick shipment to our retail partners and offer the best service levels with training for the store. In today’s world, a distributor cannot just stock products; we work closely with our vendors to offer value-added services for our partners.” Dantis says they help their adult customers by offering WTUStoreBuilder.com, a free turnkey e-commerce store builder program, to sell 24/7. This new concept allows customers to compete with Amazon with a data feed of more than 19,000 items—and drop shipment direct to their own customers. Williams Trading’s other primary focus is in-store training. It provides localized training events, working with its manufacturer partners (Dantis notes they are the only adult distributor offering an e-learning program with more than 34,000 certified trainings to date). “We see our pleasure products companies offering more unique products, which is what is needed in this industry. We also see some new companies coming to the market with innovative products, like the Womanizer—targeted at high-end, luxury consumers,” Dantis says. “In regard to basics categories, we see companies like Pipedream launch a very successful category of dildos and re-energizing it with King Cock. They have sold over one million units, and this line—from packaging, product features and realism—brings the category to another level. It’s moves like this that help a consumer come back to the adult store and trade up for the next best toy.” Morgan Panzino, wholesale supervisor for SexToyDistributing.com, says one great thing they are noticing is that some manufacturers are carving out niches to differentiate themselves in the crowded market, which can help their long-term success. Other manufacturers, meanwhile, have lost their creative edge, which can dramatically affect their standing among buyers. “We have not seen a major shift in how distributors run their business, which leaves opportunities for innovation, especially when addressing customers’ current needs. We hear that customers want better shipping prices, lower product prices, order processing automation and marketing materials to help improve their sales. We are happy to change as the industry changes, of course, and lead the way when we can,” Panzino says. “Distributors are looking to separate themselves in a crowded market. Some are tired of being pushed around by manufacturers who are no longer the partners they used be—or had hoped they would be. In today’s market, this is an opportunity for new manufacturers to provide distributors with what they need. It opens the door to private-label opportunities or exclusives.” Panzino says excitement for new products is crucial for distributors, regardless of the amount they have to choose from. “We try our best to focus on providing a premium customer service experience to every one of our clients. We focus on each customer interaction and provide them with the best possible solutions and answers to their inquiries.” Panzino adds there are a few contributing factors that come into play when they decide to carry a new brand. They look at what is trending in the market, where the industry is moving and changes in consumer desires. They also ensure that they are providing customers with well-built items and quality materials that come from companies that are reliable and easy to work with. “Distributors can help their mainstream clients by providing top-notch items that serve every avenue of the adult toy environment. Whether that means something vanilla, like massagers or mini vibes, to kinkier items like deprivation hoods or sounding devices. We are making it all acceptable, ensuring we are providing the best inventory at the lowest prices. We are most excited to introduce the Shegasm, a new innovative pleasure device designed for unique clitoral stimulation that is great for beginners as well as sex toy connoisseurs.” And despite a greater penetration of niche products into mainstream stores, Garland notes that they will never carry the vast selection that can be found in adult shops. “By introducing the public to adult toys, they are making pleasure products and talking about sex more socially acceptable. This makes it more likely that people will seek out other toys and sexual information that mainstream companies can’t provide.”

 
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