Former record producer Neal Slateford has come a long way since setting up online-only sex toy retailer Lovehoney in 2002 with co-founder Richard Longhurst and only £9,000 of savings.

The company has just revealed profits have surged 76% year-on-year to £9 million after sales rocketed 31% to £76 million.  

On the back of the success Slateford is carrying out a round of interviews in the swish surroundings of the Langham Hotel in London, before jetting off to Shanghai the next day to discuss the opening of a Tmall store as Lovehoney prepares for a launch in China.

The online nature of Lovehoney has been integral to its success because of the discretion it provides.

“Sex toys are the perfect thing to sell online because it is discrete so we thought let’s just do an adult toy website as if John Lewis were doing it,” says Slateford. “Let’s be completely trustworthy, tell people what these products are for, how you are supposed to use them, offer great customer service, proper photographs, nothing revolutionary, but the bar was so low we only had to be half decent to be a lot better than anyone else.”

No to porn

When Lovehoney launched the competition was semi-pornographic in nature and Lovehoney’s focus on offering a respectable alternative has reaped benefits.

“We want nothing to do with the pornography side of it,” says Slateford. “We are about happy couples having better sex lives.”

The core customer base of Lovehoney – about 40% of it – is within the millennial age bracket, while some 70% of customers class themselves as being in a long term relationship.

However, customers are spread across all ages as the use of sex toys becomes more of a social norm.

“We regularly get letters into our customer service department, literally from 80-year-old women, thanking us for their first orgasm,” says Slateford.

The road to acceptance was complete when Lovehoney received a Queen’s Award for International Trade that was signed by Prime Minister of the time David Cameron and the Queen.

The award was accompanied by a formal reception with the Queen and Prince Philip.

“I spoke to Prince Philip, who looked slightly stunned when I told him what we did and moved on swiftly,” says Slateford. “That was fantastic to have a company that sells adult products recognised and goes to show how mainstream this category is becoming.”

The UK still accounts for two thirds of sales, but European sales increased 51% year-on-year to £6.4 million and rest of the world sales – primarily US and Australia – jumped 71% to £19.8 million.

“There is no global brand leader in this market, the weird thing about it is it’s quite fragmented,” says Slateford. “We want to be the number one retail brand for this category in the world.”

Licensing deals with Fifty Shades of Grey and bands including Motörhead and Mötley Crüe are helping drive growth. A licensing deal with the US show Broad City, which follows the love lives of two young women in New York, is helping Lovehoney to broaden its appeal in America with its key millennial demographic.

Meanwhile, in the summer Lovehoney is set to unveil a celebrity tie-up with a “very high profile American personality”.

Mobile first

Three quarters of Lovehoney sales come from mobile and as a result the retailer is focused on a “mobile-first” strategy.

Slateford says sales on mobile are so high because of its “discrete” nature. Customers still value privacy and the top question received by the customer services department is about the discrete nature of the packaging.

“The challenge for us is to get that optimal mobile experience, because our mobile [site] does not convert quite as well as our desktop,” says Slateford. “We are spending a lot on tech and beefing up the technology department, we have a couple of really good hires coming in in the new year.”

One of the hires includes the poaching of a chief technology officer. Lovehoney has also been bolstering its marketing team of late.

“We were quite slow to build a marketing department, we have done that in the last two or three years,” says Slateford

Marketing tech

Marketing budget focuses heavily on PPC, affiliates and social, but advertising on social is made more difficult by Facebook rules around pictures of sex toys, which means Lovehoney has to focus on its lingerie ranges on the platform.

Lovehoney is committed to remaining an eCommerce specialist, but has considered a flagship London store that would be “like the Discovery store for sex”.

“We are not interested in a massive store footprint,” says Slateford. “The flagship store is basically just us discussing it in the pub.”

Slateford concludes: “We have been doing this now for 15 years and it has just been non-stop fun, I can’t believe how lucky I am.”