For a time, the home shopping business model was stereotyped as the late-night infomercial companion for lonely shopaholics who—with their guards down and the steady repetition of product attributes droning on—were apt to buy anything. Today, a more accurate picture of this $9.3 billion retail channel is of a data-driven business that’s years ahead of e-commerce and traditional brick-and-mortar retailers when it comes to tapping into today’s consumer and delivering on true distributed commerce.
Even so, all three home shopping networks—QVC, HSN and Evine Live—have struggled with top line growth despite having nearly half of their sales generated online. The problem is an aging consumer audience, similar to department stores, and while the home shopping networks aren’t tethered to an aging store base, decades of reliance on network TV and cable channels are a part of their legacy—platforms today’s youth bypass. QVC’s acquisition of zulily in 2015 was an effort to go after a younger consumer. Also, all three have changed up their assortments and brands, work with influencers, are active with mobile and social marketing, and promote video shopping.
Evine Live Inc. is the David to the QVC/HSN Goliath, representing little more than 7 percent ($666 million F2016 U.S. sales) of the industry’s sales. Earlier this year QVC and HSN ($6.12 billion and $2.48 billion F2016 U.S. sales, respectively) agreed to merge with an expected closing in the fourth quarter. On the announcement, QVC’s CEO Mike George said the combined online sales would approach $7.5 billion, with mobile sales at $4.7 billion, making the company third to Amazon and Walmart in e-commerce. While the sheer scale of this newly combined direct-to-consumer retailer will be a force, if there is one new truth in the new normal of retail tech, it’s that size is often a hindrance to innovation and adapting to new consumer tech-driven demands. In a marketplace where speed and agility are paramount, perhaps the Davids have more to offer.
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And though small, Evine attracted strategic investors Tommy Hilfiger, Tommy Matilda (ex-CEO Sony Music) and Morris Goldfarb (CEO G-III), who invested $10 million, provide ongoing strategic advice and could easily become new vendors and/or influencers in Evine’s commerce ecosystem.
The Secret Sauce
Home shopping is a highly differentiated shopping model with product and brand founders as well as seasoned selling professionals engaging with the audience. This relationship building plus exclusive product, which can’t be price shopped, is the channel’s secret sauce.
“Leveraging video, as well as experts personally tied to the product we are offering, we have the ability to tell a brand’s story and make a personal connection to the consumer in a way that more static e-commerce sites cannot,” said Evine CEO Bob Rosenblatt. “Our customers recognize authenticity. We also look to work with influencers within their product category, people with a great story to tell and who can bring a new audience to Evine.”
Rosenblatt, who held management roles at HSN, Tommy Hilfiger, ideeli and Bloomingdale’s prior to Evine, said for products that represent shoppers’ personality and personal tastes like apparel, home shopping is an ideal fit. And it’s one reason why he feels businesses like his are able to withstand the threat from online pureplays—even the biggest one. “I don’t see true fashion brands going to Amazon. They aren’t willing or able to tell their stories on a platform that is only about commodity, speed of delivery and price – none of which are commensurate with the essence of true fashion” Rosenblatt stated.
Since becoming CEO in August 2016 (he was Chairman when then CEO Mark Bosek stepped down in February 2016 and became interim CEO), Rosenblatt has been rebalancing the merchandise assortment away from low value-add consumer electronics and rebuilding the home assortment. The company has launched 37 new brands in the last six months, including Bob Vila’s This Old House; MacKenzie-Childs; Royal Albert and Frankie Avalon and the Deen Brothers, with fall launches planned as well.
Rosenblatt noted on the Evine 2Q conference call last month that in its first two shows McKenzie-Childs’ productivity was 400 percent and 200 percent above plan, which he attributes to telling the brand story to interested shoppers. Even for mature brands like Waterford, which has been available on Evine for years, the approach works. Evine has reinvigorated demand by working with Waterford to create compelling storytelling, including remotes from Waterford’s factories in Ireland where the crystal is manufactured. Evine is now the No. 1 vendor of Waterford’s supreme line, House of Waterford, usurping Macy’s leading position. Both MacKenzie-Childs and Waterford are well known luxury brands, but were losing relevancy as department store visits decline and the number of knowledgeable brand ambassadors to tell the brand stories in-store dwindled. Evine, with its multi-platformed live selling, solves for the latter, and by placing videos in social forums such as Facebook Live and on YouTube, Evine is going where the next generation of shoppers discover, shop, and buy.
About 80 percent of Evine’s apparel merchandise offerings are proprietary or exclusive, reducing pricing wars while focusing on differentiated product and consumer connectivity. Evine has become a fashion leader with brands like V. by Vanessa Williams, Kate and Mallory and Indigo Thread Co. Rosenblatt said Evine shoppers know they’re going to get value for their money and on-trend looks that are still age appropriate. “We look to buy into these assortments narrow and deep which allows us to be more efficient in managing inventory levels and responding to the trends we’re seeing,” he said.
And by creating unique content for YouTube, Facebook and Instagram, the company is also able to expand its offerings. “There are so many great brands out there, but only 24 hours in a day of ‘shelf space’ for us to offer. This is why we have expanded and invested in alternative distribution, a move that is starting to really pay off,” he said.
The Real Competitive Advantage
Online, mobile and social selling is also a two-way street—one that allows Evine to remain tapped into what consumers want. “We collect and review almost every piece of feedback our customers leave us, from product reviews, social media posts, return slips, letters, calls and emails. We use that precious feedback to help steer our decisions with the customer voice in mind,” Rosenblatt said. “As our customer analytics practice has matured, we have started to add relevance to all our digital touchpoints, site search, product recommendations, email segments, mobile app enhancements and even the way we merchandise our site.”
What home shopping networks like Evine are finding is that by offering exclusive brands, unique experiences and personal stories from the entrepreneurs behind the labels, they’re able to connect and create the experiences consumers are craving. Add that to a truly distributed commerce model that meets shoppers where they are, they’re able to offer retail one-to-one. Now that’s a solution that can make every shopper feel special; isn’t that really, what it’s all about?
Marie Driscoll, CFA is an industry analyst focusing on apparel brands, retailers and luxury goods and providing consulting services to academia, industry, investors and non-profits through her firm, Driscoll Advisors. She can be reached at firstname.lastname@example.org.