The summary of the first six months of this year in regard to the development of our market is negative. Would you agree with that?
- Considering the entire erotic market, I would, a significant drop is noticeable, some players on this market are frustrated and, mildly speaking, annoyed. It comes as no surprise, after all the recent years – particularly the COVID-19 pandemic – brought the industry a lot of growth, high profits, and made the impression that the future would be promising. It turns out that the impression has been misleading, joy temporary and investments into products in the years 2020-2023 have blocked considerable funds.
Were expectations simply too high?
- There was a lot of optimism at the beginning of the year, but after the first trade shows in the US, disillusionment set in. Were you similarly optimistic - or, to put it another way, what do you think was the reason for this optimism? People tend to be impulsive and unreasonable in unusual situations. When you celebrate your success, you usually fail to analyze the causes but remain emotional and happen to take decisions with ease. The joy, or perhaps euphoria, that accompanied the success during the COVID-19 pandemic time – especially in the e-commerce – obscured the essential issue: the cause analysis (sales success in this case), assessment of effects (how the success is going to influence the organization) and predictions about the future (tendencies versus anomalies). Now the erotic industry has got nervous and it results from the lack of reasonable evaluation of what actually happened in the years 2020-2023 and its consequences in the future. It they had assessed the situation in a proper way, they would not be surprised about what we have to deal with today.
Now let's look at the causes: isn't it easy to explain what we are currently experiencing in our market when we consider the many global crises and their effects?
- It is easy to list obvious causes of problems: war and inflation, yet such an approach means that you cannot see your own organization. This means that there are several causes: internal that are beyond your control, and internal which you can influence. Let’s focus on the ones you can affect. I believe that one of the sources of numerous problems in our market is the fact that large entities are greedy and expect quick profits, they compete in terms of prices rather than quality or range of services. It is also all about legal struggles and continuous lawsuits. This is what makes the industry weaker and it has been happening for a couple of years. Big players fight with one another and smaller organizations (companies) sadly bear costs of their problems and struggles. Plus the regional nature and consumers’ cultural behaviors that differ in Germany and Austria from those in Sweden or Spain, and prove completely different in Poland or the United States of America. The company is nothing but organization and you need to concentrate on its systemic operation rather than rest on emotions. One of the features of the organization is the fact that it should be planned, rest on a formalized structure, have the division of work and center of power. And obviously it must adopt its own strategy. The universal strategy, rather than developmental strategy only. Nothing can be worse than being surprised. Companies’ only strategy is to sell more and more. But it is not a strategy but only an irresponsible and often unfeasible goal. And the curse of modern times: copying ideas, price war, no intellectual effort to find your own way or come up with a marketing strategy and provide an innovative service. I know a lazy store (and it is surely not the only one) which is so insolent that it copies the display cabinet of another shop, believing that it is going to work just like it does there. What a specific marketing model! How can you get ahead doing that?
But for you, the coronavirus pandemic also plays a role in explaining what is currently happening in our market. Can you explain this in more detail for our readers?
- The COVID-19 pandemic that invaded Europe at the early 2020 was shocking to us all. Nobody, literally nobody could either understand the roots of the problem or predict what we would be forced to deal with later. In Poland, during the lockdown, numerous entrepreneurs lost all their possessions, in particular restaurant and hotel owners. We all feared the upcoming future. And here come a surprise! The e-commerce trade started growing. Online stores could earn more and more. The OESD report reflects that perfectly, yet with the example of other countries: https://www.oecd.org/coronavirus/policy-responses/e-commerce-in-the-time-of-covid-19-3a2b78e8/
- This trend remained for a long time but it differed in particular countries. But nothing is constant, especially quick, unexpected and unforeseeable situations. The deviation, that is the pandemic period and enormous growth in the e-commerce was the perfect example of such a deviation. Why? It is because they did not result from analyses and sales strategies, they were not concerned with fulfillment of scheduled processes and plans, but came from unexpected and external circumstances that created some field for operation. In this particular case they created a good opportunity for the e-commerce. Few online stores were ready for that. I know that people panicked, stores received a dozen orders more than normally and could not fulfill them all, and were not able to send these orders to customers. Stores decided to buy more from distributors, and distributors from manufacturers. It was rolling. The manufacturers could not produce much enough, and to take the most of the situation, they produced higher volumes... As a consequence, we are facing an oversupply now, particularly of famous brands. And consumers have not only bought enough but spend their cash more carefully. Plus the outbreak of war in Ukraine on 24 February 2022 had a considerable influence on further market trends.
However, the old wisdom that our market is crisis-proof no longer applies?
- I don’t think the market crisis-proofness exists. The market moves in various directions, for various reasons, yet mainly for economic reasons and own needs (purchasing needs, satisfaction of desires, pleasure). Market immunity is a romantic vision and blurs our thinking. I think you have to think outside the box to understand the market in a proper way. But… people are lazy, when you receive the ready answer (here: market immunity), you make use of it and use it to justify all the things.
How should we react to this situation? By reducing costs? Costs for marketing, advertising, personnel, etc.?
- I would not generalize. Every organization (company) is unique and must assess its capabilities on its own. Still, it is advisable to start with the analysis of losses and their causes, and then set certain goals and do your best to achieve them. Cost reduction is a never-ending story and surely one of the instant thoughts the entrepreneurs have in case of crisis. I think that nothing is worse than that. If you run a business that needs to bear costs to operate, you cannot reduce them just like that. If the company makes money on marketing, is funding reduction a good idea? If a store needs to have at least 2 sellers to work 10 hours a day, is it possible to cut personnel costs and fire 1 person? There is no need to answer that.
Are you worried that one reaction to the current situation could be a price war?
- We have been witnessing the price war for long time now, it is nothing new, it is waged by various organizations and at various levels. The market is like that, some entities that are not innovative and original choose the easy way and lower prices. Some will lower them now, others later, and finally the price will be too low to make it lower...
Is there perhaps also a danger that there will be less investment in innovation and unique products?
- I am glad that the European Adult News Magazine sometimes asks about innovations and unique products. This is a proof that they understand what the 21st century is and what we can all expect from it. Innovation entails considerable intellectual effort and substantial funding. You cannot elaborate a novel product if you fail to analyze consumers’ needs. As we all know, these needs differ, depend on the culture, result from diverse life experiences and life attitudes (open or reluctant towards new items). At present, in the light of the war in Ukraine and unstable situation in the Middle East, many technologically advanced companies that would otherwise be committed to elaborating and producing innovative erotic gadgets remain engaged in other projects, not necessarily related to sex and sexuality. Going back to eroFame in 2023 and previous editions, one could hardly ever say „wow” with regard to products. The industry is stagnating, there are no ideas for new products, after all another personal massager or another lubricant cannot be called innovative.
Do you see a glimmer of hope that we will soon have passed through this 'valley'? Or are there perhaps even signs that the 'valley' is getting even deeper?
- I am always optimistic and try to use my common sense in the business. This is why my prediction for the next 2 or 3 years is that the market will cool down after a downward trend and go back on track. I believe it will require investments in innovative products. Someone has to do it as consumers are getting younger and younger. In the past, they would buy one erotic toy and keep it for many years, now young customers are willing to look for novelties, search for experiences, are able to do a lot to get what they are looking for. Boring and predictable toys will not be suitable. The question is if we are going to prepare a good offer for them.
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Źródło oryginalnego tekstu: https://www.ean-online.com/ebooks/EAN-06-24_ebook.pdf
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