Over the past few years, digital technology has profoundly changed the home-shopping business, which not only appears to be surviving but, in many ways, is thriving despite radical changes in consumer-buying habits.
QVC, HSN and Evine Live have embraced e-commerce, with sales from digital platforms soaring to roughly half of their revenue. In fact, QVC and HSN ranked Nos. 8 and 19, respectively, this year in a list of the Top 25 e-commerce retailers compiled by eMarketer. And now, the products borne from the digital revolution — consumer electronics ranging from laptops to Fitbits — have supplanted jewelry as a key home-shopping product category.
As it turned out, the Internet didn’t kill home shopping. Instead, the major home-shopping channels stepped up to the plate with their websites and mobile apps; adjusted their mixes of merchandise to reflect the times; repurposed their TV content and created original programming for their digital platforms; and made aggressive, innovative forays into social media.
For the remainder of the year and going forward, executives at QVC, HSN and Evine said they will continue to make changes and find new ways to make buying on digital platforms more enticing and easy.
HSN, for example, will once again live-stream a fashion show featuring apparel from its celebrity vendor Serena Williams, with that event to take place later this month.
“Everything in the fashion show will be shoppable in the moment,” HSN president Bill Brand said.
QVC’s efforts have included launching an all-digital network — Beauty IQ, available on QVC.com — and experimenting with Facebook Live. And Evine is focusing on making its online checkout process as consumer-friendly as possible, as well as following the example of its two larger competitors by finding success with celebrity vendors, including Southern chef Paula Deen and actress-singer Vanessa Williams.
QVC, HSN and Evine say that these kinds of initiatives, as well as their ability to be nimble to adjust to consumer trends, have given them an advantage in a brutal retail environment. It’s a landscape in which brick-and-mortar companies are announcing store closings or filing for Chapter 11 protection, and one where Amazon.com appears to have changed shopping habits forever. QVC, HSN and Evine Live maintain the relationships they’ve forged with their longtime customers — who unabashedly enjoy shopping — through the networks’ vendors and hosts will also help them weather the storm.
“We were always part of a shopping experience that was best had outside of the traditional brick-and-mortar environment,” Doug Rose, QVC senior vice president of brand and communications, said.
And now those “super-engaged consumers” can shop online — on a desktop, laptop, tablet or smartphone — for any product 24/7, according to Brand.
That is not to say that home-shopping networks haven’t been buffeted by the changing retail climate. In the second quarter, QVC’s domestic network saw revenue increase 2% to $1.4 billion, but CEO Mike George warned that sales had tailed off the end of the quarter. HSN’s net sales slipped 3% from the prior year to $557.2 million, and Evine Live saw a similar dip, down 2% to $157 million.
But home-shopping network officials said their companies are better equipped to buck the negative trends in part by swiftly adjusting their on-air and digital offerings in a way that, in their view, traditional retailers cannot.
“We are so flexible we can go where the customers are taking us,” Rose said. “You’ll see us shifting airtime and resources and digital space to categories that are really responding and we’ll shift them away from ones that are not doing as well.”
In the second quarter, QVC’s digital sales increased to 51% of revenue, to $727 million, with mobile making up 57% of that, according to QVC’s parent, Liberty Interactive.
“People who like shopping for discovery like to fit it into the margins of their day, and so, when they’re grabbing a cup of coffee in line in Starbucks, they’re going to open up their app and they’re going to see what’s on QVC today,” Rose said.
Home-shopping networks were well-positioned to take advantage of the e-commerce boom. Digital made it easy for shoppers to buy merchandise from the networks’ vast inventories of product, even when it wasn’t being shown on-air. And QVC, HSN and Evine also had distribution systems in place to get goods directly to consumers.
In addition, the networks could post video from their telecasts online with products.
“Most brick-and-mortar retailers don’t have the internal structure to do all this kind of production,” Nicole Ostoya, Evine’s chief marketing officer, said. “It takes years producing 24/7. We’re making content and it’s taken all of these years to hone this skill.”
Officials at all three of the major home shopping networks say that their strategy is to tell viewers the interesting stories behind the brands and products they sell, and the people behind them, and video lets them do that online.
Today, these networks say that they are continuing to fine-tune their online experience for shoppers.
While some retailers viewed e-commerce and mobile “as something of a disruptive factor, we look at [them] as a unique opportunity,” Rose said.
Digital sales are also skyrocketing at HSN, making up 46-47% of its business, according to Brand. He said that his network’s most valuable customers shop across all of its platforms.
“I’ve had to really pivot this business to be sure that we’re building an experience that’s based in content but is seamless and frictionless across every single device,” he said. “The iPhone only came out in ’07 … and now smartphones and tablets make up 50% of all of our digital sales.”
On the mobile front, the focus at HSN is “on optimization,” making that experience as strong and consumer-friendly as possible, Brand said. And as a result of growing demand on digital, HSN has widened it online product assortment, particularly in the beauty category, according to Brand, “because our customers want great product when they want it, and that’s what digital provides.”
The third-largest home shopping network is officially named Evine Live, but on-air it has dropped the “Live” and refers to itself as just “Evine” because of its digital presence, Ostoya said.
“We think that Evine is cleaner and easier to understand,” she said. “A lot of places that people experience us — online, on our app — the content isn’t live, so it felt like [Evine Live] wasn’t exactly right.”
In the second quarter, the company reported about half of its sales are online, and 50% of those are actually done by mobile, Ostoya said.
“But a big piece of that is driven by what’s on-air,” she said. “What we’re finding is a lot of customers still see what we’re selling on the TV but instead of calling, they do the quick checkout on their second screen … So we have a really nice healthy online business, but there is that chunk that’s driven by what’s on TV.”
Like its larger competitors, Evine has been tweaking the content it offers online, and has new initiatives in the works for unique online content, according to Ostoya.
“In the old home-shopping/online world, we would just take our shows and repurpose them on the Web,” she said.
Now Evine is editing down 10-minute segments to two minutes for the Web, to make it more convenient for consumers, Ostoya said.
Evine is also working to ease the process for checking out and purchasing items online, and plans a total overhaul of its website next year under the guidance of its newly named chief digital officer, Macy’s veteran Sunil Verma, Ostoya said.
THE AMAZING GORILLA
E-commerce giant Amazon has been a disrupter, luring shoppers away from brickand- mortar retailers. This year, it also escalated efforts to sell apparel — a key category for home shopping — launching a live show called Style Code Live featuring clothes available on Amazon.
Rose and Brand said that while their home-shopping customers buy some goods on Amazon, the monster website doesn’t have the allure and attributes that attract many shoppers to HSN and QVC. Amazon’s emergence more than 20 years ago “has been wind on our back,” Rose said, “because for that entire time what it, in effect, did was help bring more and more people into the behavior of shopping remotely.”
But Amazon really just represents “a search-driven experience if you know what looking for and you are just trying to avoid running an errand,” according to Rose.
“Amazon is kind of the elephant in the room in retail right now,” HSN’s Brand said. “And they’re doing an amazing job of delivering product purely from a commodity standpoint ... Our point of differentiation comes through products you can’t find anywhere else, the content and the personalities [on the network], and the relationships.”
Some 75% of the merchandise HSN sells can’t be bought elsewhere, and popular vendors such as celebrity chef Wolfgang Puck and veteran host Colleen Lopez have loyal followings, according to Brand.
“Those relationships even in the toughest retail environment help us pull through,” he said, adding that shoppers don’t have a relationship with a search engine.
Ostoya described Amazon as “an incredible force in the marketplace” that is affecting everyone.
“Where we stand apart is Amazon is still a 2D experience: you can click on it, you can zoom in,” she said. “I know that they started Style Code, but they don’t quite understand the science that we understand about home shopping … They don’t understand that you have to get the information out clearly [about merchandise] right away ... They’re doing kind of a talk show. That’s not commerce shopping.”
SHAKING UP THE MIX
It’s an outdated notion that QVC and HSN are largely purveyors of cubic zirconia jewelry. With the explosion of consumer-electronics products, driven in good part by the Internet, QVC and HSN have diversified far beyond from jewelry sales in recent years and shifted their product mixes to include consumer electronics as common as tablets to newer wares just coming to market.
“We had great success with Amazon and its Echo device,” Rose said. “Those kinds of emerging technologies are very demonstrable and that’s kind of our sweet spot … Products that we are constantly looking for are those that have great stories to tell, and they might actually struggle a bit in the absence of telling that story.”
QVC also believes its growing international footprint gave it an advantage in the retail and home-shopping arena for consumer electronics and other categories. That reach allowed it to afford brands such as Dyson virtually global distribution through its home-shopping channels in Europe and the Far East, Rose said.
Consumer electronics “continues to be a strong pillar” of HSN’s strategy, and the network has built strong relationships with companies such as HP and Samsung, according to Brand. The network also is partnering with exercise-electronics maker Fitbit on offerings.
HSN has become such a player in the consumer-electronics arena that the industry turns to the electronic retailer for marketing advice, according to Brand.
“And the reason that the consumer-electronics business relies on us the way that they do is because of the understanding that we have of the female consumer,” he said. “It’s fascinating to go to [International] CES with our team and they rely on us to help them pick colors in laptops. Technology … is a big part of our business, but it’s also how women interact on social [media] and shop now.”
In contrast to QVC and HSN, Evine’s major product category remains jewelry and watches, Ostoya said. While the network has diversified its merchandise mix, it pulled back on the consumer-electronics segment last quarter and is retooling efforts “because we weren’t doing it well,” Ostoya said.
There’s a lot of potential in electronics because Evine hosts and expert vendors can explain all the benefits and features of a product on-air more skillfully than an untrained teen salesperson at Best Buy, she said.