Levi?s, Whirlpool, LG, Samsung, Reebok… the list goes on. These are among the 500-odd brands that are available on the country?s first 24-hour home shopping TV channel, HomeShop18. The channel has also started selling insurance and could soon be retailing real estate?the last thing one would have ever imagined a home shopping channel selling in India.
In existence for over a decade, teleshopping programmes on various television channels had earned the rather dubious distinction of selling products like slim sauna belts and amulets with magical properties. The fact that the companies behind these programmes, which includes the likes of TVC Sky Shop Ltd and Telebrands India , have continuously bought air time, even on the top rated TV channels, for such a long period did indicate that there was a market for home shopping. But reputed brands were staying away from the medium.
So it did surprise many when the two-year-old online and on-air retail marketing and distribution venture of media conglomerate Network 18 started operations in a market where home shopping programmes were viewed with much scepticism.
?In addition to the fact that the kind of products being sold were somewhat odd, there was the issue of timing. They were generally broadcast at odd hours,? says Akshay Mehrotra, head ? marketing, Bajaj Allianz Life Insurance. The company started selling two insurance products through HomeShop18 about two months ago. There have been approximately 16 shows since then and around 4000 people have called up enquiring about the insurance policies. Bajaj Allianz now plans to add one more insurance product to the line-up.
Even though it?ll be sometime before the company breaks even, HomeShop18 closed 2009-10 with Rs 300 crore worth of sales. This is 80% more than what was achieved in 2008-09. In fact, Korea’s largest and world’s third largest home shopping network, GS Home Shopping, seeing the potential of the Indian market, bought a 15% equity stake in HomeShop18 in January this year for $ 18.5 million.
HomeShop 18 receives thousands of calls everyday and of these, 6000-7000 calls result in orders getting placed. Among the numerous products sold on the channel, electronic items like mobile phones and digital cameras top the list. This is followed by home appliances. A category which has shown phenomenal growth is jewelery. What?s more, repeat customers comprise 20% of the total number of customers. The company has served 2 million customers till date.
?It?s a mall on TV. We reach 2800 cities. Our repeat customer base has doubled over the last few months and this has resulted in a sharp business growth for us. The channel is currently adding a customer every six seconds,? says Sundeep Malhotra, CEO, HomeShop18.
The channel, when launched, had a daunting task ahead of it. One of changing the perception of home shopping channels and building credibility. In addition to the kind of products being sold, there have always been concerns over payment, replacement of products, warranty and so on.
?This was countered by introducing consumer friendly strategies such as no questions asked 15-day money back guarantee, the choice of payment on delivery of the product. There is a 24-hour customer service centre to cater to all post-sales queries. And also tie-ups with renowned brands such as Reebok, Lee, Levi?s, Whirlpool, Samsung, Canon, Peter England,? says Malhotra.
Something which another new entrant in the segment, Star CJ, is also attempting. The company, which is a 50:50 joint venture of Star Asia and South Korea’s CJ Shopping Co., currently runs a few hours of programming on popular channels including the Star network and is launching a 24-hour channel soon. The business model adopted by the company is wholesale cash and carry.
?Our entire focus is really on getting high quality brands, great products with all the reliability issues taken into account. So eventually when we launch the 24-hour channel we have a wide product range and at various price points. But right now, it is very important to establish that we are not those sleazy fly-by-night kind of people, we are a genuine, authentic, high quality shopping experience and that?s what we are endeavouring to do,? says Paritosh Joshi, CEO, Star CJ. He adds that the kind of product information given by their channel is even better than what is provided at stores.
Of the total roughly 120 million households in India, cable TV reaches around 80 million of these. That in itself is a sizable number of people or customers for a marketer.
?When a viewer switches on a home shopping channel, the intent to buy is already high. That’s half work done. Also, it provides us with the opportunity to explain our product,? says Bajaj Allianz’s Mehrotra.
Joshi adds that assuming 20% of these belong to high income group and with a discretionary spending of Rs 1,000 per month, that tantamounts to roughly Rs 400 crore per month. Even 10% of this or Rs 40 crore per month, he says, is a sizable amount.
Though it is early days to dub the new business model pursued by HomeShop18 and Star CJ as a success in India, there are certain categories where they are likely to have an edge.
?There are certain products which require a certain degree of confidentiality and that is where they can succeed. Say, for example, lingerie. Often, when women go to shops to purchase it, they are greeted by a man, which can be very discomforting for the buyer,? says Harish Bijoor, a brand strategy specialist.
Perhaps, that’s what propelled Gokaldas Intimatewear, makers of the Enamor brand of lingerie to launch their products on the channel.
?HomeShop18?s logistics network is the strongest in the country and through this unique show, we get an opportunity to communicate the benefits of our product range in an interactive and informative manner,? says Debashis Chatterjee, CEO, Gokaldas Intimatewear Pvt. Ltd.
“One of the biggest advantage is that the product gets a bigger exposure here compared to a TV ad wherein one has to attract a consumer to buy it in just 30-45 seconds. Also, it gives us access to a certain target audience who probably is more receptive to communication”, says Sudhin Mathur, business head- mobile communication, LG Electronics India. He adds that right now this is at a nascent stage but it is growing fast and that’s why the company is looking at these channel opportunities.
Globally, home shopping through television is a multi-billion dollar industry and has been in existence for over three decades.
It started with a local cable channel called ?Home Shopping Club? in the US in 1982. In three years it expanded nationally and was re-christened ?Home Shopping Network? or HSN. The next year another home shopping channel, QVC, was launched in the US.
Both HomeShop18 and Star CJ are also placing their bets on the growth of organized retail in the country. They believe the growth of modern trade is not just growth of store trade but as well as non store trade. According to a report by global management consultancy firm, McKinsey & Co., the total retail industry in India will become a $ 450 billion business by 2015. Of this 14-18 percent will be organized retail. Currently, organized retail forms just 5 percent of the total retail in India. Furthermore, the report says that e-commerce, catalogue and home shopping put together is expected to become a $ 10 billion industry by 2012.
India is a different story. Indian consumers prefer to touch and feel a product before making a decision to buy it. ?In India, you have around 14.5 million shops where all the brands are available. You could in all probability get the same product so why would a consumer buy it from a TV shopping network,? asks Bijoor. He, however, adds that home shopping could be a bigger success in tier 2 and 3 towns as the market system there has not evolved to that extent.
Clearly, it’ll be sometime before home shopping networks can actually become a strong distribution model. The channels are working on building up credibility and extending the product range to attract the consumer. ?Break-even is not the priority as of now?. It?s a new industry and creating infrastru-cture and investing in activities to gain customer trust is the focus area,? says Malhotra. The way things are going, HomeShop18 hopes to break even this year. The struggle though, will continue for a few more years.