Pleasure Product Companies Brace for Impact From Pandemic

As Americans nationwide confront the measures necessary to stop the spread of COVID-19, the pleasure products industry is taking its own precautions. In a matter of the past few days, many manufacturers have banned travel for salespeople, and some adult retailers are temporarily closing their doors and/or limiting their hours. While social distancing and self-quarantining measures will be in place for the next several weeks at least, what longer-term effect the pandemic will have on makers of pleasure products is still uncertain. Long before Americans began sheltering in place, COVID-19 crippled China. In an effort to control the fast-spreading coronavirus in its early days, Chinese authorities ordered the closure of factories throughout the mainland, including those that manufacture parts and pieces of pleasure products. While it took more than a month, as the spread of the virus slowed, factories slowly began to reopen, but the shutdown of one of the largest economies in the world paralyzed global supply chains, which in turn affected various industries worldwide. The factory closures spurred mega-corporations such as Apple and Hasbro to announce delays and possibly even shortages of new iPhones and Baby Yoda dolls. And the disruption also affected the pleasure products industry. From simple travel delays—many in the industry traditionally visit Chinese factories and suppliers in February each year—to concerns about shortages in the future, there’s no denying the pandemic has had an impact on individuals and companies. “My flight on [American Airlines] has been pushed three times,” Dean Elliott, founder and CEO of Sliquid, Ride BodyWorx and Mad Toto, told AVN earlier this month. “I was slated to be there [at the end of February]. My flight was pushed until mid-March, then again to early April and now it’s right after Cinco de Mayo!” Elliott said his plans were to source bondage items for some home party clients, and noted the factory had only partially reopened by Feb. 24, and hoped its employees would return from mandatory lockdown in their home cities by the end of the month. “Many have been stuck there from the Chinese New Year holiday nearly a month ago,” he said. Each year, many in China travel to spend time with family during the Lunar New Year. This year, the holiday fell on Feb. 25, which coincided with the initial spread of the coronavirus. Factory closures and travel restrictions combined with quarantines to keep people inside. According to a report in Forbes magazine, by the end of February and start of March, government officials in China were pledging tax cuts and other aid in an effort to encourage factories to reopen. According to IndustryWeek, several Chinese provinces began relaxing regulations to allow factories to reopen. Many did, but with much lower staffing levels, which made them still unable to meet productions schedules and demands. And that could translate into problems for the pleasure products industry. “The amount of units of any product will be limited, and more than likely a bit more expensive to produce,” Elliott said. “Lower MOQ [minimum order quantities] equals higher prices, because these factories need to make enough to keep their doors open. Couple that with Trump’s Chinese trade war tariffs and voilà, your $50 vibe is now selling for $60.” Elliott and his companies are not alone in being affected by the situation, and many are preparing for possible problems down the road. Casey Murphy, of sibling companies Rock Candy Toys and Bedroom Products, said their production schedule did experience a brief delay because of a factory closure, but is now back on schedule. “This would have a larger detrimental impact on us if we hadn't been ahead of the production schedule curve, or if we had a factory visit to China scheduled,” Murphy said. “Luckily any travel restrictions will not affect our current production; we are thankful for that!” Andy Green—president of Xgen Products, a distributor that also owns several brands, including Bodywand, Zolo and The Rabbit Company—said while he does not often travel to China, he is keeping an eye on the situation. “There are a few delays in restarting after Chinese New Year pertaining to corona. First, not all of the workers have come back as of yet. Due to transportation regulations and testing it is taking a little bit longer than usual,” he said. “Secondly, the government is making every factory get ‘approved’ before they start back up into production. The issue here will be the delay in having officials come to each and every place to sign off that they are good to go. “That being said, we probably keep more safety stock than most,” Green continued. “I have about six to seven months of stock here, while others that I know of run at three months. Our fill rate hovers around 92 percent to 95 percent on any given day, and we have not seen any fall off from that yet. We will be good for another few months with zero interruptions. If this gets drawn out past that we may start to see some outages, but so would everyone else at that point. And not just in our industry—that would be everything. Then it could get really scary, but let’s hope it doesn’t get to that breaking point.” Even as factories reopen in China, there’s no guarantee they will all remain open. The IndustryWeek report noted various agencies from the Chinese government are sending representative to conduct spot checks, including checking body temperatures of employees, disinfecting factories and ensuring employees sit at least 1 meter away from one another during lunch. If a factory is forced to close down a second time, it could be enough to run small operations out of business completely, the story warned. “What lies ahead for other manufacturers in our industry and outside is unknown, and there could be an even bigger fallout than we have yet to see,” said Murphy of Rock Candy Toys and Bedroom Products. “Now is the time to take action instead of when it's too late; exploring alternative manufacturing solutions—i.e., outsourcing in Mexico, for example. I imagine it’s going to get worse before it gets better, and time is of the essence. It will be interesting to see how this plays out, as far as the domino effect that trickles down to the consumer: product pricing, etc. Retailers may see product that has been sitting on a shelf for quite some time fly off the shelf depending on supply and demand if best-selling manufacturers start to disappear.” Photo from the Centers for Disease Control and Prevention