Alibaba received a $192,000 penalty for pricing during the past two Singles’ Day sales.
With simulcast content, ShopNBC TV and ShopNBC.com are demonstrating that electronic retailing really is converging.
Merchants that call themselves multi-channel retailers today operate in web, catalog and store channels. But if Eden Prairie, Minn.-based ValueVision Media has anything to say about it, that trio will become a quartet tomorrow, with TV the fourth leg of a new, must-do commerce platform for retailers and manufacturers.
To get there, it’ll have to convince retailers-and a boatload of shoppers who don’t now shop TV-that it’s come a long way not only from the Ginsu knives and Veg-O-Matics that ushered in the dawn of direct marketing on TV 35 years ago, but also from its own early history. The company’s Internet business started out as a liquidation outlet for merchandise left over from its original TV shopping channel, founded in 1990.
Today, it’s shedding that image and working to reposition itself as a marketplace worth the investment of long-established, trusted brands. It’s reaching out to customers with new programming, an improved merchandise mix, and 24/7 streaming of its cable TV programming onto its web site, which is introducing the home shopping network to a new audience. It’s reaching out to retailers with TV/web opportunities that provide branding, an avenue of customer acquisition, and a direct marketing opportunity all rolled into one.
But perhaps the biggest move it’s made to reposition itself with retailers and potential new shoppers alike in the estimated $5 billion home shopping industry is re-branding the former ValueVison TV as ShopNBC. Last June, ValueVision granted NBC stock warrants valued at $35 million for the rights to brand its TV and web shopping network with the NBC name and re-launched itself as ShopNBC. That deal built onto an earlier agreement in which GE Equity and NBC invested $225 million for a 40% stake in ValueVision.
It’s wasting no time in leveraging the NBC logo. In the fall, ShopNBC announced a deal that will wrap programming around sales opportunities with The Spiegel Group Inc., Sony Corp., Lenox Inc., FTD.com, The Musem Company and others through an agreement with Yahoo@ Shopping for an hour-long, weekly program, also to be streamed on the web and on Yahoo.com. It also has launched weekly hour-long programs under the sponsorship of single merchants, such as the Bose hour added to the lineup in November.
And there is no doubt that the NBC name has helped the web and TV shopping network get in the door at retailers and merchant partners who might not otherwise have even taken a look. “When we approached the LPGA as ShopNBC, they told us, ‘If you were ValueVison rather than ShopNBC, we wouldn’t be here talking today,’ ” says Trish Mueller, senior vice president of marketing.
The deal with NBC and subsequent re-branding were smart moves for the shopping network, says retail consultant Paula Baldwin, senior vice president at marketing agency Campbell Mithun. “NBC is an established and highly respected brand, so to extend that branding over the shopping network would predispose consumers to try it,” she says. “Since the beginning of the year, we’ve seen some interesting strategies employed by mainline retailers to attract customers. What many of them find interesting here is the instantaneous nature of the offer. Traditionally, advertising has a delayed effect. What ShopNBC is offering the retailer is a long-form message that incites a phone or online purchase immediately. “
While ShopNBC is in an estimated 50 million households, the network is not Nielsen rated, so it can’t say with certainty how many people are watching which programs. But that’s less problematic for ShopNBC, which offers direct marketing as well as exposure, than it is for purely ad-driven networks. “I can’t tell you exactly how many are watching at a given time, but I can tell you more impactful numbers, such as how many people called in during a program, how many ordered, how much they spent and how many were driven to the retailer’s web site,” says Roy Seinfeld, senior vice president of programming sales.
Undercutting network ads
ShopNBC is pursuing two separate but linked programming initiatives to grow sales among its existing customer base and bring in new customers. One approach aggregates merchandise under celebrity names seeking to leverage their cachet in the e-commerce realm. The celebrity host’s endorsement of merchandise selected for presentation on his or her show, in effect, is the brand. Examples of such programming on the network include the Star Jones Show, hosted by Jones, a fixture on ABC daytime TV’s high-profile talk show, The View. A similar deal with garden writer and syndicated garden-show host Rebecca Kolls is in the works.
The other approach has ShopNBC selling time to branded retailers and manufactures. “It’s just as if they’re buying a 30-second commercial spot or a banner on the web, but it’s an hour-long block of time instead,” says Seinfeld. “We produce that show for the merchant, and during it, they get to sell brand, sell merchandise and acquire customers.” Branded, sponsored shows include those for Bass Pro Shops, the recently announced Yahoo and Bose deals, and others.
The hour-long program slots go for less than typical network rates. 30-second commercial spots on ESPN Sunday Night Football, for example might sell for as high as $100,000. By contrast, an hour on ShopNBC starts at around $50,000 to $60,000 for a turnkey solution that includes all program production, talent, and the use of ShopNBC’s technology platform which provides web site tools like 3-D and zoom capacity for product viewing. The rate structure is a flat fee that doesn’t typically include a sales-based revenue share.
TV content is streamed on the web in two channels; one offering a live feed that’s simulcast around the clock, and the other featuring video that’s created specifically for the web, such as “drop-offs” or extensions of TV programming. Web shoppers can also shop products featured in shows after the show runs, accessing them through a “Week in review” feature that presents the products in a listed format. Prime time programming, in which each hour-long show is a bundle of entertainment, information and shopping opportunities, is beginning to move away from an earlier hard-sell approach to one that delivers programming “more consistent with the NBC brand,” says Mueller.