“We believe in supplying bestselling brands that our customers can make a great profit on.”
When Net1on1 Wholesale entered the market in the early 2000s, it was still a very different market. A lot has changed since those days, also and especially in the realm of wholesaling and distribution. These changes forced the companies within the market to adapt to a new set of requirements. EAN and Sebastian Gonzalez, the Sales Manager of Net1on1 Wholesale, take a look back at the history of the British company and how it managed to keep up with a changing marketplace time and again. And while we’re at it, we are also talking about concepts for the future of the erotic wholesale segment.
Our first question is dictated by recent
events: Brexit is now complete. Do you expect the erotic industry in the United
Kingdom to feel any negative effects after the transition period?
Sebastian Gonzalez: Unfortunately, we can’t be sure yet what changes will happen after the transition period to tariffs, custom checks, currency exchange, and cross-Channel trade. At the moment, we can only wait and see what will be agreed during the negotiations and hope that trade and market regulations won’t diverge too much between the UK and EU.
That being said, I think the UK erotic industry is robust and stands on a very good foundation of ongoing and growing demand so, even if there are negative effects, I think the industry will be able to counteract them.
Did you prepare for Brexit in any way? As we know, you work with suppliers from all over the world and also distribute to customers in the EU (and beyond) …
There have been so many Brexit deadlines in the last three years that it feels like we’ve been getting ready forever. There were some more administrative questions that we had to work out with our suppliers and we’ve also been in constant correspondence with our couriers and freight forwarders to make sure stock can flow in and out of our warehouse just like it did before.
We also decided to set up a company in Europe and we are exploring the option of warehousing in the mainland to ease the time- and financial-pressures that may arise from potential custom checks. We would much prefer to work with a distribution partner who already has a warehouse in the EU though, as we are always looking for ways to expand our presence and reach in Europe.
There’s a lot of uncertainty with what will actually happen from January 2021, which makes any preparation speculative, but we will continue to work with couriers, suppliers and of course, our customers both in the UK and the EU in the coming months, to make this massive change as smooth as possible for everyone.
Now on to your company history: Since when has Net1on1 been active on the market? What is your company philosophy?
Net1on1 Wholesale has been around since the early 2000s, so the company has a pretty great history and ample amount of experience. Tony, my father, is our managing director and he’s been working in the adult industry for almost 20 years so, he brings a tremendous wealth of knowledge to the table.
Our company mission is to work, learn and grow together with the adult industry in the UK and worldwide. We believe in supplying bestselling brands that our customers can make a great profit on. We take extreme pride in our world-class customer service and small, but dedicated and passionate team. We aim to provide convenient on- and off-line business solutions, honest advice and an always approachable, friendly service. We embrace sex-positivity and we are always open to learn new things, not just about our product catalogue and brands, but about sexuality in general.
“Our company mission is to work, learn and grow together with the adult industry in the UK and worldwide.”
There are many wholesalers and distributors in our market. What sets you apart from your competitors? What are your strengths?
We differ in a huge variety of ways, including the many exclusive brands we stock that our customers can’t find anywhere else. We built our product catalogue very consciously to feature both big industry veterans like Doc Johnson that consumers expect to see, but also smaller brands like Zuyosa, YES, Sliquid, Earthly Body and Glyde. This provides a great balance for sellers starting out on marketplaces, start-ups launching their own eCommerce websites and brick-and-mortar shops wanting to stock their shelves.
We are also extremely proud of our in-house brand, Loving Joy that recently turned 10 years old. Our sub-brands now include bondage gear ranges Bound and Bound to Please, the Furry Fantasy tail plugs, the Spectrum glass dildos, the Precious Metals jewelled metal butt plugs and the Impound male chastity cages. These brands all offer unique, outrageously priced products that are steady bestsellers in the UK and in Europe too. I think having such a diverse in-house brand name is reason enough on its own to join the Net1on1 family and sets us apart from most of our competitors.
And, of course, as I mentioned before, I believe that our customer service is second to none. We all have a good, comprehensive knowledge of processes related to the wholesale, dropship and website services, so whoever picks up the phone when you call, you’ll be in good hands! As a big fan of Space Jam, I always thought that the customer is always right, and I think this is something that the whole Net1on1 team prescribes to.
What does it take to operate successfully as a wholesaler in today’s market? A wide range of products? Strong brands? Smooth logistics? Professional customer service?
All the above are essential to keep retailers happy, but personally, I strongly believe that customer relationships are the most important. Having a friendly and approachable team that is focused on delivering a convenient and smooth service and building an outstanding product catalogue strongly differentiates us from other wholesalers. Many of our customers have been with us for over a decade and our network of connections within the industry are far-reaching. We love, live and breathe the adult industry and maintain a very good relationship even with our competitors.
Our biggest guiding principle when it comes to product sourcing is to provide high margined items with competitive RRP so our customers can make a great profit and keep consumers happy too. With every single product launch in the last 5 years, we’ve been building our Loving Joy brand to embody this very principle – our customers can expect an average 70% margin even when they sell to consumers at a very competitive, affordable and accessible RRP.
How have the requirements for you as a wholesaler changed throughout the past years?
The UK market has changed massively over the last few years, especially with sex shops. Sex toys have become a lot more mainstream and so sex shops have updated their image too. With these changes in the industry and around the perception of sex toys in general, more and more people decide to have a stab at selling online and with convenient dropshipping services such as ours, it’s never been easier to start listing on marketplaces or setting up a website.
The changing profile of who sells sex toys and how, means that retailer needs have changed significantly, so we have to adapt continuously too. We focus now more and more on offering high quality products at exactly the right price point. We reduced our free shipping threshold in order to help our wholesale customers manage their stock and cash-flow. We scrapped the 10% dropship fee, so smaller online sellers can just pay the standard trade price and have their order shipped directly to their customer’s door without any extra charges.
All these changes and steps we’ve taken in the last few years, were made in order to offer our customers better margins and to help them sustain their businesses. The retail landscape, both on- and off-line, is a tough environment at the moment, so we feel we need to do our best to aid entrepreneurs, start-ups as well as bigger businesses.
“The changing profile of who sells sex toys and how, means that retailer needs have changed significantly, so we have to adapt continuously too.”
How would you describe your assortment? What is important to you when you look for new brands and products?
Our catalogue used to be pretty vanilla – your usual vibrators, dildos and butt plugs, if you know what I mean. But ever since the worldwide success of Fifty Shades of Grey, fetish became so much more mainstream, so we slowly added sub-brands like Impound, Furry Fantasy, Bound to Please, all geared towards a more adventurous audience. When we saw how popular these ranges became, we increased our offering drastically. We also expanded our sexual wellness category and grew our Essentials range, which now includes a universal harness and beginner’s bondage kit too.
We consider a variety of different things during product sourcing, but obviously, quality has to come first so we scrutinise every sample in the office that comes through our doors. Then we look at market trends and demands and how the product would fit in to our catalogue and existing product range. We also establish margins – both ours and our customers‘ – at this stage to see if it’s viable for us to sell the product. Eventually, we always end up making a well-informed decision about what products we should bring to market.
I think this thorough process is what makes our products sell so well as soon as they touch ground. Just recently we launched a new battery-operated wand vibrator under the Loving Joy brand umbrella, and it almost sold out in under 2 weeks!
You are the exclusive distributor for several brands in the British market. There is much debate about the pros and cons of exclusive distribution. Is this a strategy with a future for you?
I think exclusives are great and work very well for smaller, boutique brands. We have a few UK exclusives with brands like Zuyosa, Sliquid and Glyde and these are some of our best performing ranges; our sales of these have been increasing year on year. I think having exclusives does wonders when it comes to the whole team getting behind these brands and pushing them on all fronts. We nudged these brands into the attention of publications like Cosmopolitan because we passionately believe in them and want the UK public to know about them. For this reason, if and when we are given the chance, we will continue to work with certain brands exclusively.
However, with larger brands that are already very well-known across the market and have a tight control over their products and prices, I think having multiple distributors is a good thing – providing that those distributors don’t damage or devalue the brand by starting a price war or selling on marketplaces at heavily discounted prices, in order to gain a competitive advantage over their competitors by appearing to sell bigger volumes.
You launched your own brand, Loving Joy, about ten years ago. What was the motivation to take this step?
When Loving Joy was first created, Net1on1 wanted to launch a ‘cool brand that our customers would associate with good quality and excellent value for money’. This is a core concept that flows through our approach to Loving Joy today.
For example, we have recently launched a new silicone, remote controlled cock ring that is fully waterproof and comes in a very stylish, elegant packaging. Our customers can get their hands on a unit from just £14 (approx. €16.10) with the RRP of £49.99 (approx. €57.99) – I don’t think you can find a better priced product for that quality and functionality.
We are planning to increase our basic offering even further this year with products that have an even better price point. We are launching a range of 250ml lubes in the new year – a standard water-based (from €1.83), an anal (€2.63) and a white hybrid (€2.86) lubricant that our customers will be able to sell for €10 a pop, providing them with fantastic margins.
We’ve been developing Loving Joy very methodologically in the last 5 years and with great results. The brand has been growing in popularity and recognition, it featured in some great mainstream publications and it’s a firm retailer’s favourite both on- and off-line. 10 years and going stronger than ever!
How do you prevent your own brand from becoming direct competition to the brands of your suppliers?
The products that we take on from our suppliers are usually very unique and innovative. They also come with their own brand story, following and style. We wouldn’t dream of competing with Aneros in prostate massage, for example.
The products that we bring into our own brand are completely different and usually have unique features that no other brands have invested in yet. My favourite example is the Loving Joy DUA – an interchangeable vibrator that was voted as the third best vibrator by the Good Housekeeping yearly Tried and Tested panel in 2018. It has been incredibly popular ever since, and suddenly, this year we started to see other brands releasing their own versions of the toy too.
Basically, we like to jump on unique products as soon as possible, and they often end up being the first of their kind on the market.
“We like to jump on unique products as soon as possible, and they often end up being the first of their kind on the market.”
Would you agree with the statement that the wholesale market is increasingly dominated by distributors’ and wholesalers’ own brands? What role does the distribution of foreign brands still play in today’s market?
Most in-house brands are built on basic products that can be easily and openly sourced from China, and yet there are only a few companies that do own-brand lines very well. In contrast, established brands have greater resources at their disposal which allows them to bring innovative designs, exclusive to them, to market – as long as they keep doing that, they will always be relevant and popular. They also have the ability to market and advertise to a wider range of consumers worldwide which helps with brand recognition and presence so the public actively seeks out their toys.
As previously mentioned, Net1on1 set foot in the market about 15 years ago – a market which, at that time, was a very different one. Hence the question: was everything easier in the past?
It was definitely easier in some respects, especially with established brands and being able to sell them. Wholesalers used to be everyone’s primary suppliers, but nowadays many sellers buy from China or manufacturers directly, using wholesalers like us, as secondary suppliers only.
I think some B2C players grew so big that it made the market extremely competitive for everyone else. Furthermore, 15 years ago the big marketplaces were not interested in the adult industry yet, and their involvement in the last couple of years has disrupted prices, the standard distribution channels and the market in general.
This is where own-brand product ranges and innovation plays an incredibly important role as price point and uniqueness became the main ways to stand out from an otherwise very crowded market.
The traditional supply chain is coming apart further and further – and quite a few in our market believe that wholesalers and distributors have suffered or are suffering most from this situation. Do you share this view? And how has Net1on1 Wholesale reacted to this serious change?
I think this change doesn’t just affect our industry; this is a problem with wholesale in general. Wholesalers need to offer unique products and have an absolutely unparalleled service in order to maintain business and attract new customers.
The prevalence of marketplaces and the absolute rock-bottom prices that can be found there made a huge difference in how the supply chain works. This means that wholesalers and distributors need to manage costs and margins more than ever, to keep themselves relevant and necessary. It all boils down to pricing, unique products, exclusive brands, healthy stock levels and convenience.
As such, Net1on1 will continue to focus on building a unique product catalogue filled with bestsellers and hidden gems as well as maintaining high volume stock levels for products that our customers seek, need and buy the most. We will also focus on offering even better priced adult toys and essentials that our customers can turn around for a tidy sum.
“Wholesalers need to offer unique products and have an absolutely unparalleled service in order to maintain business and attract new customers.”
Now on to the present: What are your ideas, plans, and goals for 2020?
In 2020, we will expand our Loving Joy range further; we already have products in the pipeline that are unique and target a younger, trendy market. We are also looking for distribution partners who could take Loving Joy exclusively to their region; we have some we are already working with and they are proving to be really rewarding business relationships.
We are looking forward to a very productive, busy, successful and exciting year – never a boring moment in the adult industry!
Which challenges does Net1on1 expect in our market this year? Do you see serious changes on the horizon?
The biggest challenge will definitely be the uncertainty around the Brexit negotiations and the effect they will have on our European business. We have lots of EU-based customers who will be following the trade talks just as anxiously as us, and we want to assure them that we will do our absolute best to minimise the impact, whatever the outcome will be.
We would love to start working with one or two select partners in mainland Europe in order to push Loving Joy to the next level and elevate our Net1on1 relationships with European retailers. We hope more information will be available soon and we can make concrete plans to continue these much-valued partnerships with our EU friends all across the continent.