The Electronic Retailing Association

Global Industry Trends and News Review of 2017: A Remarkable Year by Budd Margolis

The year 2017 will go down in TV shopping history as one of the most significant moments in the industry because it marks the start of a new awakening. The past 3 years have been challenging and for many difficult but we are now at the inflexion point. This new era is one of empowerment for we now know more about consumers than ever before and many companies are now responding to the threats posed by digital disruption, millennial consumer behaviour and globalised competition.

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Budd Margolis: expert for global TV shopping & eCommerce.

Budd Margolis is a London based consulting expert who started his TV shopping career with QVC UK.  He has been working in the field of global TV shopping & eCommerce for some 25 years and has worked in over 50 countries.  He is now an associate with Best Flow Factory Retail of Copenhagen, Sofia, Dubai & London which is a group of digital and broadcast retail specialist who plan, specify, build companies and improve sales for existing companies.

A significant trend in home shopping & delivery is instant, or near instant, delivery of your purchase. Order in the morning and receive by late afternoon has created further stress on resources and has created a hard to match competitive advantage. Robots in warehouses, autonomous trucks and drone deliveries are not far behind.

We know about Amazon’s growth and continued expansion but wait for Alibaba and for new entities we have yet to imagine to emerge. The change will be revolutionary and appear faster than ever while many traditionally based companies will simply disappear.

In the world of TV shopping, whether infomercial or live shopping, 2017 has experienced an unprecedented increase in expansion, acquisition and rationalisation activity which indicates an inflexion point where some markets have ceased to grow and must buy growth or potential for growth.

TV shopping is, above all other considerations, video-based and reliant upon great storytelling. That skill set and invaluable experience remain relevant. Depending on your strategy, we are approaching either a perfect storm of disruption or a new age for growth and consumer delight.

Mobile is beginning to dominate, not just in the USA but especially across the developing world. The use of video is the fastest growing ad format and by 2020, video will make up 80% of all online consumer internet traffic. Video can improve click-through rates by 200-300% and increase purchase intent by 97%.

TV shopping whether infomercial or live/recorded TV shopping is adapting, evolving and innovating, not all at the same level of success, but everyone recognises that today it is necessary for survival. And live video drives 300% more engagement than recorded video.

eCommerce revenues were projected to reach $400 billion by the close of 2017. The next wave of social media which is a considerable and powerful retail distribution channel, omni-channel strategies, and mar-tech (Marketing technology based on digital transformation & optimisation). We are innovating faster and many new concepts will emerge in 2018 growing eComm revenues of $460+ billion.

2017 Global Industry Highlights

• QVC acquires the remaining 66% of HSN and later announced significant reorganisation plans. DEC 29 PR states the acquisition has been completed forming a company with $14b in revenues. The previously announced transaction between Liberty Interactive and General Communication, Inc. (“GCI”) and subsequent split-off of Liberty Ventures is expected to close in the first quarter of 2018. Following that closing, QVC Group, including wholly-owned subsidiaries QVC, Inc., Zulily and HSNi, will become an asset-backed stock and Liberty Interactive will be renamed QVC Group.

• Segel Vision based in NYC announced in October that they will pay 105% premium to acquire Evine Live and merge the shopping channel Into Segel's Company, STARSHOP. In December they announced they had withdrawn their offer.

• German HSE a €800m Euro powerhouse announces partnership with mbc for new Dubai UAE based TV shop channel which launches in the summer of 2018

• In July Studio Moderna, acquired Mango Home Shopping TV, a Polish TV channel

• Global Home Shopping of China buys 51% of Citruss TV and intends to expand the operation throughout the MENA region. Amazon bought Souk and Noon a $1b+ investment mark two significant Dubai based e-commerce entries. GHS in January entered the Vietnam market.

• Thailand has seen a lot of expansion as Mitsui of Japan and the Korean giants GSHS & CJo, also active in the Thai market, continue to enter new markets. Note: 2015 CJo launched of 'CJ Grand Shopping' in Mexico.

• China’s TV shop market has grown RMB6.73 billion ($1.18b USD) in 2007 to RMB39.93 billion ($6b USD) in 2015, at a CAGR of 24.9%. India is still many times smaller but starting to catch up. Korean shop channels GSHS & CJo, which are two $4b+ channels, have expanded aggressively. China has 19 TVHS channels.

• Korea has 7 must carry TV shop channels and the worlds No. 2 & 3 largest operations the $4b+ GSHS & CJo foreign revenue is down and no expansion in 2017. Some slight growth domestically. There is competition from Amazon and Aliexpress and technology is pervasive and could be a fast & vast disruptor. The e-commerce share of the retail industry has hit 20%in 2017.

• India’s No. 2 shop channel Homeshop18 acquiring No. 3 Shop CJo after a downward trend which started with PM Modi’s demonetisation policy and new GST system.

• India’s No. 1 channel Naaptol does about 3X the turnover of HS18 and reported $100m for FY 2017.

• The newest entry for India, EZ Mall in Delhi is also on two distribution system and looking to gradually expand.

• UK: Shopping Nation a micro TVHS operation launched in the Autumn of 17’ and Dec 24th announced that 80% of their sales were online and that they would no longer air on Sky and will now stream on the web, Facebook & Youtube. On 3rd January 2018 they announced they are ceasing operations and that the channel is for sale.

• TV Shopping will reach every corner of the globe: Irib Bazaar Iran’s first TV Shopping channel launched 20/11/11 and closed 17/3/16

• MoneyMart TV of Nigeria appears to be the only functioning tv shop channel but Africa may soon have another shop channel in the first quarter of 2018

Budd Margolis has compiled a listing of global past & present TV shop channels: https://www.linkedin.com/pulse/2018-tv-shop-channel-history-brief-list-current-former-budd-margolis/

There are well over 200+ shopping channels, some, the most prosperous operate live and cover many categories, quite a few are niche specific such as travel, infomercial, auction, jewellery, craft, in various regional languages or have expanded into new markets with a local partner and have made some adjustments for the regulatory & cultural regime. It is not yet complete and may be inaccurate so any amendments please notify him. Email: buddmargolis@gmail.com

The big news has of course been Amazon. Every day, or so it seems, we hear of a new strategy or market penetration. Huge sales, several significant acquisitions, such as Whole Foods and entry into Australia, are spectacular events but right before Christmas Amazon announces that they are adding videos to the product pages. The promotional and instructional videos will be no longer than 30 seconds. Some of its two million merchant partners have been asked to join the test program, with videos posted to the site in mid-December. We all know video sells much better than web-based text and images.

2018 will continue to be challenging for everyone in the electronic retailing industry. We can expect to see further expansion, as well as disruption as consumers adopt mobile shopping and social retail becomes a massive channel for smart retail.

For those who study and adapt, the future indeed looks bright as video is the ultimate sales tool and one our industry knows better than anyone else. It is now time to work harder and smarter!