At the end of 2015, EAN visited Michael Peter Hansen, the founder and owner of online shop sexshop.dk, in Padborg, Denmark. Even back then, it was pretty obvious that Hansen had a good nose for the market, pursuing the right path and the right concepts. So it was not really a surprise when we learned that, in 2016, Michael’s revenues almost doubled compared to the previous year. In our latest interview, we asked him about the foundation of his success and the trends in the e-commerce segment.
Michael, was 2016 a good year for your company? Michael Peter Hansen: It was a very good year. We almost doubled our revenues compared to 2015. We optimised the delivery conditions, so we can now guarantee delivery on the next day for orders placed up until 21:00. We are the only online adult shop in Denmark offering that kind of service to the customers. Of course, this is a big logistics challenge, but we made it work. Apart from that, we also put the final touches on our German online shop, Palora.de, in 2016. Getting this shop off the ground took much longer than we’d originally anticipated, but now, it’s up and we’ve reached a level of about 1000 orders per month. We know that there is a lot of competition in the German-speaking market, but securing even a small slice of that pie is enough to make us happy.
Which trends did you notice in the e-commerce segment for sex toys last year? Were there big changes compared to previous years?
As far as products are concerned, the big trend of 2016 was increased interest in products such as womanizer or Satisfyer. Other than that, sales of male-oriented anal toys went up 30% compared to 2015, and demand in couples’ vibrators and app-controlled sex toys was up 20%. Moreover, many of our customers started asking for ecologically sound products that don’t contain any harmful substances, softeners, etc. If you look at customer behaviour in general, a big development is that 50% of all orders were placed via smartphone or tablet.
Online retailers in many countries complain about the overwhelming competition from big e-sellers (such as Amazon, for instance). Is this development also a problem for sexshop.dk?
In Denmark – in the whole of Scandinavia, as a matter of fact -, we have no Amazon and no eBay, which is obviously a good thing for people like me. I believe that there are two big reasons why Amazon and eBay have never entered the Danish/Scandinavian market: Firstly, the population in these countries is simply too small to be of interest for these big companies, even though there is a lot of disposable income to go around, and in spite of the fact that Scandinavians have embraced the digital market and do a lot of their shopping online.
And secondly, there are big and well-established online shops in the various segments of the Scandinavian market. Because companies like Amazon and eBay have not been part of the market, these shops had the opportunity to grow and to bind customers. Now, the consumers are used to shopping at these sites. That said, we are still facing the same challenges; the competition never sleeps, and everybody is working hard to add to their market share.
E-commerce can transcend borders between countries. Still, most of your customers are Danish. How important is it to be close to the consumer in terms or language and/or customer service?
In the e-commerce trade, it is vital to create credibility and trust. One of the best ways of creating that kind of trust is by offering great customer service. Another important element is to make the consumer feel that you are by his side, every step of the way. That also helps set a smaller shop apart from big companies like Amazon who are basically just showing you a large catalogue of products. We present ourselves to the consumers as experts in our field, and we are eager to respond to any questions or requests.
”In the e-commerce trade, it is vital to create credibility and trust.“
In your opinion, what are the most important factors that influence the consumer’s purchasing decision? Price? Brand? Functionality? Design?
I think there are two kinds of customers. The ones who care about brands and quality and those who care about low prices. I think that our customers make their decision based on any combination of the following criteria: price, service, delivery time, shop rating, product quality, credibility, and product recommendations.
And which criteria do you go by when picking products for your online shop?
We find out which products people are looking for on Google and on our own site. Also, we keep an eye on the product categories that are doing particularly well and then watch out for new releases in these categories, as presented in magazines, on TV, the internet, etc. This way, we always keep up to date.
Being an “etailer”, do you feel that you get enough support (sales-promoting materials, product information, etc.) from your suppliers?
I don’t think we could wish for better support from our suppliers. They provide us with images, texts, key selling points, etc. and the delivery times are great. Working with our wholesale partners and producers is a very pleasant experience.
Technology keeps evolving, and the Amazon Alexa Voice Service is a great example of that. What is your take on this new system?
It does not really affect us because we don’t sell our products on Amazon, not even in Germany. Also, it’s basically just an extension of a regular search function. There is not really a difference between entering the query yourself or having it entered by the system.
In February, Valentine’s Day will coincide with the release of the second Fifty Shades movie. What kind of impact will the movie have, especially on adult-oriented e-commerce?
The first movie provided a major boost to the entire industry, and we hope that the second film has a similar effect. Since part one, people have become more open-minded and more adventurous regarding bondage.
What are your plans and goals for the upcoming years? Do you want to launch more online shops or incorporate other channels of distribution such as homeparties, or maybe a brick and mortar store?
We pursue a very straight-forward strategy. We want to bolster and improve our position in the Danish market and become an established option for toy lovers in Germany. And once we have secured a solid foothold in Germany, the next goal will be Sweden. However, there are no plans for a brick and mortar store or anything like that. We are going to stick to the online business.
And what do you predict for the future of the e-commerce segment in general? Do you expect any major changes that might affect your business model?
I believe that the customers will demand better quality and more sustainability in the future. Also, bondage and fetish products will become a bigger part of the market because the young generation is very liberal and open-minded, and these products are no longer tied to kinky pornography. Moreover, it will be very important to keep up with the trends, such as products with virtual reality support.