Today, we’re going to start a whole week of “Future Voices”, where we’ll be talking to some experts in the technologies and trends that will shape coming decades.
Sex and shopping are odd bedfellows for an article, but today we’ll tour a business that’s exposed to both. Why? Both have been with us for thousands of years, and frankly haven’t changed much. But at our particular point in history, they are in rapid flux.
Who better to help us understand this, than Richard Longhurst and Neal Slateford, founders of the mighty Lovehoney – one of the UK’s biggest retailers of adult toys. They’ve given us a lot of great content. Please do make the effort to read through to the end, as there’s some really insightful information there.
AL: Hi Richard, hello Neal. Can you start off by telling me a bit about Lovehoney?
Lovehoney is Britain’s largest online adult toy retailer, based in Bath. We sell more than a third of all adult toys sold in the UK. We’re international – selling throughout Europe and the English-speaking world. We have an office in Brisbane, so we can run customer service 24/7 with real people. We’ve been going 14 years and it has been a lot of fun.
AL: How did you get started?
We met at Future Publishing in 1995. [Richard] was editing internet magazines and [Neal] was working on the websites that went with them. We noticed a lot of ecommerce businesses spending a lot of money advertising with Future’s properties. We thought that this “shopping on the internet” thing might actually catch on and decided to set up our own online business.
All we had to do was think of something to sell. Eventually we narrowed it down to three prospects: kid’s toys, cross-stitching and sex toys. Kids toys had too much competition, even then. We went to a cross-stitching show. It was as dull as you’d imagine. And then we went to the Erotica Show in London, an adult consumer show selling lingerie, adult toys and the like. It was packed, full of happy, smiling couples having a whale of a time, and people were throwing money at the traders. We thought “this looks like fun.” It was the perfect thing to sell online – people don’t want to go in stores to buy their bedroom fun – and the competition at the time was appalling: dreadful sleazy websites with rip-off pricing; salacious copy; and zero customer service. We thought we only had to be half decent to be way better than anyone else. So we put in £4,500 each and off we went.
AL: How has it gone?
It has been the fastest 14 years of our lives – and the funniest. We have gone from selling adult toys kept under Richard’s bed to a huge international operation. We have a separate trading operation in Australia and we are about to open a new one in Atlanta. As well as making our own toys, we also create and license toys for rock bands, sex experts and we are looking to work with some big-name celebrities.
So last year we created a range for Motörhead, which came out around four months before Lemmy’s death. Fans loved them and they sold out each time we made a new batch. After Lemmy’s sad departure, fans bought them in tribute.
We had so much fun doing them that this year we are doing the same for Mötley Crüe. A similar band to Motörhead with an equally fanatical following.
AL: Did you have a business plan?
We do now. When we started Lovehoney we had done some back-of-an-envelope figures to work out that it would be profitable to sell sex toys online and ship them to customers. We didn’t have any more than that. We just thought that if we could make a decent living out of the website, so we didn’t have to have proper jobs, then that would be enough.
Now, though, with turnover in excess of £50m, profits of £6m and more than 200 staff, we’ve got to have a plan – and what a plan it is. We’ve made two crucial strategic insights: people have sex everywhere; and the internet goes everywhere. Our strategy is for Lovehoney to be the most recognised specialist retailer and manufacturer of sexual wellbeing products in the world.
AL: Any other key points in the business?
Undoubtedly the publication of Fifty Shades of Grey four years ago. This changed the way the whole world viewed sex toys and soft bondage. from being a fairly niche activity that most ordinary couples were slightly wary of, suddenly it was very much in the mainstream and couples in particular wanted to buy sex products in Boots and other high street chains. They wanted to replicate what Christian Grey and Anastasia Steele from Fifty Shades got up to in the bedroom – perhaps not the full Red Room experience, but tying each other up, blindfolds, spanking, that kind of thing. The market responded quickly and we were able to launch a new line, Swoon, especially for Boots.
That summer of 2012 was extraordinary. You would be sat on a train and women would be reading a book which is pretty full-on erotica, without a hint of embarrassment. Across beaches, virtually every towel had a copy of Fifty Shades of Grey lying in the sand near it.
We latched onto the phenomenon fairly quickly – while it was still a big word-of-mouth hit amongst mums in New York. We went the publishers and said: “Why don’t we make some Fifty Shades branded merchandise to go with the books?” They thought it was a great idea and we began working with the author, E L James, to create fresh ranges of sex toys and bondage products for couples. We have just signed a new exclusive worldwide licence taking us through to 2018. This covers the next two movies – the first of which (Fifty Shades Darker) comes out next year around Valentine’s Day.
AL: How do you grow it further – when there are so many restrictions on media?
You’re right, there are issues. We can’t advertise on Facebook, for example, because sex toys are on the same list of prohibited items as guns, ammunition and drugs.
We have pioneered TV advertising for sex toys; it’s been a real battle finding out what the regulators will and will not let us show on TV. We can advertise after 9pm but can only show a vibrator after 11pm – even if we’re advertising in a programme like Geordie Shore, where the main content is people having sex.
We’ve advertised on TV for three years now and it’s worked well for us.
AL: I understand the queen is a fan?
We were surprised and delight to be awarded a Queen’s Award for Enterprise for our international sales. When we were notified that we had won, we said to each other – “Hang on, do you really think they’ve checked the website properly?” We were amazed. It just shows how far the category has moved to the mainstream. When we started in 2002, if you went into a Boots to the family planning section, you would find some condoms, pregnancy testing kits and KY Jelly. The market was all about safety. Now all the supermarkets and pharmacies carry some kind of sex toy. It’s all about fun and pleasure. It’s absolutely fantastic for everyone in Lovehoney.
AL: And the queen recently hosted a reception for you both at Buckingham Palace?
Yes, that was very nice of her. We said hello to the queen, and thanked her for having us over. We did not discuss the nature of our business with her. We did with the Duke of Edinburgh, though – we told him we were a sexual wellbeing business. He nodded and smiled, swiftly made his excuses and moved on. Richard was looking forward to meeting a real princess as he’s met all the ones at Disneyland already; we hovered near Eugenie but weren’t able to be introduced.
AL: How have you got PR?
TV documentaries have been big for us. The first one, More Sex Please, We’re British, went out on Channel 4 in 2012. It was an hour-long fly-on-the-wall documentary looking at the business from the inside. It was a lot of fun and focused on some very amusing aspects of the business such as the returns department, which check if any returned products can be retained. It made for some very amusing TV – Andrea from our returns department going through returned boxes with a pair of rubber gloves. The night the show went out, we had so many orders our website almost crashed. It introduced the brand to a whole new audience. It was repeated endlessly – not just on Channel 4 but E4, More4 and right across the world in dozens of countries. Netflix screened it in the States. It is still shown and every time it is screened, we are introduced to new customers.
We hit it off with the producers of that documentary, Bristol-based Oblong Films – and particularly with one of their bosses, Jonny Young, who is a brilliant film-maker. He pitched further TV shows with us and we did two further series of fly-on-the-walls: Frisky Business and The Joy of Sex Toys. This involved virtually all our staff getting involved in one way or another – and many suggesting strands for the films. Almost everyone was happy to take part.
Oblong had full editorial control but the films were made with real love and care, and when we did mess up it just made for great TV. No one minded. The two series went out on Lifetime, the satellite channel in the UK, and got the biggest audience of the day – despite going out at 10pm. They have also been shown on Netflix, and on different channels all over the world.
We have just filmed a new documentary for Channel 4 with the comedian Katherine Ryan which is going out in the autumn. TV has been very kind to us.
AL: Ever need to get fundraising? Any debt?
When we started Lovehoney we put in £3,000 each. We realised that we had under-budgeted – because we needed to buy more stock before the bank would give us the money for the credit card sales we had made; we were on 30 days payment terms. So we had to go back to ourselves for another £1,500 each and that was our total investment: £9,000. The only borrowing we had was to buy our warehouse in Bath. That mortgage is now paid off, so Lovehoney is totally debt free and massively cash generative.
AL: What is unique about you?
I think it is the minute attention to detail. We are the only company in our category offering a no-questions-asked 365-day returns policy. You buy one of our products, you use it for 364 days, you decide you don’t like it, you can send it off to us and get a full refund.
We figured at the outset that people were wary of online firms – no happy smiling face at the till when you were shopping. So we would make our customer service second-to-none. It has paid huge dividends because we have been at the vanguard in changing people’s perceptions of online service. They know that the customer care can be even better than in shops.
We want to make our shopper’s experience a happy and informative one. We have the biggest database on sex toy reviews in the world. Look up a product on our site and an ordinary customer will have used it and assessed it and shared their views – good or bad. If a product has not been reviewed, it won’t get bought – but obviously there are dangers in that warts-and-all policy. Who wants to buy a product with rubbish reviews? Fact is, if our customers don’t like it, it won’t sell and we take the product off the site. So the bad reviews serve a purpose.
We employ a big team of copywriters to describe our products in multiple languages for our worldwide customer base.
AL: Does ecommerce eventually take over from bricks and mortar?
There will always be people who like the social aspect of shopping who treat it as a leisure activity. But an increasing number of consumers will appreciate the ease, convenience and utility of shopping online. By visiting an ecommerce site like Lovehoney, consumers can use customer reviews and recommendations to make informed choices, watch product videos and get live help via phone or chat from expert customer service agents. Shopping online is a very compelling and fulfilling experience now. It can complement bricks and mortar with click-and-collect, but ecommerce is the growth area.
AL: Are you sad about the death of the high street?
I don’t think the high street is dead necessarily – at least not in Bath – but there does need to be more consideration about what it’s for. Online now accounts for 12% of retail sales in the UK so it’s obvious that fewer – and different – retailers will be needed in the high street. But why be sad? Look for the opportunities.
AL: What are the challenges for an ecommerce business?
Too numerous to mention, but at the core it’s attracting customers and retaining them, same as any business. The tools available for an ecommerce business to do this are more immediate, and potentially more powerful, than those used by offline businesses – but that’s also what makes it easy for customers to switch to a competitor. As Google founder Larry Page said, “On the Internet, competition is one click away.”
AL: In the film Demolition Man people have sex by wearing mind control helmets and sitting ten feet apart. Do you think this is a realistic future?
People have been predicting this ever since Woody Allen invented the Orgasmatron in Sleeper. That was set in 2073 – and that still feels about right.
AL: What is teledildonics, and what impact might it have on carnal relations in coming decades?
Teledildonics is delivering physical sensations to a partner over the Internet or some other network. You control a sex toy that can stimulate a person that could be on the other side of the world. This is already popular in the Cam Girl world, with girls able to stimulate devices attached to their customers and vice versa. On a consumer level there are a number of app-controlled sex toys that allow this kind of remote stimulation between partners. It’s a great way for couples to stay intimately connected while apart, but it’s very much a niche market for now; it’s still a lot of hassle to get up and running and I’m not sure a lot of couples want to go to that effort.
AL: Will VR (virtual reality) porn mean that nobody ever needs to leave the house again?
No of course not. The same question was doubtless posed when adult videos tapes first became available for home use. VR will be massive for the porn industry, and the experience may be better than DVD by some measure – but the success of Grindr, Tinder and the like, shows that people still crave physical interactions.
AL: Which companies do you think are reshaping the world of sex right now?
A lot of companies are doing some nice app-controlled adult toys for the domestic market. PicoBong have a very easy-to-use range, with a really fun interface. There’s a whole homebrew community of enthusiasts building weird and wonderful devices all over the world. One of them may breakthrough and make the category mainstream, but it hasn’t happened since they began tinkering in the 1980s…
AL: What are the neglected areas of the adult industry, which are ripe for disruption?
You have to think there should be a worldwide leader in an app for connecting people selling sex, with the people wanting to buy it, making things easier and safer for both parties…
AL: In future, will we all fall in love with virtual people, like the phone bot in the film Her?
Of course nobody knows anything, but yes, at the rate that AI tech is developing, I can see it happening. Don’t think we’ll be around to try it, though!
So, what do you think of the Lovehoney craziness? It’s certainly been one of the most entertaining interviews we’ve featured in Exponential Investor – and I think it’s been extremely informative, too.