Convergence Inc. President David Levine is an e-commerce frontiersman, an adult Internet Davey Crockett who's been blazing new paths on the cyber-frontier since the mid-1990s. The entrepreneur has parlayed his www.sextoy.com and www.sextoyfun.com sites into multi-million dollar enterprises.
"The key is to be the first to market with a product or service," Levine explains. "Because when you're first to market, it's easier to grow, because you have no competition, and can make good profits."
The e-porn pioneer believes a number of precedents are largely responsible for his success. Among the Web firsts Levine claims are: being a forerunner in the selling of sex toys online (and doing so at lower prices) as well as offering some of the more exclusive novelty items; marketing with search engines; inaugurating toy store use of a secure server; and initiating an affiliate program.
As the competitive curve catches up with innovators, in order to remain profitable and leader of the pack, Levine thinks trendsetters have to move on to the next thing. In 2000, the cyberporn veteran launched his newest next thing: a wholesale sex toy club (www.sextoyclub.com) for Levine's international clientele. "Nobody else has a sex toy site where you can order every item at the recommended wholesale prices," Levine asserts. "A customer signs up and joins for free, and gets a user name and password. Then, they can log on to the site, and pick and play with the shopping cart and see how much everything would cost. Pictures and descriptions of items are at sextoy.com. To avoid fraud for large wholesale orders, members pay up front via wire transfer of funds or send bank checks. American customers - who we are shipping to the address their credit card is billed to - can charge on their credit cards," says Levine. The Convergence President extends the same credit courtesy to overseas clients who establish a business relationship and have a proven track record with SextoyClub.com.
The club is primarily intended for B2B transactions, but consumers can also buy at the wholesale prices if they buy at least the minimum wholesale order of $250. Levine says that all products are at the manufacturers' recommended wholesale prices, about 50 percent off the retail prices at Sextoy.com. Shipping is additional - U.S. mail or UPS or UPS Express, although certain large domestic orders have free shipping.
What are the advantages of purchasing from SextoyClub.com, as opposed to buying from a bricks-and-mortar distributor? "If you want to buy wholesale, how do you find the traditional distributor, and even if they're on the Web, they don't wholesale online," Levine contends. "I also sell the top three manufacturers' actual catalogues at www.sextoycatalogue.com. The print catalogues have no contact info. International customers particularly benefit from our online system vis-a-vis placing orders, because they don't have to make costly detailed phone calls or send faxes.
"E-mailing's not only free, but faster in terms of expediting orders," Levine points out, adding, "A lot of my stuff is out there already, but I have it easily and readily available for people to access. I've got the retail and wholesale price lists for either catalogue online."
The Convergence President also insists his Websites, which have links and the like, are better organized than the print catalogues. He maintains that SextoyClub.com is very user friendly and offers the best customer support system for buying wholesale sex novelties online.
"Our volume is pretty big, so we get a decent discount off of the wholesale prices, about 20 percent off," Levine adds. "My objective is to break even on the shipping and make 20 percent. We don't have overhead or inventory - it's just a matter of processing these orders efficiently and getting them out," he says.
Convergence is able to execute this because of its New Economy business model. At the 1994 Internet World Convention in Boston, Levine had an intuitive flash. "I realized I wanted to start a business selling products on the Net," Levine recalls. "Work out of my home; have no employees or overhead; and have other companies drop ship for me." This virtual venture is free of the encumbrances of conventional businesses, from work force to workplace to warehousing to wayfaring. Levine outsources and contracts a network of distributors who cover the globe, and tech support reps who work from their homes, accessing the Sextoy.com and SextoyFun.com online databases, providing customer service and order fulfillment.
"What I own is the network, software which I designed, and the information for receiving, processing, and tracking the orders," the e-tailer says. He adds that the SextoyClub.com wholesale club has been very successful since its introduction in 2000. He says one niche market for it is women, who've set-up small businesses selling sex toys. "Our business grew about 70 percent in 1999. In 2000, we grew again at about 70 percent, to about $3 million in revenue."
