QVC: The original e-retailer scores big on the web
“We are the number one electronic retailer in the world when you consider that electronic retailing really started on TV,” Robert Meyers, merchandising vice president of QVC.com, told an audience at this week’s eTail 2002 Conference in Boston.
If you accept Meyers’ broad definition, few would dispute the claim. In its 16th year, QVC has become the second-largest television network in the U.S. with $3.9 billion in sales last year, making it the dominant player in the home shopping arena. Its 24/7 shopping broadcasts reach 84 million homes and its seven call centers field more than 130 million calls a year.
What is less known is the quiet but stunning progress QVC is making with its foray into Internet retailing. Launched in 1997, QVC.com has grown rapidly to $285 million in volume last year and is expected to top $400 million this year, according to Meyers. It has achieved such remarkable growth by leveraging the resources and building on the strengths of its television channel and by offering the dedicated viewers of the network a wide range of products that cannot be merchandised on television. “Our broadcast features only nine items an hour, but I’ve got up to 70,000 items in warehouses that we can sell on-line,” Meyers remarked.
A key strategy in building QVC’s web site is converting the network’s avid television shoppers to web shoppers as well. Meyers noted, for example, how the web site features a streaming video box that shows the live programming on the network, specifications of products featured on the broadcast are provided on the site, and a perpetual banner on the bottom of the TV screen provides the web site’s URL. Pricing on the site is the same as on TV, and when items are sold out on TV, they are immediately removed from the web. Furthermore, celebrities, such as Joan Rivers, who anchor portions of the television show, have their own pages on the web site display the same product lines (jewelry in the case of Rivers) associated with that host on television. “Our hosts and celebrities are people who shoppers relate to and that creates a sense of community,” said Meyers. “That translates very well online.”
Creating and maintaining this web-TV link is no easy task. Typically, for example, 40% of the items featured on sale on television are sold out during the show, which requires an immediate adjustment on the site. “If you sell out 40% of the items shown on TV every day, it means that every day, we have to replace those 40% of items on the web site,” Meyers said.
A built-in electronic shopping clientele is not the only thing QVC.com leverages off its parent’s assets. Massive purchasing, warehousing and shipping assets are others. The web site, for example, has use of the company’s seven distribution centers, which last year shipped more than 92 million packages.
Yet, the parent arguably receives more in return. Because the web can merchandise thousands of items, while the TV program can feature only 200 a day, QVC.com opens the parent company to products and markets that could not possibly be covered on TV. “Close-out items in quantities of 1,000 aren’t put on air because they wouldn’t last one minute on TV,” said Meyers, adding that such deeply discounted goods are routinely offered on the web with brief mentions on the TV program. Similarly, a range of products Meyers called “Hot Market” goods are reserved for opportunistic sales on web. When Brazil won the world cup last month, the victory was immediately announced on the TV program, which referred viewers to the web site to purchase a wide array of world cup memorabilia.
QVC has also used its web site to extend its powerful merchandising capability to 180 drop shippers who inventory products featured on the site and fulfill orders received from QVC.com. The web site provides a vehicle for moving out of QVC warehouses the 60% of products featured on TV that are not sold out on the show. Additionally, the QVC web site provides hot links to a growing number of so-called linked merchants, such as GSI Commerce. Shoppers on QVC.com can reach the web sites of linked merchants without leaving the QVC site and place orders from those merchants in the same QVC shopping cart. QVC processes payment on those orders, which are then fulfilled by the linked merchants. Through such arrangements, QVC.com boasts that it merchandises a million items without having to inventory any of them itself.
And just what happens to QVC when television becomes interactive, the web becomes more like TV and the two media merge? In the Q&A after his presentation, Meyers was ready for that very question. “You just asked the question that brought me to this company,” Meyers said. “QVC is well positioned when you talk about the merger of television and the Internet. We already have buy-button technology (interactive TV) in place today in the UK, and we have the technology available in the U.S. right now. It’s just a matter of getting it implemented.”
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