Future of Peaches and Cream
WHAT DOES THE FUTURE HOLD FOR PEACHES & CREAM?
Peaches & Cream is without doubt the biggest sex toy seller in New Zealand today. It has a distribution network throughout the country with 13 stores. We did an article on the rise and development of Peaches and Cream before, but we haven’t yet covered the challenges the company may meet in the future and how it is already adapting.
Like any other brick and mortar establishment they have overheads such as rent, salaries, rates and utilities – standard costs for any retailer basing business on passing trade. P & C have no serious competition when it comes to off-line customers. They are currently taking 40% of sales in New Zealand’s sex toy market.
However, the seismic shifts happening in the online community will dramatically change the future of Peaches & Cream and all other offline businesses. First, let’s talk about pricing. How should an offline business (store fronts) with an online presence (websites) price its items?
Online competitors are able to offer lower priced items as they have fewer overheads. The advantage Peaches & Cream holds here is that they could negotiate undercutting those prices with their suppliers when bulk buying. The flip side is that they would still have to sell those same items at a higher price in the stores because of the establishments’ running costs.
Eventually customers are going to realise that buying the devices online can be up to 50% cheaper* than visiting a store. This is going to force Peaches & Cream’s outlets to compete with website prices in order to maintain their high street presence.
The threat to Peaches & Cream is coming from two market forces:
1. Adult Toy Megastore
2. Amazon Australia
Comparing the online traffic of Peaches & Cream to Adult Toy Megastore using SimilarWeb we can see the following infographics :-
If we looked at profit margins, however, the comparisons would demonstrably favour Peaches & Cream.
Looking at the other threat to Peaches & Cream’s market domination is the penetrating of Amazon into Australia. Amazon AU is currently mainly associated with books in the Australian market but this is set to change in 2018. Amazon plans to aggressively expand its online retail presence into Australia & New Zealand. And this will include its sex toy website section.
With its well-known advantages of fast shipping times, access to thousands of reviews and easy return and refund policies, Amazon is a war machine compared to Peaches & Cream. It is also in a league of its own when it comes to brand awareness.
Peaches & Cream and the whole industry (including ourselves!) will have to adapt lightning quick to stand up to this sales behemoth. Exciting times indeed for Kiwi consumers.
* All information in this article can be found online. If you find any mistakes, please contact us and we’ll revise it immediately.