QVC: the channel-to-market you haven’t considered
Type in “define: eCommerce” into your Google search and the first line that might turn up is a definition from Princeton University in the US: “commerce conducted electronically (as on the internet)”.
But this doesn’t seem to go far enough these days. If you actually look at where and how people are shopping “online” you can quickly see that a more apt definition might actually be “commerce conducted via any digital means available and convenient for the consumer”.
24/7 convenience, time-efficiency, global choice, easy value-for-money comparisons, home delivery and good return policies; these are all reasons why “digital commerce” is a booming industry. They are also reasons why exporters need to think well beyond just an “eCommerce” strategy when considering their market-entry and/or marketing options.
A ‘digital strategy’ could include social media, email, sms/mms, RSS, online banner ads, digital displays and even “old” technologies like television. The best digital strategy is of course one that uses multiple techniques to “layer” the messages while also building up the database of knowledge on their customers.
Anthony Lye, President of CRM for Oracle, recently noted that businesses providing cross-channel processes and providing customers with flexibility to choose different ways to interact with the business will do far better than those trying to limit a customer to just one or two channels.
Let me give you a quick example which blends some of the various experiences I’ve had recently in the Sydney retail scene into a hypothetical scenario.
About six months ago I purchased a suit from a Sydney fashion retailer. At the time they asked if I’d like to receive a $20 voucher for my next purchase. For me to get the voucher I had to give them my email address, which I did.
They then sent me the voucher and asked if I wanted to know about their sales and if so, would I spend a few minutes filling in an online survey which would help them identify when to send messages to me. They asked if I’d like information delivered via email or a text to my phone. I opted for phone and gave them my BlackBerry number.
About three weeks later I got a text message indicating this season’s suits (which matched my criteria) were going on sale in about a week. They also asked if I would I like to preview them at a special VIP sales night. I SMS-d an acceptance.
At that evening, I was asked if I liked to order items online now that there was a track record in terms of my size and preferences. 티비 So I set up an online account with a full profile and I can now just order items online and have them delivered to my home or office.
In six months I have been into that store four times and bought outfits three times out of four. This from a store I’d never been into until six months ago and which I walked into just because I liked a suit I saw in their display window. So a digital strategy works nicely to build your customer base, loyalty and repeat sales. But my example still requires a physical “bricks and mortar” or “shop-front” set-up. Are there any other alternatives?
Interestingly, this is where television is making a comeback. Television retailing is big business. Thankfully, I’m not talking about cheap infomercials here, but rather actual dedicated television retail channels.
The biggest television retailer in the world is QVC. In fact, QVC is now the second largest television channel in the US after CBS – and it does nothing except sell things! In 2010 they had a turnover of almost US$8 billion. They broadcast live 24x7x364 days a year (Christmas is pre-recorded) to almost 200 million households on three continents.
They use numerous digital channels to service their customer base, including a website qvc.com and its international equivalents, as well as an integrated mobile/telephone support network. Their website gets 18 million visits from 6 million distinct visitors each month. They also have a very active community on Facebook, YouTube and Twitter.
The scale of QVC can be a bit mind-boggling when you think they delivered more than 158 million packages to their customers in 2008/09, who by the way, all recorded a 95 percent intention to re-order. That’s about seven or eight packages per annum delivered to every man, woman and child in Australia from just one business alone. One can’t even imagine that would be possible for a major Australian retailer like David Jones or Myer.
So it’s clear it’s a business model that works in the US and by the spread of QVC and competitors like it into markets like the UK, Japan, Germany and even India, it’s clear it’s a channel that works in other markets too.
If we look closely at QVC’s demographics and major product categories, you can pretty quickly see there is s natural, although evolving, focus on fast moving consumer goods. In 1998 over 50 percent of the items sold on QVC were household items. In 2008, this had changed to reflect a broader range of items but 45 percent of sales were still household items.
Contrary to popular opinion, television retailing is not the “back-water” of retail selling excess product or cheap, disposable items. QVC’s biggest movers are in fact high-end brands. QVC’s customers are predominately “above average income households”. They are however, predominately female; over 90 percent of QVC’s revenue comes from female customers aged 35-to-59. So if your product is designed for the more affluent, brand-aware and design-savvy female consumer, you might just want to look at market-entry options like QVC.
Of course, the hurdles to get selected can be significant and you have to be able to supply in large-scale quantities. It’s not uncommon for 2,000 units to be sold within minutes of a segment airing. You also need to be sure to keep your QVC airtime by delivering a regular schedule of new products, colours and seasonal items.
You need to train to present the product professionally and you need to work with QVC to set a price point that gives both parties the margins they need, while still appealing to the customer.
But there can be no doubt, if you’re selected as a television retail product for a channel like QVC and you manage to survive your first two airings, you’re next biggest worry will probably be about whether or not you need to (or can manage) to diversify away from just one major channel.
Kylie is the Executive Director for International Markets & Trade for the New South Wales (NSW) Government. NSW is Australia’s largest State and its capital is Sydney, Australia. Her Department helps foreign investors to set-up in NSW and helps local companies export to the world.
This article was written by Kylie for the September 2011 issue of Dynamic Business in Australia.