A discussion draft of the Online Sales Tax Simplification Act of 2016 is expected to be introduced in Congress soon.
With a new and broader Internet plan, Shop At Home TV surfs for new channels of web shoppers.
Though its name invariably conjures up images of TV infomercials and smiling hosts hawking the deal of the minute, Shop At Home Network LLC is spending considerable time and resources dialing into a far more reaching sales channel: the Internet.
Founded almost 20 years ago as a satellite and cable TV home shopping network, Shop At Home Network sells about $300 million worth of merchandise each year and reaches about 54 million U.S households with cable access.
But in the world of TV shopping, those numbers are small and make Shop At Home Network a relatively minor player and perennial distant competitor to shopping channels with bigger organizations and sales, including QVC Inc., with annual TV and web sales of $5.7 billion, Home Shopping Network, $2.4 billion, and ShopNBC, a $649 million-a-year business unit of ValueVision Media Inc.
These days Shop At Home Network, like all other TV-oriented merchants, is asking "Where do we go from here?" and the answer is clearly to the Internet and e-commerce. Rather than devote all of its time and resources to TV shopping, a single sales channel that generates annual growth of only 6% to 10%, Shop At Home Network is betting its future squarely on web retailing, which is growing at 25% a year. "We intend to grow on the web in ways we can`t as a single channel retailer," says Adam Rockmore, senior vice president, marketing and interactive commerce at Shop At Home Network, a business unit of The E.W. Scripps Co. "We see a whole new audience we can reach with a well-defined and executed e-commerce plan."
One of the ways that Scripps is counting on to grow its e-commerce base is by consolidating more web shopping activity at ShopAtHomeTV.com, beginning with the online stores for three of the company`s most widely watched cable channels. Under that plan, all online sales for TV programs the Food Network, Home and Garden Television and DIY Network will take place on the ShopAtHomeTV.com platform. Web shoppers at Home and Garden Television and DIY are already being redirected to ShopAtHomeTV.com, not to be confused with ShopatHome.com, a completely separate site. The Food Network`s web store will be integrated in the first half of next year.
In addition, it`s beefing up the merchandise content, including adding more high-end home décor and kitchen products.
However, retailing analysts question if Shop At Home Network can build substantial market share against bigger and more established TV and web retailers at this late date. After nearly five years of selling online, Shop At Home Network generated estimated e-commerce sales of just about $75 million in 2004. In comparison, QVC, a unit of Liberty Media Corp., racked up 2004 web sales of $739 million, while HSN.com, the web arm of Home Shopping Network, posted e-commerce sales of $303 million and ShopNBC.com had estimated Internet sales of $131 million, according to The Internet Retailer Top 400 Guide to Retail Web Sites.
Analysts point out that not only are Shop At Home`s competitors larger but they are more nimble as well. IAC/InterActive Corp., for instance, the parent of Home Shopping Network, this spring took a much larger step into multi-channel retailing with its acquisition of Cornerstone Brands for $727 million. The justification for the purchase was the e-commerce operations of Cornerstone`s six brands: Ballard Designs, Frontgate, Garnet Hill, Smith + Noble, The Territory Ahead and TravelSmith, which have combined web sales of more than $550 million.
To date Shop At Home Network has languished as a smaller web retailer and home shopping channel in large part because of its narrow merchandising niche--50% of all online and TV sales are made by an audience of mostly middle age and middle income women who like to purchase inexpensive jewelry and collectible coins. In 2004, ShopAtHomeTV.com generated monthly traffic of about 1.6 million visitors who spent about $50 each time they made a purchase, according to comScore Networks Inc. and the Top 400 Guide.
In contrast, larger home shopping channels with web stores such as QVC, Home Shopping Network and ShopNBC generate monthly traffic of 10 million visits, 6.6 million and 4.8 million respectively, according to comScore. The average order is also bigger: QVC.com shoppers spend about $55 each time they shop online, compared with $75 at both HSN.com and ShopNBC.com.
To achieve greater economies of scale, let alone take market share and sales away from its bigger rivals, Shop At Home Network must implement a broader e-commerce plan that delivers better short-term web sales while identifying longer term Internet opportunities, says Kent Allen, founder of The Research Trust, a San Francisco e-commerce and interactive marketing research and consulting firm. "Having a plan for a new e-commerce strategy is one thing, but putting together all the pieces and going after a broader channel is a very tall order," he says. "If they are going to pull off a new approach, they will need to know who exactly their e-commerce customers are and figure out precisely their reasons for buying online."
That, in fact, is exactly what Shop At Home is doing. Shop At Home Network and Scripps researched Shop At Home`s audience and learned that the typical viewer was more upscale than the typical buyer at ShopAtHomeTV.com. The typical viewer of Food Network or Home and Garden TV, which are two of the most widely watched cable channels, is older, web savvy, has annual household income of more than $70,000 and is twice as likely as the average viewer of cable television to shop online or use the Internet to research a major purchase.
It is this new base of upscale buyers, the 12 million viewers hooked on Scripps programs that tell them how to cook a gourmet meal, hire a landscape designer or do a home makeover, that Shop At Home Network sees as a lucrative new audience of web shoppers. To reach that audience of potential higher end shoppers, Shop At Home Network is putting in place the right combination of merchandise and promotions that will attract affluent viewers.