The idiot box has given birth to yet another idea in the form of ‘home shopping’; but with the Indian psyche of touch & feel shopping ruling big, the test is getting tougher
From the late management guru C. K. Prahalad’s Bottom of the Pyramid theory which changed business models in India, forcing many brands to digest the (non-existent) rural pill, to the entry of elite brands like Mont Blanc which cater to a niche, the way we are being sold products and services and the way we willingly buy them, has continuously evolved. And the latest form of it comes in the name of the phenomenon called ‘home shopping’. You sit at home, and they deliver it at your doorstep, with specifications as stated by you; what’s best, you can even pay in cash on delivery mode today! And what’s making this a reality today? Names like Home Shop 18 and Star CJ Alive which sell round the clock are getting people to wonder why they need to take the trouble of pushing the trolley around, when all you need to do is dial a 11-digit number or simply log onto the website flashing on the idiot box and have what you want! Selling and buying 24x7 is the new buzz in town! So how did we get here?
The primitive form of trading called barter, existed in Egypt more than 5000 years back. It was a system wherein goods and services were exchanged in return for other goods and services. Later, modern traders started negotiating through a medium of exchange – money. The onslaught of technology in the 20th century enabled giant retailing and mass market concepts. That led to credit cards, which further led to online shopping. Today, you can shop while watching TV, with just your mobile phone next to you! And that’s what home shopping is all about – setting up a complete retail store on TV, which allows you to shop 24x7. “When we started Home Shop 18, about three years back, it was just an idea. It was a scary idea, because no one had done home shopping till then; at least I hadn’t. Even today, most people don’t even know what home shopping is all about. The image of home shopping is that of a foreigner selling a Rudraksh or a Hanuman Kavach, which is what most people still feel. That is not home shopping, that is tele-shopping which is very different from what we do,” says Sundeep Malhotra, CEO, Home Shop 18. So what’s the real difference between tele-shopping and home shopping? Well, nothing and everything. Home shopping is the packaged version of the old and faded concept of tele-shopping; but unlike tele-shopping (which focused more, and still does, on health/cosmetic/physical fitness products), home shopping gives you a broader range of products and services to buy. So while tele-shopping temporarily thrived on the insecurities of the masses, home shopping thrives on wants.
First things first. The home shopping model is that of a wholesale cash and carry business, based on the wholesale margins that are realised by trading products received from the manufacturers. According to industry estimates, there are around 80 million cable and satellite homes, which would give access to some 400 million viewers. Even if 50% of these are potential customers, then it puts some 200 million viewers at the sellers’ disposals. If we slice this further and take the top 1/5th of it as hi-value shoppers, we get 40 million attractive, upper income consumers whom TV-based shopping could tap. Let’s assume that discretionary spending of these 40 million people is Rs.1000 a month, then it equals to Rs.4,000 crore of discretionary spending. Now, even if home shopping channels can tap 10% of the Rs 1000 figure, it equals to Rs.400 crore a month of business, a figure which in all conservative views stands to testify the potential of the home shopping business in India.
From the late management guru C. K. Prahalad’s Bottom of the Pyramid theory which changed business models in India, forcing many brands to digest the (non-existent) rural pill, to the entry of elite brands like Mont Blanc which cater to a niche, the way we are being sold products and services and the way we willingly buy them, has continuously evolved. And the latest form of it comes in the name of the phenomenon called ‘home shopping’. You sit at home, and they deliver it at your doorstep, with specifications as stated by you; what’s best, you can even pay in cash on delivery mode today! And what’s making this a reality today? Names like Home Shop 18 and Star CJ Alive which sell round the clock are getting people to wonder why they need to take the trouble of pushing the trolley around, when all you need to do is dial a 11-digit number or simply log onto the website flashing on the idiot box and have what you want! Selling and buying 24x7 is the new buzz in town! So how did we get here?
The primitive form of trading called barter, existed in Egypt more than 5000 years back. It was a system wherein goods and services were exchanged in return for other goods and services. Later, modern traders started negotiating through a medium of exchange – money. The onslaught of technology in the 20th century enabled giant retailing and mass market concepts. That led to credit cards, which further led to online shopping. Today, you can shop while watching TV, with just your mobile phone next to you! And that’s what home shopping is all about – setting up a complete retail store on TV, which allows you to shop 24x7. “When we started Home Shop 18, about three years back, it was just an idea. It was a scary idea, because no one had done home shopping till then; at least I hadn’t. Even today, most people don’t even know what home shopping is all about. The image of home shopping is that of a foreigner selling a Rudraksh or a Hanuman Kavach, which is what most people still feel. That is not home shopping, that is tele-shopping which is very different from what we do,” says Sundeep Malhotra, CEO, Home Shop 18. So what’s the real difference between tele-shopping and home shopping? Well, nothing and everything. Home shopping is the packaged version of the old and faded concept of tele-shopping; but unlike tele-shopping (which focused more, and still does, on health/cosmetic/physical fitness products), home shopping gives you a broader range of products and services to buy. So while tele-shopping temporarily thrived on the insecurities of the masses, home shopping thrives on wants.
First things first. The home shopping model is that of a wholesale cash and carry business, based on the wholesale margins that are realised by trading products received from the manufacturers. According to industry estimates, there are around 80 million cable and satellite homes, which would give access to some 400 million viewers. Even if 50% of these are potential customers, then it puts some 200 million viewers at the sellers’ disposals. If we slice this further and take the top 1/5th of it as hi-value shoppers, we get 40 million attractive, upper income consumers whom TV-based shopping could tap. Let’s assume that discretionary spending of these 40 million people is Rs.1000 a month, then it equals to Rs.4,000 crore of discretionary spending. Now, even if home shopping channels can tap 10% of the Rs 1000 figure, it equals to Rs.400 crore a month of business, a figure which in all conservative views stands to testify the potential of the home shopping business in India.
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Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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