The Electronic Retailing Association

Global Industry News Update: Challenges of the Digital Age by Budd Margolis

Evine for sale, BUM Moscow & Ellaycom out, Hyundai Home Shopping to launch Australian Shopping Network August 1st., closure of QVC France

Budd Margolis, President MIT Consulting, and Global TV Shopping expert

Budd Margolis is President MIT Consulting, and a Global TV Shopping expert who specialises in TV Shopping, Social Media Retailing & eCommerce/interactive retail, covering many areas of the industry such as improving, fundraising, industry forensics and expert testimony. Budd started his TV shopping career with QVC UK and has worked with TV and TV shopping channels across some 50+ countries helping companies & suppliers improve sales and profitability. Budd is American but lives in London, UK.

Evine, U.S.

March 27 2019, America’s 3rd largest TV shop channel Evine Live after reporting poor holiday 4th Quarter results announced that it is exploring strategic alternatives that may include a sale or strategic partnership to help propel it to long-term profitability. EVLV shares rose 17 percent at .47 cents. Nasdaq will delisting the stock if it cannot return to $1 value by July 15.

For its full fiscal year, Evine reported a loss of $22 million on sales of $596.6 million, which were down 8 percent. Results were hurt by slow sales in the second half of the year, traditionally a retailer's busiest season with back-to-school and holidays.

Evine reported a net loss of $10 million and an 18 percent decline in sales to $157.6 million for the period ending Feb. 2. Evine executives provided guidance for only the first quarter of its new fiscal year. It forecasts sales to drop 12 to 14 percent to a range of $134.5 million to $137 million. Its adjusted profit before interest, taxes and other expenses is expected to range from a loss of $5.5 million to a loss of $7 million.

BUM TV, Russia

March 5 2019, the announcement that Bum-TV has filed a claim with the Moscow Arbitration Court to declare itself bankrupt. The operator of Russian shopping channel Rostelecom and Korea’s GS Shop invested a total of $20 million (€17,763,567) in the channel, which was launched in 2016 but went off the air last month after having failed to achieve break-even. Rostelecom held a 60% stake in Bum-TV, with GS Shop owning the remaining 40%.

As of the end of 2017 the channel had a net loss of R343 million (€4.6 million or $4,930,995) on revenues of R402 million (€5,131,9947 or $5,779,599).

It began to receive lawsuits from lenders in January this year and these currently number 15 and amount to R22 million (€280,776 or $334,669).

CJo Korea which has TV shop channel operations in South Korea, China, India which was sold to Homeshop 18, Japan, Vietnam, Thailand, Turkey, Philippines, Mexico has been looking to sell off this division.

Global Trends

The global trend continues to be impacted by a new consumer, new and fierce competition and changing market dynamics. What began 4-5 years ago in the USA has spread to fragile markets such as India, Russia and Asia. The Korean model, which are among the industries most successful and is emulated by many throughout Asia but has its own short comings.

And companies that expand without due regard to local customs and consumer and market behaviour will find navigating minefields a difficult slog.

On the bright side, those who make the investment and challenge convention, take well calculated risks and try to evolve, innovate and create exciting and interesting, formats with honest prevention and quality products will win future customers. It will not be easy or quick. But what choice is there?

ASN have set up offices in the NEP Studios in Sydney

ASN, Australia

Australian Shopping Network Pty. Ltd.(ASN) is a retailing company established in 2018, and they are preparing to launch TV home shopping business August 1st on broadcasting channel seven in over five main cities (Sydney, Melbourne, Brisbane, Adelaide, Perth) in Australia. Expansion to pay TV is planned for the next year.

Hyundai are the sole investors and plan to catch up to TVSN’s turnover of $150M AUD in 3 years.  They have set up offices at the studio at the NEP facility in Sydney. 

Apart from the TV home shopping, ASN is also planning to enter the retail sectors including online shopping, catalogue, and offline shops. Although ASN is a newly established entity based in NSW, the parent company is Hyundai Home Shopping Network Corporation, which is a broadcasting and retailing company with more than $6billion USD annual turnover, Australia is the fourth international expansion for Hyundai Home Shopping Network Corporation.

Ellay.com

HSE24 has decided to end the newly launched Middle Eastern channel Ellaycom. The youngest home shopping company of the HSE24 Group, was launched on November 27, 2018. This marks the fastest closure in TV home shopping history and might have been a strategic play to increase HSE’s value as it went up for sale last year.

Trends

One trend we can expect to grow is the merging and converging, refunding or closure of TV shop channels. In some markets there are too many channels, some are poorly managed or have not caught up with the digital disrupted audiences. Few if any are actually experimenting or innovating new and exciting formats. For some, new territories may provide growth, but managing this while absorbing management bandwidth issues is a significant challenge even for the best managed companies.

Companies will focus more on their digital assets such as multiple ecommerce sites, social pages, mobile apps, print catalogs and in-store destinations. But do they have what it takes to merge one format with another?

DRTV vs. Shopping Channels

Infomercials are fast to react, TV shopping maintains its format to form audiences behaviours and foster high value and long term loyalty.

Think of a canal with DRTV yachts adjusting sails to the ever changing winds and currents with QVC battleships which turn in an orchestrated plan slowly and carefully. Today, few TV shop channels are innovating or evolving. Sudden changes are punished by consumers who withdraw loyalty and spend. DRTV is an intense and focused laser beam. One product judged on performance, tweaked and then distributed to drive direct sales. When sales wither the next line up of products are brought to market.

Amazon

Amazon is moving more towards video which accelerates sales. With near instant delivery and superb value of Prime, and a vast assortment to compare quality and price with customer comments it has been and will continue to be difficult to navigate this supreme threat.

TV based shopping channels

Can QVC and other TV based shopping channels, successfully navigate the challenges of a society that is younger, has less disposable income, possess different values and is struggling with attention deficit syndrome exacerbated by social media and an explosion of media?

QVC has to compete with Amazon, youtube, Facebook, video games and other ecommerce and social media platforms. There are also issues when major sport events, natural disasters, political angst, trade wars and rising prices with basically stagnant wages over the past few decades.

Buying up HSN will be worthwhile as many of the HSN customers can gravitate to QVC. Sustaining two identical operations make little sense but if one was to close it would have to be done subtly over a period of a few years. Sudden disruption would cause ripples in the trust & loyalty relationship many high value and super loyal customers have with this format.

Last March 1 Liberty Interactive Corporation ("Liberty Interactive") announced that it will rename itself “Qurate Retail Group”. Qurate is more focused on the transition across to digital after its very successful acquisition of Zulily, an international flash fashionista ecomm operation which is performing very well.

Closure of QVC France

March 11 news of the closure of QVC France shocked many. Wednesday March 13th 154 employees were let go. The operation has underperformed since its founding and launch on August 1, 2015.

Qurate stated that the lacklustre performance was due "in large part due to unique in-market structural challenges and market dynamics that evolved in the years following the launch of the operation," says the company's Aidan O’Meara. The company will refocus resources and believes it can better focus on other existing markets.

QVC operates multiple channels in the USA, UK and Germany. With 15 television networks, 5 in the United Kingdom alone, the audience is about 350m homes worldwide. Beauty IQ was launched in the USA in 2016 and might be superfluous or even counter productive to the main channels performance. Other channels may also be pruned.

Editors Note: This article was edited on 18th and 19th Aprl 2019 to correct information about Ellay.com