Are TV shopping channels holding their own?

... Or will e-commerce brands crush them? A look at the TV commerce segment, in the era of e-commerce.

There was a time during and before the 90’s when neighbourhood stores ruled. These were places to buy ‘provisions’ and meet up and chat too. Once malls came up, it was the epitome of cool to be seen browsing - especially for youngsters - through rows of shops.

However, convenience trumps everything else, and thus even as malls patronized by young shoppers, flourished, mothers and tired-after-work fathers discovered television shopping networks. It often helped them indulge in shopping from the comfort of their living rooms with a press of the remote button.

Then came the e-commerce revolution. The internet’s growing penetration via smartphones helped it race ahead of television shopping. Though television is still a bigger medium in the country in terms of subscriber base, e-commerce shopping is more than five times that of TV commerce in terms of the business it gets. So, how is TV-commerce faring in the time of e-commerce?

When TV commerce started almost 10 years ago, shani yantras and sauna belts were among the most popular products. TV shopping commercials used to run only as slots late in the night. While that continues to be the case for genres like Hindi GECs, Hindi movies and music, full-fledged channels also started creating a niche category for themselves.

TV commerce started buzzing when HomeShop18 came into the business in 2008 and carved out a new category. Star followed with Star CJ Alive (now Shop CJ) in 2009. In the last one year, the category has witnessed the launch of DEN Snapdeal TV Shop, which also marked the entry of leading e-commerce player Snapdeal in TV commerce. Snapdeal’s is a 50:50 joint venture with cable operator DEN and it has now expanded to other markets as well after tie-ups with cable operators like GTPL in Gujarat and Hathway in Punjab.

The newest entrant is Best Deal TV, a home-shopping network launched by Raj Kundra and Akshay Kumar. The celebrity-driven channel has Shilpa Shetty Kundra as chairperson. Besides, the channel has inked endorsement deals with A-list celebrities and top TV stars in the country. Best Deal TV was followed by the launch of Best Deal TV Tamil, specifically for the Tamil market.

Naaptol, one of the largest players in the sector recently launched a full-fledged channel christened Blue. The network that started as an e-commerce platform continues to buy teleshopping slots on other channels.

Paritosh Joshi (former CEO, Star CJ Alive) believes that one should think of TV commerce and e-commerce in terms of non-store retail. “Conventionally, in India, we are accustomed to shopping in a shop but some years ago, thanks to TV, you started getting unusual stuff on TV like astrological items.”

Teleshopping found more advocacy when Snapdeal, one of the biggest ecommerce players, forayed into the TV commerce space in a JV with DEN and launched DEN Snapdeal TV Shop early this year. Teleshopping channels have added many more products from various categories to their portfolio like fashion and accessories, gadgets and gizmos and kitchen appliances.

Why launch a teleshopping channel? “We are now in a new phase,” says Sundeep Malhotra, founder, HomeShop18, adding, “now the issue is not about the consumer confidence but about getting the new customer on board.” Is that why there is a sudden spurt in TV shopping channels?

Explains Maneesh Goel, CEO, DEN Snapdeal TV-Shop, “The idea is to service the market which is currently not serviced by either physical retail or e commerce. When I look at my data, we get 25-30 per cent of my orders from the metros and the balance comes from really small towns. We recently reached out to Assam as a market and you will be surprised that it is contributing almost as much as the business we are getting from Gujarat.”

India’s teleshopping market is a fragmented one. While it gets business through late night teleshopping slots on various channels, it also comprises full-fledged channels dedicated to teleshopping. The former in this case are considered to be advertising slots. As per industry estimates, Hindi GECs that air teleshopping ads get Rs. 5-8 crore a year for a half-hour slot - new channels command Rs 1-2 crore for the same.

As of March 2014, India’s nascent TV Home Shopping, as per Media Partners Asia, was estimated at Rs. 3,200 crore ($525 million). HomeShop18, Shop CJ and Naaptol command 80 per cent market share. Once the March 2015 figures are released, industry watchers estimate that the value would be close to Rs. 5,000 crore.

As per the ‘TV Home Shopping Industry: Hidden Gems’ Report from Media Partners Asia, the TV Home Shopping industry has started to effectively leverage the reach of C&S in India, estimated at 140 million households or 650 million people as of December 2014. In comparison, the number of internet users is estimated at 301 million in the country.

The IAMAI Report reveals that e-tailing has grown at a CAGR of 33 per cent - from Rs. 2,372 crore in 2010 (January-December) to Rs. 10,004 crore in 2013 (January-December). It further grew by 1.4 times and reached Rs. 24,046 crore by December 2014. “It is pertinent to note here that the adoption of web and web related services is still restricted to fewer people and relatively younger ones. TV caters to older demographics,” adds Joshi.

Ashish Pherwani, partner, E&Y, opines that TV commerce and e-commerce are not different. “It is shopping away from a store. TV is just a method of communication and, at the end, it’s all about products, pricing and logistics and how you interact with the customer - through TV, web or mobile app. People end up buying from TV in three cases - where broadband is poor, where there is lower literacy rate which largely happens in smaller towns and where they are selling to non-smartphone buyers.”

Television is also believed to work better when companies want to educate people about their brands. However, in case of e-shopping the buyer mostly searches for what he needs. While some argue that TV shopping has good sales in the internet-dark areas, the numbers reflect that around 40 per cent of the sales of these TV shopping channels still happen in Delhi and Mumbai, 40 per cent from other metros and tier II cities. The rest is accounted for by Tier III cities. E-commerce players attract lot of funding and hence advertise heavily to expand the market. On the other hand, TV commerce players rely a lot on promotions. Elaborates Kenny Shin, CEO,

Shop CJ, “We do corporate promotions like Prestige Wife Day on the channel. These activities are marketed through e-mailers, text messages for appointment tune-in, leaflet activity and partner database targeting to attract more customers.”

TV shopping is convenient for those who are not tech-savvy or don’t like to frequently step out of the house to visit malls and multi-brand retail outlets. They use the comfort of their couches to make a purchase.

TV shopping works on push marketing while e-commerce works on pull marketing. “A buyer will go to different e-commerce platforms and see who is giving a better deal for a particular product and buy that. TV has the ability to demonstrate the products and hence many innovative products also sell on TV,” says Meghna Krishna - COO, Best Deal TV. Products like vacuum cleaners and air fryers sell well on television.

The top categories on television are household goods, kitchenware, home appliances, fashion (female and male), interiors, IT, health and fitness, food and jewellery. But the ratio of contribution from these categories is different for different channels. For instance, for DEN Snapdeal TV shop, 26 per cent of the sales come from mobiles and tablets, 19 per cent from footwear, 13 per cent from home and kitchen and 10 per cent each from home furnishing and apparels.

For e-commerce, kitchen appliances are at No. 3 with a 14 per cent share. Mobile phone and mobile accessories are much bigger with a 41 per cent share in terms of contribution. The second biggest category in e-commerce is made up of apparel, footwear, personal or healthcare accessories which, when clubbed, contribute 20 per cent of the overall e-tailing business revenue. Home furnishing, another big category in TV commerce, contributes just 4 per cent of the e-tailing revenue. Laptops, netbooks and tablets contribute 12 per cent.

According to industry sources, 30 per cent of the people who call at the call centres of homeshopping channels to enquire about the products end up purchasing one. “As credibility rose, brands such as Samsung and Videocon started to utilise the services of TV shopping players. In addition, leading service brands such as Bajaj Allianz and ICICI Lombard have also experimented with the platform. Since its inception, HomeShop18 has fulfilled over 20 million orders, having served, more than 11 million customers while Shop CJ has catered to six million customers since launch,” shares Mihir Shah, vice president, Media Partners Asia.

Shah goes on to add that since consumers in small towns are used to a “touch and feel” approach to the product before paying for it, about 80-90 per cent of TV home shopping sales are driven by cash on delivery. “However, logistical difficulties often result in delayed deliveries. In some cases, consumers refuse to accept delivery. Return rates are as high as 10-20 per cent of total transactions and adversely impact the business.”

The ease that e-commerce provides to shoppers has affected regular retail sales to a large extent. As the e-commerce business in India evolved, books were the first to get affected. Then followed segments like music, mobile phones and white goods. In the case of apparel, experts note that only low cost apparel is being purchased online. So where does that leave TV commerce?

While third-party experts and analysts are of the view that the growth of TV commerce will slow down in the coming years, the people in the business think otherwise. According to HomeShop18 CEO Sanjeev Agrawal, everyone is fighting for the same share of the wallet. “We have to make sure that there is a strong enough reason why anybody should shop through television channels instead of e-commerce or brick and mortar,” says Agrawal.

Arvind Singhal, founder, Technopak is of the view that TV commerce is in danger. “Most consumers, especially in small town/rural areas, are able to access whatever they are looking for through smartphones and this trend will accelerate in the next two years when 3G makes way for 4G. E-commerce is a threat to TV commerce simply because it is far more easy for the customer to look at the product through a small screen and conclude that transaction as well.”

Shin begs to differ. “Not at all. In fact, e-commerce is helping TV commerce as it is opening the perception towards virtual shopping as a category. Secondly, we are not about variety and product range but offer a unique and exclusive product range at great prices to the consumer,” says Shin, who expects a 65 per cent growth and expansion in TV commerce in the future.

Agrees Malhotra of HomeShop18, “E-commerce has helped in the growth of TV commerce. It has given confidence to the Indian consumer to buy without touch and feel. It has also ensured and helped the infrastructure on delivery and payments. Also, the demonstrability of products on TV is unmatched. Can’t be done on the web,” he says.

As for the way forward for TV Commerce, Singhal shares that in two to three years from now, many of the limitations of internet commerce which includes access, speed of data, quality of the screen, payment mechanisms and gateway, will improve dramatically because of the rapid increase of ownership of smartphones. “Why would somebody watch something on TV and then make a decision to shop? It is not as convenient as shopping online,” observes Singhal.

For now, players in TV commerce are hopeful that the good times are ahead than behind them. As Malhotra of HomeShop18 puts it, “It is not just a platform for consumers but also an alternate platform for companies and brands as well.”

(Based on additional interviews with: Bhavesh Pitroda, COO, Images Group; Damodar Mall, CEO, Grocery Retail at Reliance Retail; Jagdeep Kapoor, CMD, Samsika Marketing Consultants; Jayant Kochar, managing director, Go Fish Retail Consulting, Shailesh Kapoor, CEO, Ormax Media and Sumit Bedi, VP-Marketing, IndiaMART)

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