Why Sex Sells More Than Ever
America's sex toy retailers are proving there's more than one way to stimulate the economy.
For decades, the U.S. sex toy market, which, excluding the pornography industry, accounts for up to $2 billion in total adult industry sales every year, was dominated by a handful of big companies like Doc Johnson and Good Vibrations. But that's all changing, thanks to a mix of e-commerce and a gradual shift in sexual attitudes among mainstream consumers. That, and the determination of many small-business owners to drag the industry out of the shadows and into your local shopping mall.
Just hours after the laptop, smartphone, and gaming vendors pack up their displays every January at the close of the Consumer Electronics Show in Las Vegas, a very different crowd fills the Sands Expo and Convention Center. The Adult Entertainment Expo, the world's largest sex industry trade show, attracts as many as 30,000 visitors and more than 400 registered exhibitors every year, including a growing number of small-business owners, organizers say.
Trade shows like the Adult Entertainment Expo, which falls a few weeks before Valentine's Day -- the industry's busiest season -- provide a rare opportunity for smaller sex toy manufacturers and retailers to publicly display their products and services, many of which are as high tech as any of the gadgets unveiled by Sony in the same space a week earlier. It also offers a chance to network within a multibillion-dollar industry that's often only discussed in hushed tones.
"There's an extremely supportive environment out there compared to the competitiveness of the mainstream tech world," says Suki Dunham, the 39-year-old co-owner of OhMiBod, a Greenland, N.H.-based vibrator company she and her husband launched in 2006. Dunham, a former marketer at Apple, used this year's event to unveil a new line of Naughtinanos, an iPhone-compatible device that vibrates in sync with a caller's voice.
Many of the workshops and seminars offered at the expo wouldn't be out of place at a typical business conference, including roundtable discussions on marketing and advertising tactics to help grow your business, and a presentation on the difference between Web and brick-and-mortar sales strategies -- concerns shared by entrepreneurs everywhere, whether they're launching a shoe store or an erotic bakery.
Not surprisingly, a much larger share of the sessions deal with the unique challenges of running an X-rated business, from a legal analysis of recent developments in obscenity laws to "adult" bookkeeping.
Yet one of the biggest hurdles faced by adult-themed business is funding -- getting financial institutions to bankroll ventures that carry a stigma.
Pat Davis, the CEO of Passion Parties, a national sex toy supplier based in Las Vegas, says she has been turned away from banks and other small-business lenders on the grounds that their boards refuse to support pornography.
"I tell them, 'Neither do I," Davis says. "Our business is about education and we're very clear about who we are and what we're about." Like many sex toy business owners, Davis relies on private investors for financing.
Launched in the mid 1990s, Davis's company supplies kits and training to more than 20,000 independent counselors, who organize product promotions in homes across the nation. (Imagine a Tupperware party for sex toys.) The get-togethers typically attract about dozen women -- from stay-at-home moms to corporate executives -- who can buy products directly from the counselors or place orders from the company. Each party brings in between $500 to $1,000 in sales, which is split between the counselor and the company. Last year, some 38 counselors brought in more than $1 million, while a smaller group raised $5 million, Davis says.
Davis says the parties offer a greater awareness of sexual aids among women who, like herself, are not comfortable going into their local sex shop. Even so, Davis adds that women of all ages are far more sexually empowered than they were a generation ago -- and that is good for business.
"I think shows like Sex in the City have made it far more open for women to look at these issues and speak more frankly about sex," she says.
Still, Dunham says, there's a bad stigma around the industry that many smaller sex toy retailers are hoping to clean up by disassociating their products from pornography. "The bigger companies used to be run by men and marketed to men," she says. That meant naked women on the product packaging or graphic sex on the website. By contrast, OhMiBod and other smaller retailers are shifting their market focus to couples, with suggestive but less graphic packaging, Dunham adds.
They're also creating their own trade shows that, unlike the Adult Entertainment Expo, exclude hardcore DVDs and websites.
The approach is working. In the past few years alone, sex toys -- or pleasure products, as they're now often called -- have begun appearing on Amazon.com, Walgreens.com, and other mainstream shopping sites. At Fred Segal, a boutique department store in Los Angeles, shoppers can browse for sex toys while sipping a cappuccino.
As Davis puts it, "We're empowering women from the bedroom to the bank."