Eric Idema, head of EDC Wholesale, does not beat around the bush when discussing the impact the Corona pandemic is having on his business and on the market in general. What troubles him most is the uncertainty regarding the duration of this crisis and the economic aftershocks that are to be expected. But he hasn’t lost his optimism, as becomes evident in our EAN interview.
Your retail branch (EDC Retail) warned the Dutch press on 19 February that the Coronavirus could cause a shortage of sex toys from April onwards. Is this realistic or rather pessimistic?
Eric Idema: No, this was a very realistic prediction, triggered by a delay in the production of our house brand collection. Our production facility in China remained closed after the Chinese New Year. Under normal circumstances, our production would start directly after the holiday period, but now they had to stay closed for another 3 weeks and once they were allowed to reopen their doors, they didn’t have enough workers to fully pick up production. Which caused a delay in our normal production flow and this will be noticeable from April onwards.
The lion’s share of products in our market is produced in China. EDC also sources products from there. Can you say what the current situation is like in China? Are the factories that work for you closed?
We keep in touch with our production facilities on a daily basis, to stay up to date on the situation. We are pleased to say that our associates in China are in good health and have returned home safe and sound. At this moment, our production facility is open. The workers who were in a restricted area at the time of the outbreak now have permission to travel back home but will have to stay in quarantine for another two weeks upon arrival. This means our production is still not at its normal capacity, but we expect things to be fully up and running mid-April. We can’t predict what will happen with the supply chain of raw materials or transport once everyone is fully operating again. We are aware that this could cause a delay in the production or transport of the goods to our warehouse in Holland.
How big is the impact on the logistics element? Are products still being transported at all?
We anticipated the Chinese New Year by raising our stock well in advance and shipped several containers before the holiday period started, which arrived 6 weeks later in Holland. By that time, our production facility was allowed to reopen and slowly started its production again, but only with a third of its normal capacity. Products are being transported again, but not at their usual pace.
In view of this situation, how difficult is it to make plans for the future? We all know that new products are the lifeblood of this market. How much uncertainty does the current situation create, for example with regard to the major trade fairs in summer and fall?
On one hand, we try to live in the moment and keep an eye on the situation and the developments day by day. The situation is changing daily, and we need to anticipate every change that we have to deal with. On the other hand, we need to look ahead, but the question is how far ahead. Events are canceled until summer here in Holland so, for now, we will carefully focus on events in August and later in the year. Hoping that the corona virus will have settled by then. We see that China is slowly recovering after 2 or 3 months. That gives us hope that we can overcome this terrible pandemic. We’re still working on new products, even though it’s challenging at the moment. But we will continue to do so for as long as we can. We need to stay optimistic and prepare for better times.
“We need to stay optimistic and prepare for better times.”
How does EDC Wholesale deal with these problems? Are there other resources and capacities you can use?
Like I said before, we have raised our stock before the Chinese New Year and after the lockdown in China, I started raising stock again with products from our suppliers. So, some items might be running out of stock, but we have plenty of alternatives. For now, we have enough products in our warehouse and new stock is still coming in. Our office staff is working from home and we are now working in 3 separate shifts in the warehouse. Our sales and customer services are available to help our customers in any way possible. We are blessed with a tremendous ICT department that is making all of this possible.
Fewer products and more expensive transport – that clearly sounds like the price of sex toys will rise. Could this happen?
It definitely can and it will. We already see it happening around us, suppliers are raising its prices and it’s only a matter of time till it’s inevitable for us to follow. We see the dollar rate changing daily and supply and demand has also shifted tremendously. Our customers had to close their brick and mortar shops, which causes a change in demand. These are all elements that affect the prices. For now, we are still able to find transport to ship our goods to Holland. But now that the production has started again in China, there might be more demand and less transport, which will also push the prices up.
The international stock markets have already been badly affected by the virus, and many people are worried that the global economy is going to slow down. Do we also have to keep an eye on these rather long-term effects of the Corona crisis?
Yes, we do. I always like to stay positive and even in this situation, I try to convince myself that other industries are more affected than we are. But I also have to be realistic; a total lockdown situation is bad for business and our economy. Many countries are already in a complete lockdown situation, this is affecting the economy already, and not in a good way. We can only hope that Europe and the rest of the world will recover quickly. It’s hard to predict how we will overcome this situation, but I can only imagine that we will need time to recover from the Corona crisis. On the other hand, it’s amazing to see how resilient people are and how quickly they can come up with a creative idea to deal with the situation. That gives me hope. Let’s all get creative and think about how we can make the best out of this terrible crisis.
Aside from the direct delivery and transport bottlenecks, we know from experience that the consumer mood declines in times of crisis – do you see this as a threat to our market?
As of yet, we see a shift in product demand; we sell more hygienic and disinfectant products and since the lockdown of public places in Holland, we see that consumers are now focusing more on toys. I can only imagine that this is a nice distraction if you are quarantined at home. People are looking for ways to make things more fun at home and sex toys help. So, for now, I’m still optimistic.
Since nobody knows what will happen with the virus, we can speculate freely: If everything goes well and the virus disappears by the start of summer, how long would it take for our market to recover from the effects? And what if it’s going to get tough and the virus continues to dominate the world for many months? What would we have to prepare for then?
This is a complicated question to answer and this really keeps me up at night. Not knowing what’s coming and in what way and for how long we will be affected. I am mainly concerned about everyone’s health. My family, my employees, my customers, and suppliers. I really hope that everyone can return to their jobs safely and start building again. But I’m also concerned about the financial effect of things. Customers who are on lockdown and not able to make any money while their companies are closed. This isn’t only affecting our industry, but also the catering industry, aviation, etc, etc. I could imagine that many companies will not overcome this crisis. Large or small, these are difficult times for everyone. We really need to take the Corona virus serious and listen carefully to the rules and advice from the authorities. That is the only way to overcome this crisis.
“I could imagine that many companies will not overcome this crisis.”
Should the Coronavirus be seen as a wake-up call for our industry not to become completely dependent on China? Or should we understand the virus and its effects as an ‘external factor’ that influences the erotic market in a similar way as, for example, the financial crisis in 2007 or the euro crisis in 2010?
In this case, it really doesn’t matter where our products are manufactured, whether it’s China or a different country. Everyone is affected and Europe may be affected even worse than China. I do hope that this is a wake-up call for the world, that this cannot happen again. They say it was not a matter of IF, but WHEN this would happen. Let’s all learn a lesson from this situation and see how we can make a better world for ourselves. And let’s start now, by helping other businesses in need or people who are affected the most by the Corona virus. What can we do to help each other during this crisis? We can’t change the situation that we’re dealing with, but we can change the way we deal with the situation. Together we can overcome this!