MUMBAI: While there’s been a lot of attention on online retail and customers shopping increasingly through mobile phones, the unassuming retailers of the other screen — television — have been performing strongly with a targeted approach.
By selling higher-margin items such as kitchenware sets and saris, India’s television shopping players are looking to steal a march against their ecommerce peers. HomeShop18 and TVC SkyShop have already reported profits, even as others like Star CJ Alive and Naaptol are expected to hit the milestone in the coming months “E-commerce is a different model based on discounts. Our model is about discovering deals with significant margins and then pushing them to the consumer,” said Manu Agarwal, founder of Naaptol which gets 80% of its revenues from deals advertised on TV and newspapers.
TVC Skyshop, one of the oldest players in the industry, has been reporting profits since the last four fiscal years. In FY14, TVC SkyShop reported profit of Rs 7.53 crore on revenue of Rs 250 crore and expects the topline to increase 20% in fiscal 2015. HomeShop18, which filed for a US listing, said for the ninemonths ending December 2013, its television segment reported a profit of $2.5 million, or Rs 15 crore, even as its online arm continues to bleed leading to total losses of $14.5 million.
In the run up to its filing, the company decided to focus on its TV segment which accounted for 80-85% of its gross transaction value of $159 million for the given period.
While the majority of revenues for these players 70-95% comes from TV, they also have a presence in online and mobile segments. Take for instance Star CJ, a JV of STAR Asia and South Korean home shopping major CJO Shopping, which gets 95% of its revenues from TV and only 5% online.
“We are now going to initiate a mobile commerce business as it accounts for 30% of our internet traffic,” said Star CJ marketing head Donald Kwag.
Experts said the strategy of the TV retailers contrasts with the model adopted by India’s top online retailers who focus on growth at the expense of profits. “These players are dependent on mass media and targeting TV viewing customer with a different marketing and promotion strategy, which is more for less and bundling of products not easily available,” said Pragya Singh, assistant vice-president for retail at advisory firm Technopak.
Flipkart, which announced having reached the milestone of $1 billion (Rs 6,000 crore) in gross merchandise value of sales in March 2014, has provided no indication as to when it will turn profitable. Snapdeal has earlier said it plans to reach profitability in 2016 while Myntra, which is in talks with Flipkart for a merger deal, expects profitability by end of 2014.
As these portals now joust with Amazon in India’s fast-growing online retail industry the path to profitability could become even longer.
E-commerce, which had sales of $2.3 billion or Rs 13,800 crore in 2013 according to Technopak, is expected to remain the dominant category in terms of total sales. According to Euromonitor, Indian home shopping grew by 6% in 2013 to Rs 1,210 crore while market players peg the size at Rs 2,000 crore.
Home shopping players are betting on larger reach, especially in the hinterlands of India, and the ability to illustrate the product better through TV medium. TV shopping firms view themselves as more of performance-marketing companies who can drive more sales from a limited catalogue of products.
Rahul Khanna, MD at Canaan Partners, said the difference between ecommerce and home shopping is pull and push marketing. “On the e-commerce front, it is about the widest selection but players like Naaptol curate different kind of products which are hard to find and then create volumes,” he said. Canaan, along with NEA and SVB Capital, are investors in Naaptol.
Also, while e-commerce players are getting sales from branded electronics and apparels, TV shopping players are focused more on private labels and unique products which are not readily available.
Comments are closed.