"It was either cross stitching or sex toys we could see massive potential in both." Richard Longhurst (pictured, on the left) and Neal Slateford (right) met at Future Publishing Slateford worked on websites and Longhurst was a magazine editor. They had "always talked about combining our skills to create an e-commerce business". When Future offered them voluntary redundancy in 2000, "it was time to get started". Their decision? "We wanted to be the Amazon of sex toys."
First they needed a commercial edge. "We wanted something that wasn't easily available on the high street and had limited online competition." Most existing websites "weren't very professional".
So they decided to build a better one. Thanks to their contacts, "we were able to get freelancers to put it together for a few thousand a fraction of the going rate". Friends in the industry also linked to the new site, helping push it up search-engine rankings. Next, they rang up a leading wholesaler and "ordered two each of their 100 best-selling products". Unlike many rivals they decided to stock the products themselves rather than act as straight middlemen. "The only way you can understand your product and guarantee it reaches a customer is if you have it in your warehouse."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
By April 2002 they were ready to start selling. For the first year they worked from Longhurst's house. By the end of the year sales had hit £500,000 and the pair "realised that we were on to something". As sales grew they "moved out of the spare room and into a self-storage service". This was surprisingly easy: "it was a bit cheeky but the local manager was very understanding". They also took on their first employees.
Their big breakthrough came in 2004 when they began to change the packaging on their products. "Our research showed that most of our customers were women, yet most products came with crude pornographic images and messages." With sales of "a few million", the pair felt that they "understood the market better than our suppliers". Longhurst used his writing skills to create a newsletter and discuss the "various benefits of sex toys in a professional way that you couldn't find anywhere else".
Soon their success inspired competition and copycat sites began springing up. Not wanting to "get dragged into a price war that nobody would win", Slateford and Longhurst decided it was time to change tack. They contacted 'sex expert' Tracey Cox, and commissioned a series of unique sex toys. "We needed something to make us stand out from the rest. Margins are higher too." They also organised competitions for their customers to design sex toys. One product, 'the sqweel', an oral sex simulator, is now a best-seller.
These days more than 40% of Love Honey sales come from products it designs or manufactures. The pair recently opened a wholesale division to sell their products in America. "Attitudes to sex toys have changed in the last ten years women in particular are more open about using them." The numbers certainly bear that out sales topped £10m last year. The next target is likely to be the high street a Longhurst and Slateford Love Honey store is due "sometime soon".
James graduated from Keele University with a BA (Hons) in English literature and history, and has a NCTJ certificate in journalism.
After working as a freelance journalist in various Latin American countries, and a spell at ITV, James wrote for Television Business International and covered the European equity markets for the Forbes.com London bureau.
James has travelled extensively in emerging markets, reporting for international energy magazines such as Oil and Gas Investor, and institutional publications such as the Commonwealth Business Environment Report.
He is currently the managing editor of LatAm INVESTOR, the UK's only Latin American finance magazine.
Who is the richest person in the world?
The top five richest people in the world have a combined net worth of $825 billion. Who takes the crown for the richest person in the world?
By Vaishali Varu Published
Top 10 stocks with highest growth over past decade - from Nvidia, Microsoft to Netflix, which companies made you the most money?
We reveal the 10 global companies with the biggest returns since 2013. One firm has posted an astonishing 9,870% return, meaning a £1,000 investment would now be worth almost £82,000.
By Ruth Emery Published