As a member of Hong Kong's adult products industry, I have witnessed the ups and downs of this market over the past few years. When many people hear "adult products", their first reaction is often, "This industry must be hugely profitable!" Indeed, around seven or eight years ago — in 2017 and 2018 — the adult products industry did enjoy a "golden era". Back then, market competition was relatively limited, consumer demand for these products was gradually becoming more open, yet supply chains and brand choices were few. Merchants could easily sell products at high prices, with prices set as high as 10 times the cost, and overall profit margins easily reaching 70% or even higher. For example, a vibrator that cost just $50 to stock could sell for $400–500 or more, and with so few choices, consumers simply had to accept it. Today, however, this industry is no longer the hugely profitable market outsiders imagine. Intensifying competition, a vast range of products (with thousands of products in stock at any time, leading to a large build-up of dead stock), rising operating costs and other factors have greatly diluted the profits of those of us in the industry.


Intensifying Competition: From Blue Ocean to Red Ocean
Looking back to before 2019, the adult products market was still a relatively "blue ocean" space. At the time, most adult products shops in Hong Kong were small physical stores, and online platforms were limited to a handful of local websites. Consumers knew little about the products, brand awareness was weak, and merchants could almost "price however they liked". With the rise of e-commerce platforms, however, the barrier to entry fell sharply and the adult products supply chain expanded rapidly. During the pandemic in 2020, demand for online shopping surged, and online sales of adult products grew explosively. According to a 2022 survey by The Family Planning Association of Hong Kong, online sales of adult products grew by nearly 40% during the pandemic, attracting a large number of new players into the market. Today, Hong Kong consumers can easily buy products on local e-commerce platforms and even international websites such as Amazon, with so many choices it is dizzying. This competition has directly pushed prices down — a product that once sold for $300 may now cost only $200, with profit margins shrinking from 70% to around 50% or even lower, essentially no different from ordinary retail goods.


A Wide Range of Products Has Diluted Profits
Another reason the adult products industry is no longer hugely profitable is the extreme diversification of product types. In the past, adult products mainly fell into a few major categories, such as vibrators and lubricants, so merchants could focus on a small number of popular products, with low inventory pressure and concentrated profits. Now, however, market demand has become far more segmented, as consumers pursue personalised and diverse experiences. From smart sex toys and products for couples to toys designed for different gender identities, and even high-end devices combined with VR technology, there are so many product types it is astonishing. According to an industry report in 2023, the range of adult products in the Hong Kong market grew by nearly 60% over the past five years.


For merchants, this diversification is a double-edged sword. On the one hand, it satisfies the needs of more consumers and expands the market; on the other hand, it also means we need to invest more money in stocking goods, researching new products, and taking on higher inventory risk. For example, a newly launched smart sex toy may cost thousands of dollars to stock, but if it does not sell, it can only be sold at a discount, cleared at a loss, or become "dead stock". To keep up with trends, we also have to keep launching new products, and marketing costs keep climbing. All of these investments ultimately dilute our profits, making "huge profits" a thing of the past. I have also witnessed quite a few fellow merchants leave the industry over the past five years.


Rising Operating Costs and Constant Challenges
In addition to competition and product diversification, operating costs in the adult products industry have also risen significantly in recent years. Hong Kong's high rents and high labour costs go without saying, and online advertising costs such as Google Ads have also climbed steadily as new competitors join. If your online shop is not attractive enough, advertising costs are very likely to hit your whole business hard. As a sensitive industry, adult products face strict restrictions on advertising and promotion — for example, Google and Meta's advertising platforms impose many review requirements on such products, and ads are often forced to be paused. Once an ad is paused, with your other expenses unchanged (such as rent and staff costs), your entire income will take a serious hit.


Not to mention that consumers are demanding ever higher quality. In the past, consumers did not have high quality requirements for adult products, but now they pay attention to whether the materials are safe, whether the brand is trustworthy, and even require products to have medical-grade certification. This means we must choose higher-quality suppliers, and purchasing costs rise accordingly. For example, a product made of medical-grade silicone may cost 50% more to stock than one made of ordinary materials, but its selling price cannot simply be raised, because market competition is too fierce.


The Era of Easy Profits Is Over — What Matters Now Is Running the Business Well
All in all, the adult products industry is no longer the hugely profitable market outsiders imagine. Intensifying competition, a wide range of products and rising operating costs have greatly shrunk our profit margins. As someone in the industry, I can say that running an adult products business today is more like running a marathon — it requires refined management, continuous innovation, and keeping a close eye on market trends at all times. For those who still think this is a hugely profitable industry, I would say: welcome to join this market and experience the truth about "huge profits" for yourself!