In 1999, a brick-and-mortar powerhouse in the adult toys and novelties game bumped into a Web startup brimming with talented programmers and a killer adult video presence online. One thing led to another, and eventually the brick-and-mortar company acquired the programmers’ group. Effex Media was born.
Based in Central New Jersey, Effex (www.effexmedia.com) specializes in providing co-branded virtual storefronts to thousands of Webmasters worldwide. With an extensive client list of companies and Webmasters of all sizes, Effex provides its services to many large players including Penthouse, Wicked Pictures, Danni’s Hard Drive, and Vivid Video. The services vary according to each client’s needs, but all are based on a commitment to client and end-user service that developed roots in the real world long before the Web became what it is today, according to Adam Winters, vice president of sales and operations.
It’s a very simple principle, really: “When we make money, our affiliates also make money,” Winters says, adding that Effex makes no pie-in-the-sky promises to affiliates. “While our consumer products are competitively priced, they are not the cheapest or we would go out of business. However, we’re extremely responsive to consumer demand and client input. Service to both of those aspects of our market is very important to us. It’s what distinguishes our company from the others.”
It’s significant that when Effex’s parent company decided to “go digital,” it stuck to a realm in which it was already successful. One of the giants in adult toys, novelties, and video distribution for nearly 20 years, the parent company also counts among its offspring International Video Distributors and East Coast News. Effex’s ability to offer and deliver one of the largest selections of adult retail products on the Web is directly related to its brick-and-mortar siblings’ long-standing business relationships and volume purchasing agreements with hundreds of leading manufacturers.
“Because of the relationships our sister companies have with their suppliers, [Effex has] an inherent advantage over our competitors,” Winters says. “We’ve got a multi-million dollar inventory at our disposal. Anybody can build a Website and develop an affiliate program, but we can make sure we deliver the goods – thus ensuring consumer satisfaction and that Webmasters are able to get their commissions from completed transactions.”
The combination of real-world sensibilities with virtual-world technology has worked well for Effex. The company now employs a staff of almost 30 people, whom Winters describes as “tech-heavy.” Not everyone is a geek, though, he admonishes: Quite a few people are employed in the company’s call center to handle consumer and affiliate inquiries. That’s only one of the ways in which Effex’s dual-world lineage is apparent. Another is in the way the company relates to its affiliates. Effex sees itself as the sort of virtual equivalent of the full-service gas stations of a bygone era: It handles everything for its clients.
“We manage the store and provide product content; manage order fulfillment and credit card processing and customer service,” Winters notes. “All the Webmaster has to do is determine what type of store niche they want, then promote it heavily through their traffic base.”
Effex’s virtual store generation mechanism is template-based and push-button easy, allowing affiliates to customize significant aspects of the user interface. Webmasters can choose to offer all of Effex’s products, or select from several modules: physical products only (DVDs, VHS, and adult toys), Video-on-Demand only, or DVD rentals only. Within the video category alone, there are more than 20 niches. The virtual storefronts generated by the system are optimized for broadband and dialup connections.
“You can’t exclude a significant portion of the market,” says Winters, referring to the dwindling number of adult product consumers who continue to use dialup connections. He adds that Effex also is “one of the few resources that still deliver VHS [video]. There’s been a major transition from video to DVD, but we can still are able to provide consumers with VHS because of the volume of product we purchase from our suppliers.”
Although the Effex corporate philosophy is to be backward-compatible with older technologies, the company does not lose sight of developing trends and “next-generation” products.
“The world is going digital,” Winters says without apology. “Broadband has changed everything, but we believe that people are going to continue to buy physical products [like DVDs and videos]. That market’s not going away, but we have embraced digital technology in a big way.”
Effex’s digital embrace has resulted within the past year in the addition of more than 2,500 VoD titles to the company’s virtual warehouse. Effex also recently expanded its product offerings to include adult entertainment in the increasingly popular DivX format. It also has provides a monthly subscription-based DVD rental service to give consumers access to a virtually unlimited supply of erotica. And earlier this year, Effex launched WinAStrip (www.winastrip.com), a unique combination live erotic chat and virtual casino. According to Effex Marketing and Public Relations Director Michael Moi, WinAStrip was the culmination of extensive market research into high-caliber audio and video streaming and consumer desire.
“We follow the trends closely,” Moi says, “and we wanted to do something brand new and unparalleled. Our consumer research indicated an unmet niche of consumer demand, so we combined the Web’s two best sellers: sex and gambling.”
Winters adds, “Many adults like to gamble. We knew we couldn’t do gambling for money, so we thought, ‘What else does the Internet-savvy consumer want?’ Sex!”
The concept has proven wildly popular. “It provides users with an unmatched experience,” Winters says. “Playing exciting online games with payback in the form of live shows with beautiful models in full interactive streaming video and audio just blows people’s minds.”
As for the future, Winters predicts that VHS sales will continue to decline as DVD becomes even more popular and widespread among the public at large. In addition, he is confident that broadband will continue to proliferate as availability increases and decreasing consumer pricing makes the service more attainable. Consequently, the demand for Video-on-Demand will explode. “People will still want to own physical product,” he says, “but the market for VoD will increase dramatically. We have our fingers in all those pies, to ensure we remain a big player in all those markets.”
In order to capture a good-sized chunk of the burgeoning VoD market, Effex plans to debut a new service in the third quarter of 2004: a VoD membership site, UltimateVoD.com. “It’ll be the ultimate VoD community,” Winters avers. “For a monthly fee of $36.95, users will get unlimited viewing of every title.”
Ultimately, Winters says, what has made Effex “one of the largest and most reputable retailers of adult retail product” in the virtual world is the company’s overriding philosophy: “We apply many of the same business practices that our management team has successfully utilized in other mainstream companies,” he says. “We embrace adult and we try to have a little fun with it, but we also maintain an atmosphere of professionalism and courtesy toward consumers, which keeps them coming back and purchasing from us repeatedly. These practices create a win-win-win result: The consumer is satisfied, the Webmaster reaps the benefits from the consumers’ lifetime customer value, and we sell more product.”
