Home shopping is big in the West. In North America alone, the top six to seven home shopping channels sell goods worth $40 billion a year. But in India, the concept is still in its infancy. Though many channels, including Star India, were trying to find a toehold in the Rs 300-crore space, the global financial meltdown struck. With the television industry facing a severe liquidity crunch and consumer spending trends in the negative, it will become that much more difficult for home shopping channels to find their groove, feel experts. But with TV penetration still at 50% of the Indian households, the potential is simply huge.

The problem is, the business model of home shopping channels is riskier than, say, a general entertainment channel (GEC)?a reason most broadcasters were slow to consider the space. While a GEC would depend on advertisements for almost 80% of its revenue, home shopping channels can expect only 40-50% of their revenue through advertisers. Since the ad revenues are less, they depend more on sales, which increases business risks.

But the biggest challenge is in creating a sizeable market by changing the buyer mindset, that is, getting hesitant viewers to purchase. ?Globally, home shopping has a large market but Indian consumers are still traditional when it comes to purchasing. They like to touch and get a feel of the product before buying,? says a media buyer. That said, youth, strapped for time and usually adventurous, and housewives are the target group for these channels, he adds. Says Navin Khemka, senior vice-president, Zenith Optimedia India: ?Home shopping is a totally new segment waiting to be exploited. There exists a huge market.? But who will conquer the mindsets to emerge a winner?

In the early 90s when cable TV penetration was low, Zee group and UTV tried their hand at home shopping. Remember shows like the Asian Sky Shop promoted by Zee and UTV?s Tele Shopping Network (TSN)? More than a decade later, with a glut in the number of TV channels and a subsequent rise in the number of cable and satellite homes to nearly four million, the concept of a full fledged 24-hour home shopping channel has not really sunk in.

Home shopping channels cater mainly to the metros and Tier-1 cities. Says Khemka: ?Such channels have two distinct catchment areas where people are likely to sample the content?metros where people are looking for a convenient, hassle-free purchase which saves time, and smaller cities where consumers are looking for quality products delivered at their doorstep. The key is to make it a viable shopping option in smaller places like Itanagar, Dharwad, Murshidabad and northeast.??

Tejal Shah, vice-president, south and west, India Media Exchange, is dismissive about the state of home shopping channels in India. ?Late night slots on some GECs sell inexpensive airtime to home shopping shows, and there is hardly any viewership for these shows. So, there is very little potential for a 24-hour home shopping channel to sustain amidst a GEC and niche-channel clutter,? he says.

A Ficci-PricewaterhouseCoopers report says the TV industry will see a compounded annual growth rate (CAGR) of 22% during 2008-12 to reach Rs 60,000 crore from its current size of Rs 22,300 crore. With the financial meltdown, experts say the industry will now enter a phase of consolidation even before reaching its full potential of growth. And home shopping channels, which occupy a minuscule 2-3% of the TV industry, will find the going tough.

Currently, players like Network 18 have tried their hands at home shopping channels. Last year, around August, Star India got the FIPB (Foreign Investment Promotion Board) approval to get foreign investments for the launch of its home shopping channel. Star had entered into a joint venture with Korea?s CJ Home Shopping Company for this business. The joint venture company was named Star CJ Network India. Star CJ Network had also been permitted to invest up to 100% to create television channels for broadcasting and distribution through media platforms.

There are talks of a home shopping channel from the Star stable being launched this year. However, Star officials are not forthcoming. ?We are in the process of launching a few channels, so we are not ready to comment on any of these developments,? says a Star spokesperson.

When?and if?launched, Star?s network will be the second dedicated home shopping channel in India. TV18?s Home Shopping Network Pvt. Ltd, a JV between Network18 Media and Hong Kong-based private equity firm Saif Partners, launched Homeshop18, a 24-hour channel, in April 2008.

Last year, private equity firm Saif Partners increased its stake to 35% following a fresh capital infusion of $16 million. In the first round, Saif Partners had invested $5 million to take a 25% stake in HomeShop18.

These ventures are mainly driven by a need to reap the first-mover advantage in the space, which has a significant component of young shoppers with high incomes (nearly 55% of the Indian population is below the age of 25). Also, a growth potential rather than immediate gains is what drives these channels.

Some media planners feel that better programming, in the form of innovative shows and an increased direct-to-home (DTH) foothold, would help increase the viewership of home shopping channels.

?Advertising and publicity also becomes an added expense for these channels as they cannot manage enough visibility on their own. For these channels to reach out to a larger audience, it is imperative for them to be part of a bigger bouquet of channels. The best platform for home shopping channels to market themselves, in that case, would be through their sister channels,? says Shah of India Media Exchange.

Sundeep Malhotra, CEO, HomeShop18, feels that unlike the west, there has been no historical benchmark in India to gauge the potential of home shopping channels. ?We have experienced a 50% month-on-month growth rate with a distribution that is merely 2-3% of the total TV universe. This is a genre which most people are sceptical about considering the legacy that we have achieved due to teleshopping,? adds Malhotra.

?Building a new domain of marketing that establishes customer credibility is the key criteria that consumers would look for in a home shopping channel. We had to build a large network that now reaches more than 2,000 cities and a contact centre manned by 350 salesmen on the phone,? he adds.

That reveals the business? challenges are as huge as its potential.