Home Shopping Network Captures Viewers and Sales
By George Anderson
QVC, the home shopping network, is sweeping up a growing number of television viewers and their purchasing dollars, reports Bloomberg News.
Greg Maffei, the next CEO at QVC parent company Liberty Media Corp., said the business will generate close to $7 billion in revenues this year with about $1 billion of that coming
from purchases made by consumers online.
The company is also looking to acquisitions to grow its business. Last month, it announced a deal to buy Provide Commerce to add flower and meat sales to its online business.
“We do hope to continue to do things like the Provide Commerce deal,” he said at the Consumer Electronics Show in Las Vegas. “You’ll see more deals over the next few months that
are synergistic with our existing businesses.”
Moderator’s Comment: How will sales made through television shows compare to the overall trend in retail? How will the continuing convergence of technologies
and channel expansion impact retailing in the future? –
George Anderson – Moderator
This is what happens when you combine the ability to reach huge numbers of people with a full-blown, uninterrupted sales pitch and all the yield optimization tools of direct marketing. Sure you pretty much sell one thing at a time, but you can sell that thing to millions of people using a very small number of salespeople. Retailers can’t lavish that kind of attention on a single item. For the right products, it’s hard to beat.
As America ages, TV sales will do better, since it’s a convenient way to shop. As bricks and mortar stores’ selling skills decline (and don’t kid yourself, it could and will get worse), the TV pitchpeople’s skills will become more valued. TV and radio direct selling is nothing new. Radio direct selling was big before World War II, and TV pitchmen started as soon as TV became popular in the early 1950’s. Read the book, “Or Your Money Back” by Alvin Eicoff, who helped start this industry before WW II, and whose ad agency is still going strong today. The only thing that holds QVC and its brethren back is the need for phenomenal margins, leading to poor customer value.
QVC, HSN and Shop at Home all provide something which no one else does — full motion video and audio. This is the epitome of selling, since it brings the sales process directly into the home. Add to this instant credit with “easy pay” and you have everything necessary to reach millions of people, waiting to buy. Best yet, these networks instantly adjust their sales pitch as certain keywords, and camera shots record better sales. This is a 2-way feedback process which no other medium today offers. Having done segments on QVC before, I can personally say that the process is incredible. We can continue to see sales from these networks continue to skyrocket until we have price competition set-in. They are modern-day advertising, selling and distribution all combined into one.
Peter Max once told me that home shopping networks were among civilization’s greatest achievements. “Where else can I sell 10,00 pieces of art in 60 minutes?,” he asked. There isn’t a good retort. What’s the limit? Who knew that many Americans couldn’t live without their own Bowie knife and samurai sword combination set?
While the sales on HSN are its main reason for being, manufacturers can mine another very rich vein here. A little known aspect of the deal is that you get to be inside the studio when your products are pitched. You get to see the response to the pitch. Sometimes you can see how well very subtle variations in the message work. It’s like the applause meter on hokey TV shows, only better. The next HSN pitch can be improved of course. And that knowledge can be used on the retail package message or in other marketing applications.