Remote bargain
A multitude of brands in their basket, homeshopping channels are a big hit and may well be the new face of alternative retail.
Star CJ Network CEO Paritosh Joshi
When Network18's 24-hour shopping channel HomeShop18 hit TV screens in April 2008, CEO Sundeep Malhotra was worried: "We were not sure about the kind of products to be sold … if we would get even one customer." A few months later, it did not help his confidence when an iconic investment bank went belly up in New York, sparking a financial crisis across the globe. Companies started sacking and consumer spending all but froze.
HomeShop18 survived, and with aplomb. Three years, 3 million customers across 3,000 cities and 100 per cent year-on-year growth later, it is booming today. STAR CJ Network - a joint venture between STAR Asia and South Korea's CJ O Shopping - launched STAR CJ Alive in July last year. It does about 2,000 transactions a day, selling apparel, jewellery, and consumer durables like laptops and phones. Earlier available on Tata Sky, STAR CJ tied up with Dish TV last month, an access to another 10 million households. There are others waiting in the wings. Industry insiders say Zee Entertainment, Bennett, Coleman and Company Ltd and Future Group are gearing up to launch their own shopping channels. While others wouldn't talk, Future Group CEO Kishore Biyani only said "work (is) in progress".
Teleshopping is not new to India; it has been around since 1995. Only, it took time to hit the highway. Initially, shopping on TV was associated with non-branded products of questionable quality. Agrees STAR CJ Network CEO Paritosh Joshi: "We do not sell sauna belts… The shady business of selling spurious products on various time slots on channels is the bane of our business and would be worth Rs 2,000 crore." Joshi is referring to the slots on which everything, from sauna belts to rudraksh malas, are sold. "These slots are part of the unorganised category as they do not sell recognised brands," Joshi says.
He clubs HomeShop18 and STAR CJ in the organised category and pegs the combined market size at Rs 500 crore. Amin Lakhani, Principal Partner at Mindshare Fulcrum, a media investment and management group, says though the slots are restricted to odd hours, they are good sources of revenue. "Brands advertising here are for the quick buck."
Given the situation, the launch of HomeShop18 was shrouded with scepticism and getting reputed brands to come on board was a challenge. Malhotra approached a lot of them. Chef-turned-entrepreneur Sanjeev Kapoor's kitchen appliances brand Wonderchef was one. "When he approached us, people were not taking the concept seriously," says Kapoor. But he took a chance and the products were lapped up by the audience.
Three years on, Wonderchef still sells on HomeShop18. So do a host of others. From Tanishq and Samsung to LG and Whirlpool, HomeShop18 sells more than 450 brands. It claims to be the largest retailer for mobile phones in the organised market. Also for Reebok and Graviera. Add to this average daily sales of about Rs 1.5 crore and a customer every six seconds. Malhotra is a vindicated man today: "We have created an industry."
HomeShop18 is now showcasing insurance products and has tied up with Bajaj Allianz, Tata AIG and ICICI Lombard. There are plans for real estate and automobile forays too. "These are opportunities to be looked at but we have no immediate plans," says Malhotra. "There can be only two triggers to buy on TV - exclusivity or value proposition."
The triggers have worked right Retired bank officer Ashok Potdar has bought jewellery, dinner sets, and Lee and Reebok apparel from the channel. The 61-year-old from Bihar's Purnia town was also looking for washing machines and ACs, "but they could not deliver here". Logistics is still a challenge in a country with 125 million TV households.
So, HomeShop18, which aims to double customer base and transactions this year, is busy expanding its network of warehouses, call centres and consumer interfaces. With a recent tie-up with Sun TV Direct, it hopes to widen its South India reach. Brands are happy, too. Says Naveen Paul, Marketing Vice-President for Spice Mobiles: "TV works for us in areas with poor reach. We sell about 35,000 handsets a month on HomeShop18."
Samsung sells its microwaves and cameras on both channels, and hopes to double sales this year. "Fifty per cent of our microwave sales in the distributor category come from the channels, encouraging us to add more products," says Ravinder Zutshi, Deputy Managing Director, Samsung India.
Demonstrations and interactivity help. Wonderchef conceptualised products like the Super Tandoor and Gas Oven Tandoor for the channels. "These products are tough to explain in a retail outlet. Selling on TV is easier, thanks to demonstrations," says CEO Ravi Saxena.
So what's the win-win proposition for all? The channels work like distributors, procuring directly from the brands. Doing away with the wholesaler-retailer chain creates room for discounts. Margins are in single digits for consumer durables, but over 30 per cent for skin care and apparel.
Indians are shopping like never before and online shopping is fast catching up. Amrinder Dhaliwal, Business Head at Auto and e-commerce, Times Internet, pegs the online market size at Rs 1,350 crore and 20 million heads. Channels are targeting this consumer base. Lack of Internet penetration, TV's interactivity, and the comfort of armchair shopping is what gives them the edge. This is the reason that despite having Net avatars, a readymade base for e-tailing, media giants are eyeing this category.
But there is a long way to go. HomeShop18 may be doing well, but of India's billion-plus population, it has managed to tap only 3 million. "We are trying to build an industry and will have to invest for three to four years," Malhotra says. STAR CJ will take another three to four years to break even, and the entry of seasoned retail players such as Future Group could spell trouble. Says Dhaliwal: "The space will grow multifold. Others will follow, and a 100 per cent year-on-year growth won't be a surprise."
In this space, driven by impulse buying and repeat purchases, the customer is indeed the king.
HomeShop18 survived, and with aplomb. Three years, 3 million customers across 3,000 cities and 100 per cent year-on-year growth later, it is booming today. STAR CJ Network - a joint venture between STAR Asia and South Korea's CJ O Shopping - launched STAR CJ Alive in July last year. It does about 2,000 transactions a day, selling apparel, jewellery, and consumer durables like laptops and phones. Earlier available on Tata Sky, STAR CJ tied up with Dish TV last month, an access to another 10 million households. There are others waiting in the wings. Industry insiders say Zee Entertainment, Bennett, Coleman and Company Ltd and Future Group are gearing up to launch their own shopping channels. While others wouldn't talk, Future Group CEO Kishore Biyani only said "work (is) in progress".
| Star CJ Alive Launched: July 2010 Average transactions per day: 2,000 Average sales per day: Rs 60 lakh Major brands sold: Samsung, Dell, Videocon, Benetton |
He clubs HomeShop18 and STAR CJ in the organised category and pegs the combined market size at Rs 500 crore. Amin Lakhani, Principal Partner at Mindshare Fulcrum, a media investment and management group, says though the slots are restricted to odd hours, they are good sources of revenue. "Brands advertising here are for the quick buck."
Given the situation, the launch of HomeShop18 was shrouded with scepticism and getting reputed brands to come on board was a challenge. Malhotra approached a lot of them. Chef-turned-entrepreneur Sanjeev Kapoor's kitchen appliances brand Wonderchef was one. "When he approached us, people were not taking the concept seriously," says Kapoor. But he took a chance and the products were lapped up by the audience.
Three years on, Wonderchef still sells on HomeShop18. So do a host of others. From Tanishq and Samsung to LG and Whirlpool, HomeShop18 sells more than 450 brands. It claims to be the largest retailer for mobile phones in the organised market. Also for Reebok and Graviera. Add to this average daily sales of about Rs 1.5 crore and a customer every six seconds. Malhotra is a vindicated man today: "We have created an industry."
| Homeshop18 Launched: April 2008 Average transactions per day: 8,000 to 9,000 Average sales per day: Rs 1.5 crore Major brands sold: LG, Tanishq, Reebok, Whirlpool Customer base: 3 million |
HomeShop18 CEO Sundeep Malhotra
So, HomeShop18, which aims to double customer base and transactions this year, is busy expanding its network of warehouses, call centres and consumer interfaces. With a recent tie-up with Sun TV Direct, it hopes to widen its South India reach. Brands are happy, too. Says Naveen Paul, Marketing Vice-President for Spice Mobiles: "TV works for us in areas with poor reach. We sell about 35,000 handsets a month on HomeShop18."
Samsung sells its microwaves and cameras on both channels, and hopes to double sales this year. "Fifty per cent of our microwave sales in the distributor category come from the channels, encouraging us to add more products," says Ravinder Zutshi, Deputy Managing Director, Samsung India.
| New vistas HOMESHOP18
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So what's the win-win proposition for all? The channels work like distributors, procuring directly from the brands. Doing away with the wholesaler-retailer chain creates room for discounts. Margins are in single digits for consumer durables, but over 30 per cent for skin care and apparel.
| Number game No. of TV households: 125 million Organised teleshopping market size: Rs 500 crore No. of online shoppers: 20 million Size of online market: Rs 1,350 crore |
But there is a long way to go. HomeShop18 may be doing well, but of India's billion-plus population, it has managed to tap only 3 million. "We are trying to build an industry and will have to invest for three to four years," Malhotra says. STAR CJ will take another three to four years to break even, and the entry of seasoned retail players such as Future Group could spell trouble. Says Dhaliwal: "The space will grow multifold. Others will follow, and a 100 per cent year-on-year growth won't be a surprise."
In this space, driven by impulse buying and repeat purchases, the customer is indeed the king.
