High-Tech Toys Are Taking Over

Author:
Publish date:
Updated on

This summer, rapper Curtis “50 Cent” Jackson appeared on QVC, but he wasn’t doing one of the live concerts that the home-shopping network periodically airs. He was hawking wireless, CD-quality sound headsets.

“This is an opportunity for people to hear it [music] the way it was intended to be heard,” he said during his primetime presentation in June.

In August, QVC rival HSN featured highend Beats brand headsets from rapper Andre “Dr. Dre” Young. HSN off ered them in nine colors, and threw in a $50 music card as part of the deal.

“That was a very successful promotion that we had last month,” Sandy Conrad, HSN senior vice president of merchandising for electronics, home solutions and culinary, said.

PRICEY PRODUCTS

Consumer electronics of all kinds, not just pricey headsets selling for $400, have emerged as a growing segment for home shopping networks, a trend that’s expected to continue in the future.

There will never be a lack of new products to drive sales, with the consumer-electronics industry annually spewing out updated flat-screen TV sets, computers, tablets, smart phones, digital cameras, gaming gear and camcorders.

Dominant home shopping network QVC said the category has been strong. “Consumer electronics was one of our faster-growing categories over the last few years, with top brands including Apple, Dell and Bose,” the company said in an emailed statement. “In the second quarter, we saw renewed strength in electronics supported by our expanded tablet offerings, as well as strong apparel sales and growth in the beauty category.”

Jewelry was once dominant in home shopping’s product mix, but the recession and soaring gold and silver prices have forced the networks to adjust.

At its investor day in May, QVC said that last year shipped jewelry sales shrunk to 14% from 24% of the whole in 2007.

During that five-year period, electronics sales increased to an 18% share of shipped sales from 10% in 2007.

HSN, the No. 2 home shopping network, also has seen significant increases in its consumer-electronics sales, according to Conrad.

“As technology has evolved and become much more user-friendly, it just has presented itself as an opportunity for us, given our platform,” she said. “These categories have become increasingly of interest to our customer base.”

Consumer electronics are a good fi t for HSN’s femaleskewing audience, according to a study the network commissioned from Parks Associates.

It found that women are more likely to buy “hot” tech products, and that they completed more consumer-electronics purchases (4.7) than men (4.3) in 2010.

For QVC, sales-per-minute for consumer electronics average $22,800, versus $9,400 for apparel, according to the home-shopping channel.

And QVC’s return rate for electronics is only 12%, versus 28% for apparel.

Four or five years ago, HSN enjoyed success selling flat-screen TVs. In 2012, the demand was huge for smartphones and tablets, like Apple’s iPad, Conrad said.

Home shopping networks are a good venue for such selling consumer electronics, Conrad said.

Channels such as HSN can demonstrate products and educate consumers about them, and viewers can call in and ask questions, she said.

Consumers also can return any item, such as a TV or computer, without forking over a restocking fee, Conrad said. And customers purchasing big-ticket items can use “Flex Pay” on HSN or “Easy Pay” on QVC to break their payments into manageable monthly installments.

GETTING EXCLUSIVES

To differentiate their consumer-electronics offerings, home shopping networks sometimes work with manufacturers to create custom versions of products exclusive to them. For example, HSN will consult with vendors on the colors and design of a product, according to Conrad.

“The aesthetics of the product are really important to us,” she said. “That’s an example of ways that we can engage and drive the market and generate interest in the category.”

HSN and QVC officials now trek to Las Vegas in January to attend the International Consumer Electronics Show to meet with manufacturers and peruse what new products are hot for the coming year.

“We have a very sizable presence there,” Conrad said. “That’s a great show for us. We go as retailers. We certainly spend a lot of time on the ground making sure that we meet with the key partners, not only existing ones but also uncovering new ones.”

For the rest of the year, one of the new products that HSN is upbeat about is the Nintendo Wii U, which will debut in November according to Conrad.

HSN also will be selling smart TVs, which connect to the Internet, during its Sept. 23 “Innovation” event, a day devoted to consumer-electronics products.

CE sales haven’t proved to be a boon for all home shopping networks. ShopNBC, which declined to comment for this story, ran into trouble in the category last year. On its second-quarter conference call last month, company president Bob Ayd said jewelry and consumer-electronics sales “were soft.”

To help shore up the category, the No. 3 home-shopping player in July hired a veteran of Target and Best Buy, Lee Goehring, as director of consumer electronics.

TAKEAWAY

Cable home-shopping networks are cashing in by offering consumer-electronics products to their predominantly female audience.

Related