Sunday, July 4, 2010

Home Shop 18: Taking Multi-channel Retailing to a whole different level…

Who would have ever thought that a 24-hour infomercial Television channel will be a run-away hit in the Indian sub-continent..! But, Network 18 carried out this assignment with a clinical performance. Not only they’ve entered the remotest households, but are also in the verge of breaking-even in the current year. In these 3 years they have proved that even a simple concept, if handled well can reap excellent profits in long term.

Infomercials had a bad reputation throughout. The first thing that hits the mind while thinking about infomercials is the slim-sauna belts that claimed to melt offending layers of abdominal fat within hours! The supernatural potions that assured to shoot hair from barren scalps, or the slicer-cum-dicer that made you wonder how you ever lived without it! We can recall A lady in blue, a supermart for a backdrop, product in hand, a list of its key ingredients/qualities and its benefits.  Initially, only imported goods were being offered and the market was very restricted, companies were not finding it commercially viable to prepare detailed infomercials for them. Hence, they used to offer dubbed versions (English, Hindi and other regional languages) of the original infomercials (made in different foreign languages).

As programs such as Asian Sky Shop (Zee) and Telebrands aggressively ventured the Indian market, many problems emanated – such as FAKE products, not Value for money, etc… But, even then as TV viewership increased, so did the market for these products. However, these programs were broadcasted generally after midnight or early morning on television channels.  Seeing this Network 18 slowly started with 15-second commercials which it used to air on its sister channels – CNN IBN, CNBC Awaaz etc. It wasn’t an instant hit though. It had to take initial loses in terms of majority of their items being returned, low response and lack of trust. Gradually they realized that selling right products through this medium can be a profitable proposition and using prime-time dedicated time slots will leverage home-shopping to a whole different level.

This idea led to the birth of a 24-hour Teleshopping Channel called as Home Shop 18. It developed a sound infrastructure around it, namely responsive customer call centers, multiple warehouses and logistics network to decrease the delivery time and also launched Branded products to instill trust among its consumers. The intention was to serve as a “VIRTUAL MALL”. Home Shop 18 did businesses which even well establish retailers would shy off. It closed 2009-10 with sales of Rs 330 crore, It accounts for 4.5 per cent of all digital cameras sold in the country, and is the largest seller of stainless steel dinner sets. No retailer sells more Reebok merchandise than it. Whirlpool has come out with a new range of refrigerators especially for it (source – Business Standard).

The statistics is eye-popping, Home Shop 18 has just demonstrated how a Retail System can get diversified and what variety of channels can be used to sell products..! TV penetration being huge supported the idea. They also extended their shopping network online.

The primary reason of their success was their extensive sale in small towns and villages where its difficult to find Branded and Fashionable products. Even Malls and Branded Stores were limited to tier-1 & tier-2 cities. As the economy grew, so did the spending capability at the rural areas. This made them more brand conscious and much aggressive on buying Branded products. The Indian Rural youth wanted to wear Reebok Shoes, use Samsung Digital Cameras and Branded Sunglasses. Limited/No availability of these items on nearby stores motivated them to buy through TV and Home Shop 18 just did that - Answered to the requirements of the rural consumers. Even non-branded but trendy products reaped immediate success through infomercials. Just imagine Vespro, a camera brand based out of Mumbai; It used to sell only through internet and catalogues and used to do sales of Rs 4.5 crore per annum, and now it does Rs 40 crore through Home Shop 18..!

This exactly shows how innovative and different a Retail Channel can be. It can just throw traditional Retailers out of Business..! Amazon is an upright example. Many brick-n-mortar book stores went out of business due to Amazon’s revolutionary online retail model. It would be very early to say similar thing about Home Shop 18; but it has shown impressive performance and will have to stand the test of time.

I just have one thing to say to the traditional retailers who are predicting the emergence of Organized Retail – “Do proper research on defining the boundaries of Organized Retail; It can just grow out of our imagination…!”


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