The Electronic Retailing Association

Market Insight Interview: The challenges and potential of DRTV in the Philippines market

with Lara Pennington

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TV Shop Philippines was started 2 years ago by two well known Kiwi veterans of the DRTV Industry, Stephen Jarvis & Brendan McCarthy. It is the youngest of the DRTV companies in the Philippines - the Japanese, Taiwanese and Koreans all set up operations there, implementing business models from their home countries.

ERA Europe: Lara, thank you for taking time to do this interview. As an active ERA Europe member for many years, you recently went on a round-the-world adventure for a year. What was the inspiration for this change?

After 20+ years in the European Media, Direct Sales & DRTV industry I had an “Eat, Pray, Love” moment and decided a life change was in order, I quit my big corporate job, rented out my apartment in Barcelona, and bought 2 “Round the World” tickets for my son & myself. We spent nearly a year backpacking around the world visiting 12 countries, exploring cultures & making new friends. It was an amazingly exciting & life changing experience but after a year we were both looking forward to getting back to school & work.

ERA Europe: You are now in Manila with TV Shop Philippines, can you tell us more about that, your role and it’s challenges?

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Lara Pennington is Marketing Director at TV Shop, Philippines

 

Born in the UK, Lara moved to Spain as a teenager & although now based in Manila, considers Barcelona as home. Starting her DRTV career as one of the pioneers at Industex, then a decade heading up Grupo Planeta’s Spanish TV Shopping business & 3 years on the ERA Europe board of Directors. She recently went on a “Round the World Year Adventure” with her 8-year-old son before joining the team at TV Shop Philippines.

Contact details:

Lara Pennington

Lara@tvshop.ph

www.tvshop.ph

Skype: Lara.Gizelle

TV Shop Philippines was started 2 years ago by two well known Kiwi veterans of the DRTV Industry, Stephen Jarvis & Brendan McCarthy. Funnily enough, I actually introduced them 20 years ago while on business in Manila. Their new company was going gang-busters and they asked me to join the team. It was an opportunity too good to refuse, I love the DRTV industry and this project gives me the chance to roll up my sleeves up and get involved in all aspects of the business, from Organizational structure & processes to Product, Creative, Media, Advertising & Digital Marketing.

TV Shop Philippines is the youngest of the DRTV companies in the Philippines, the Japanese, Taiwanese & Koreans all set up operations here, implementing business models from their home countries. Unfortunately the Philippines is one of the most difficult countries in the world to do business (currently ranked at 99th/190 but not long ago they were 126th!), thankfully Stephen & Brendan have 50 years combined business experience in PH plus some very business savvy local partners which explains why we’ve managed to make such a successful impact, launching ourselves into the top position in such a short time.

It has been an eye-opening experience for me to see the similarities & differences between the Spanish & Philippine markets. Product-wise there really aren’t too many changes, it’s all about the show & the offer but the logistics of doing business in PH are more challenging.

Over 95% of our business is Cash on Delivery to 1,000+ customers every day, offering free nationwide delivery to 7,500+ islands in the region, which can be quite tricky. In Metro Manila we have our own 100+ in-house motorbike courier team who do same day delivery and even set up and demonstrate the product at the customers home. Delivery to the more remote areas is with 2-3 days.

While the rapid growth of the company in less than 2 years is no small feat, the challenge lies in scaling the company to meet the demands of this exponential growth, for example we’ve had to hire whole new departments almost overnight to support the progress of the business. We currently employ 400+ staff, our telemarketing sales & online chat agents are all in-house as is our warehousing & logistics. This is a decisive factor in a developing country where hands-on control & constant training are critical in order to run a successful business in a somewhat chaotic, fast paced environment.

Our growing Marketing team handles all our TV/Online/Digital Advertising and Product Sourcing & Management. We aim to test 4-5 new products every month and because English is the most widely used language in the Philippines we broadcast all our shows in English which makes us extremely fast at getting products up on air & tested. Our most successful categories are Slimming, Fitness, Kitchen/Healthy Eating and ‘WOW factor” gadgets. General household, cleaning & storage products aren’t so popular due to the fact most middle class households have full-time maids. We are moving some pretty exciting quantities now, with several products selling more than 150,000 units a year. We are easing our way into the “Digital Social Media” arena and initial results are incredibly encouraging, our Christmas campaign for Star Shower generated more than 30 million video views on Facebook alone.

ERA Europe: Tell us more about the Economy & the DRTV/Digital Market in the Philippines?

Data Source: TV Shop Philippines

The South-east Asian region is undoubtedly a rising force when in comes to economic development and improvement and the Philippines epitomizes this as one of the fastest growing economies in the region. With a population of 100+ million, it enjoys one of the most stable GDP growths in Asia and a decreasing unemployment rate. Over the past 5-6 years the country has improved a lot of standards: Its up 45 places on the Economic Freedom Index, up 28 places on the Global Competitiveness Index and up 17 places on the Global Innovation Index. The Corruption Perception Index currently ranks the Philippines at 95 out of more than 170 countries, quite an advance from its previous position at 134! This progress will continue to support the rising Filipino middle class, which has grown 5.8% in the past year alone. Along with their increased purchasing power comes a preference for high quality and often foreign brands, as well as demand for more retail channels.

With 71% of the population below the age of 35, millennials are quick to adopt the ease & convenience of the internet, this combined with the fact that 56% live outside of a major city with little access to retail outlets means the plentiful shopping malls are no longer king when it comes to share of wallet.

E-commerce is fast becoming a favorite with 50 million Filipinos connected to the internet (50% penetration), which largely driven by mobile internet, will grow to 70 million by 2018. Over 96% of Filipino Internet users use Social Media, 47 million active Facebook users have turned Manila into one of the top global Facebook cities. Although Filipinos are very active on their mobile devices, 80% of all broadband & mobile data speed is less than 3mbps (compared to 14.5mbps global average), which means that video streaming is still a long way off.

Another medium, which is still very strong is television with a penetration rate of almost 90%, viewership in the last 2 years has remained strong with Filipinos tuning in for an average of 33 hours per week. Broadband access at home is very low at less than 10% so people still watch TV the old fashioned way, including the adverts. The Philippines is currently going through a lengthy transition from Analogue to Digital TV. This is where we see massive potential for tv shopping to satisfy the demand for more content & retail channels.

ERA Europe: Being in the heart of Asia, do you have an issue with counterfeit products affecting your business?

One of our biggest challenges is the growth of some of the large online retail marketplaces and their lack of control over the massive influx of counterfeit products they advertise. One of the largest offenders has just had a $1 billion investment from Alibaba, meaning Chinese factories have direct access to our market.

If you are a product owner & looking to enter this market, it is essential your local partner has the ability to protect & defend your products & trademarks. TV Shop Philippines is actively engaged in ground-breaking lawsuits against this behemoth to ensure our product owner’s brands are protected and the longevity of a product lifecycle is maximized.

ERA Europe: What does the future hold for Lara & TV Shop Philippines ?

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Philippine islands (Photo: Charles Deluvio)

It’s a hugely exciting time for myself & TV Shop Philippines, on a personal level my son, Zander & I are enjoying the hospitality of the Philippines & discovering all the spectacular islands and diving spots in & around Asia. As I write this we are welcoming in the New Year in true “Eat, Pray, Love” style on a beautiful beach in Bali. On a professional front we have a number of innovative projects in the pipeline which will allow us to increase our customer base enormously, taking us to a whole new level of business expansion , extending our lead as the Number 1 TV, Digital & Mobile shopping company in the Philippines!

I’ve always loved Barcelona but they do say “Life is more fun in the Philippines” so watch this space.