The traditional chain of supply, based on the interrelationship between producers, wholesalers/distributors, retailers, and consumers, has been coming apart at an increasing speed these past few years. EAN asked Robert Strzelecki, General Manager at Polish distributor PLAYROOM, how he feels about that trend. Also, we talk about the reasons for this far-reaching development, and Robert tells us why he has hope that the supply chain will stabilise again.
Do you also have the impression that the traditional chain of supply in the adult market (producer-wholesaler/distributor-retailer) is breaking apart more and more?
Robert Strzelecki: It is not only my impression, I had anticipated such a situation a few years ago when we experienced that at our company. I think these changes in the traditional supply channel arise naturally from the fact that a manufacturer can get closer to the end-customers and vice versa, end-customers feel closer to the manufacturer. I know it is a bit outrageous, particularly to those who have more traditional notions about the production-sale process (including me), but taking into account the growth of the internet and access to information, it was inevitable. It’s sad but true.
Looking at the situation from your point of view, what reasons are there for this shift? And why has this development progressed so quickly in recent years?
In the 21st century, in the era where businesses and consumers strive for omnipresence in social media in any possible channel, it should be no surprise that pace, speed is the most important thing; how quickly do you get from a purchase decision to the actual purchase/sale? Today, it is not the price that determines business but product availability, transaction smoothness. Why? Because both parties intend to buy or sell faster, smoother, without agents. Consumers believe that goods purchased directly from manufacturers are of better quality and believe that manufacturers are able to provide the best after-sale service. But is that really the case?
“Today, it is not the price that determines business but product availability, transaction smoothness.”
Is this change progressing in a similar fashion across all European countries, or are there differences between the individual markets?
In fact, I am curious about that as well. Our point of view is that consumers look for fast access to products, contact manufacturers directly, or purchase goods on the manufacturer’s websites. Sure, not every manufacturer informs them that they may as well buy their product in a retail store and still be provided with full protection, service, advice. Some sell products, literally single items, at retail prices, which is not fair, I guess.
Does this erosion of the supply chain affect all product categories of the adult market in equal measure?
I reckon that products for specific customers are doing well. I mean the customers who don’t find small vibrators sufficient and look for special thrills. Such products are available in fetish stores. It is more difficult to contact their manufacturers and more difficult to order them via the internet. The situation with traditional products – that is, vibrators, massage candles, and lubricants -is slightly different, however. The manufacturers of these products often offer better prices than retailers can.
What risks does this development entail? Could it hurt the adult market?
The manufacturer faces risks – although the temptation of bigger profits seems to be even greater. For instance, by selling products to the customers, they take responsibility for the entire after-sales service: complaints, remote agreement withdrawals, returns of non-delivered parcels, etc. Not all manufacturers know how to deal with that and truth is that manufacturers have other things to do. But the opportunity to make an easy profit turns out to be more important than a potential threat to brand loyalty due to the lack of or unprofessional after-sale service.
In your opinion, what advantages does the traditional supply chain have to offer for all parties involved (i.e. producers, wholesalers, retailers)?
Above all we need to realise one thing – manufacturers, no matter how good, rich, and experienced they are, do not know the local markets, the applicable laws, the people’s habits, the cultural or social situations and current policies. It is a seller who acts as a specialist, he is the expert when it comes to those things, and he knows best – or at least he should know best – how to provide proper after-sale service. Aside from collecting end-customers’ e-mail addresses, there isn’t much more producers can do. They do not know the consumers’ habits, and a newsletter sent to an end-customer in order to encourage him/her to make another purchase with a 25% discount proves that manufacturers who adopt this strategy focus on profits only. I think that the brand is affected and b2b bonds are affected as well. The seller is marginalised in this situation but truth is, the trade cannot be replaced.
“Manufacturers, no matter how good, rich, and experienced they are, do not know the local markets, the applicable laws, the people’s habits, the cultural or social situations and current policies.”
So what is the worst case scenario: a market where everybody is simultaneously producing, distributing, and selling their products?
The market regulates this pretty well, I guess. I mean direct contact with an end-customer seems to be very beneficial to the manufacturers at first, but with time, as customers loyalty is tested because they do not receive any replies, or are bombarded with e-mails, they may turn their back on these producers. Who would lodge a complaint and return the product for 1/3 of its value (EURO zone vs. non-EURO zone)? Sooner or later, all customers would be outraged.
Can this development be slowed down or stopped? What would have to change to make that possible?
In our company, we rely on manufacturers who assure us that they will not sell products directly to end-customers in our area, and therefore, we invest in them and work hard to sell their goods. Is it worth investing in someone who would skip a wholesaler/distributor in the sales channel? That is a rhetorical question, of course.
Is this situation unique to the adult market, or is it part of a general development that can also be seen in other markets?
I don’t know if it is comforting, but a similar situation occurs in many other lines of business: clothing, perfumes, cars. I think that is simply the times we live in. Question is whether the customer benefits from this situation. It is the customer who should be the top priority.
Is the notion of a traditional supply chain maybe becoming obsolete in our globalised world? Hasn’t the supply chain turned into a dynamic and complex network of suppliers and customers?
Globalisation is a big word and can be used to justify pretty much anything nowadays. In this case, we can say that globalization enables manufacturers to sell products without their distributors. But should they? I reckon that globalisation of information flow is a must but the globalisation of sales and distribution channels is just a whim of manufacturers who only focus on profits and do so at the expense of their brand. A traditional supply chain, if used well, clearly distributes responsibilities. People know who the manufacturer is and what obligations they have and they know who is responsible for distributing the products and reselling them, thus taking on a completely different sort of responsibility.