January 26, 2011, 1:01 PM

HSN watches the web outgrow TV sales

Multichannel customers viewing HSN TV and purchasing via the web generate the largest sales.

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While HSN Inc. entered retailing via television, e-commerce is playing an increasingly important role in the multichannel retailer’s growth strategy, Mindy Grossman, CEO, told analysts attending Citigroup Inc.’s recent 21st Annual Global Entertainment, Media and Telecommunications Conference.

Of more than $2.9 billion in revenues during the first three quarters of 2010, web sales accounted for more than $1.1. billion, approaching 40% of sales, Grossman said.

HSN Inc., No. 25 in the Internet Retailer Top 500 Guide, focuses on multichannel customer behavior, with e-commerce playing a central role, Grossman said.

“If you watch HSN on TV, you will hear consistently, ‘go to the full assortment on HSN.com,’” she said. “That’s clearly because the more multichannel we can be, the more engagement and the higher the spend.”

Multichannel customers who purchase via HSN TV and HSN.com are more fully engaged, generating sales of $1,294 per year, Grossman told analysts. That compares with $681 for customers who only order via HSN.com and $855 for customers who only order via HSN TV.

“It’s not about getting the customer to come to you anymore, it’s about how can you be where the customer is at any given time,” she said. “Particularly for a business like ours which is ‘in the moment,’ that’s very important as well.”

HSN has made its e-commerce site “very content-pervasive,” Grossman said. In addition to more than 14,000 videos on product pages, including those that come directly from the live TV shows, the web site features new interactive tools, such as one that enables customers to upload photos of their faces to try different makeup.

“We’re trying to create longer engagement, just like we try to create longer viewing time,” she said. “The longer the engagement, the longer the viewing time, the higher the opportunity for conversion.”

There are more than 300,000 unique visitors to HSN.com daily, generating 4 million page views per day, and HSN.com sales are up 12% year to date, she said.

HSN also continues to invest in mobile commerce, launching an iPad application in late December, Grossman said. HSN also offers mobile applications for the iPhone and Android.

“It’s the fastest-growing channel of distribution,” she said. “We feel that that growth will continue to be geometric.”

E-commerce also plays a central role in the growth strategy of brands HSN sells under the Cornerstone portfolio, Grossman explained. “Think of this as an e-commerce portfolio, with catalog as the marketing vehicle versus a traditional catalog portfolio,” she said. “57% of our (Cornerstone) business is through e-commerce and in a brand like Garnet Hill, that’s in excess of 72%.”

HSN is in the process of rolling out new e-commerce platforms for the Cornerstone businesses, Grossman said. Cornerstone is a direct marketing unit of HSN that also includes Frontgate, Ballard Designs and Smith+Noble.

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