How Women Made Sextech The Next Great Frontier For Growth
Originally posted in Forbes:
Sextech, the much-hyped market which encompasses seemingly everything from smart vibrators to VR porn, is estimated at $30 billion a year. While that might sound impressive, leaders in the industry, many of them women, argue that the real market is much larger, and growing much faster than many realize.
“Most people who hear the word 'sextech' think of only two things — sex toys and sex robots. Sextech is so much more than just those two categories,” says Cindy Gallop, founder of MakeLoveNotPorn. “It's like someone back in 1978 estimating the size of the home computer market based on the use of calculators.”
To Gallop, sextech isn’t just about new innovation, it’s any technology that can help us develop or connect sexually.
One only needs to look at the broader sexual wellness market — encompassing not only sex toys, but sex ed, contraception and erectile dysfunction medications — to see the full potential. The sexual wellness market alone is estimated at $40 billion, and much of it remains stubbornly offline. Bringing it online is shows the challenge, and the true growth potential of sextech.
Sexual wellness has certainly benefited from tech and e-commerce, but not as dramatically as one might think. Amazon features nearly 60,000 sexual wellness products, and as much as $800 million in annual sexual wellness sales, according to my estimates. But the company’s own rules keep them from corralling sex and pleasure products the way they have with, say, books.
That’s because Amazon’s secret sauce is cookies — the kind that allow them to track and target you for similar products, and serve you ads that resurface when you visit outside sites. When it comes to sexual wellness, Amazon uses them sparingly, if at all. No one wants an ad for lube or a pregnancy test popping up when they’re at work.
On Amazon itself, the company’s search restriction keeps many products from appearing at all — unless you know to specifically search within the largely buried Sexual Wellness category.
“Consumers who want to search for vibrators or other pleasure products are forced to really dig on Amazon to find them,” says Stephanie Alys, Chief Pleasure Officer of UK-based MysteryVibe, which uses Amazon to sell its smart vibrator, Crescendo.
A still from O.School's Guide to the ClitorisANDREA BARRICA
“If you type in ‘MysteryVibe’ in Amazon, you get a literal null result — it’s absolutely hidden. Can you imagine the sales you’d get on a new book or tablet if you couldn’t find it through basic search?”
Google and Facebook also heavily restrict if and how sex-related products are displayed, and in many cases prohibit advertisement all together. Those who are determined to purchase these products can find them, but it’s near impossible to reach the broader market.
That’s why about half of all sales in the space are still made at retail outlets, a fractured archipelago of thousands of storefronts that range from roadside “adult” retailers to progressive vendors like Good Vibrations. But no real national, let alone international, retail leader exists.
Sexual wellness’ remarkable resistance to online retail makes it one of the last great frontiers for growth. As a category, sexual wellness sees a 6.7% CAGR, a nearly unheard of rate for most existing markets — yet there are few real challengers to the current distribution system.As sextech entrepreneurs not only develop products but also unlock distribution, today’s $40 billon market could reach $122 billion by 2026.
And yet, sextech receives little in the way of institutional investment. It’s the funding equivalent of the orgasm gap. It can be hard for male funders to see the potential for solutions when to them, the problem isn’t self-evident.
Perhaps that’s why women have become the most vocal advocates for the investment potential of sextech, and the sector’s natural leaders.
“Women always challenge the status quo because we are never it,” say Gallop. “We get the enormous market that is women's needs, wants and desires.”
The potential for the market goes beyond the sexually adventurous. In progressive bubbles like New York, Los Angeles, Atlanta and San Francisco, it can be easy to forget that not everyone has access to a Planned Parenthood, let alone a Good Vibrations.
As a teen growing up in conservative Sacramento, I was taught that sex outside of marriage was a sin, and that my sexual desire was to be suppressed. I was lucky to move to the Bay Area, and begin to unlearn this shame. I founded O.school, an online platform for sex and pleasure education, because I knew too many women dealing with stigma and shame — and I saw a market that others didn’t.
Over the past year, I’ve toured colleges from NYU to ASU to Kansas State, and spoken with thousands of students. In some of the best universities in the country, students are struggling with basic anatomy and physiology. For many of these women, sexual pleasure is something of a unicorn. Many consider themselves fortunate if they’re able to have consensual and pain-free sex.
That’s why the largest markets for sexual wellness — and the sextech that will get us there — are likely to grow in the parts of the country that are only beginning to ponder shame and stigma-free sexuality.
We talk about sextech as if we’re talking about the market for smartphones. But sex isn’t reserved for a particular economic class, and the technology behind it isn’t separate from the product it delivers. Sextech coverage has focused on the potential for specific product, when the real story is the growing market behind it. In other words, we’re not selling smartphones, we’re selling the internet.
“For millennial women, we’re at a tipping point,” says Polly Rodriguez of direct-to-consumer product company Unbound. “Unlike previous generations, they see pleasure as a necessity, not a luxury. They may not have the means to purchase as much, but they’re driving social acceptance, and sales, for all women.”
As both consumers and entrepreneurs, it’s women who have seized this market, raised the capital, and seen the potential of the industry. Still investment in women’s sexual wellness is dwarfed by investment in more socially palatable ‘femtech’ — which encompasses reproduction and fertility — or male sexual wellness.
It’s precisely because the market has been so underserved that the potential for growth is so high. The question isn’t whether it will grow, but how it will grow, and who will ultimately profit. Will it continue to be small, female founders and investors, or will traditional VC firms start to see the potential?
“We live in a world where most people can’t even recognize a clitoris,” says Rodriguez. “Should we be surprised that it’s women entrepreneurs who see just how big pleasure and wellness can become?”