In the final part of Lovehoney Week on Retailinsider.com we hear from co-founder Neal Slateford, who runs through the top 10 things he has learnt from setting up the business.
1. We don’t know anything, you don’t know anything, but don’t let that stop you.
Before setting up Lovehoney it was a toss-up between creating a cross-stitching online business or selling sex toys over the internet based on them both being under-served categories. After visiting a cross-stitching show and the Erotica event Slateford says “sex toys was chosen as it sounded much more fun”.
2. You don’t need much money, an office, or a warehouse, but a bit of capital helps.
For two years the business was run from a home office and fulfilment was from a Pickfords self-storage building. “There was no electricity and heating in winter but by the time we left we were doing £1 million per year in sales,” says Slateford.
3. What makes you so special?
Competitors come into the market and under-cut you so we went into making our own products. We ran a competition to invent a new toy and Trevor, who lived in a caravan in Ireland, won with Sqweel – an oral sex simulator for women. It has been a runaway hit and Trevor earns a lot of money from it and he now lives in a smart flat in Toronto. Meanwhile, Lovehoney enjoys “fantastic margins”.
No, it's not a Rolodex.
4. Retail is detail.
Lovehoney employs eight people working on content who highlight how to use the company’s products, answer questions about new lines, and create user guides, with the aim of demystifying the industry.
5. Care for your community and they’ll care for you.
Lovehoney has 37,000 members in its community and it asks them questions about new products and they take photos – for things like Model of the Month - that are then uploaded to the site. And the company listens to its customers: “They said they did not like the official photos of models in the product shots as they were too American. Now we have a mix of customer pics and official ones.”
6. If you outsource everything then exactly what is it that you’re good at?
Lovehoney does most things in-house because otherwise there would be a question over what differentiates it from other businesses selling similar products.
7. Always go the extra inch.
“The industry was dodgy so we decided to focus on customer service. We went to visit Zappos in the US and thought we’d do the same for sex toys and go big on customer service,” he says, adding that any item can be returned for any reason up to 365 days after purchase – even if it has been used. Although Slateford says some people will take advantage they represent a “tiny, tiny proportion of customers”.
8. Find good people, it’s hard to be really successful without them.
Not hiring people earlier was a mistake, according to Slateford, who says £1 million turnover had been reached with just the two co-founders working at the company, which with the benefit of hindsight would not be repeated. He cites the company's e-commerce specialist Matty Curry as instrumental in the business' success.
9. It’s easier to change direction when you’re already moving.
Although Slateford says it is tempting to want everything on your website from day one Lovehoney has worked on getting the “bare bones” up and running and to then constantly iterate, which helps to make failures unlikely. “Never go live and then go home. Or go live and go to lunch,” he advises.
10. You don’t need to spend money to get noticed.
Lovehoney found magazine and TV ads did not work but what it finds does work are “stupid ideas” that just need to be brought out from brain storming sessions. Slateford cites one recent stupid idea that got plenty of publicity – a Royal Wedding commemorative cock ring.
For good measure Slateford throws in an extra tip – the most important of all:
11. Have fun and be happy
“The last 10 years have been fun, we laugh every day. It’s been brilliant,” he says.