Cashing in on the home shopping boom
Home shopping networks are blowing the lid off the retail trade. Even though there are few blacks, there’s money to be made.
TERRY LEWIS MASON IS WORKING the camera. Her crisp, commanding voice wafts over the Home Shopping Network airwaves, prodding television viewers to buy the red silk dress modeled on the screen. Although she appears engrossed in every fashion detail, her eyes are fixed on a nearby computer. Its color-coded graphs clock the number of incoming calls and sales every 15 second, as her voice coaxes viewers to pick up the phone and buy.
Sales are not coming in fast enough, prompting Mason to rethink her strategy. Is it the color? The waistline? She casually mentions that the fitted dress has an elastic waist. Within seconds, the orders start rolling in.
After her stint before the camera, 32-year-old Mason reflects on her job as super saleswoman of the airwaves. Throughout the program, Mason focuses on pumping up the volume of sales. As one of Home Shopping Network’s top fashion hosts, her sales goals average between $300,000 to $500,000 per show. Depending on the quality of the merchandise and the time of day, goals for some shows can be as high as $1 million.
“My monitor tells me everything I need to know,” Mason continues. “I know how many calls are coming in, how many units are selling per minute, how many dollars I’m making during that show.” While all sales hosts receive a salary, it pales in comparison to the bonuses they can make.
THE LURE OF HOME
Still in its infancy, the electronic retailing industry includes TV home shopping, infomercials and computer online shopping. This phenomenon generated an estimated $3.2 billion in sales last year, according to a recent study by the International Mass Retail Association. That number is projected to top $100 billion by the year 2000. For consumers with less time on their hands to shop, these new electronic venues offer competitive prices, unique product selection, product information–and, above all, convenience.
With few African-Americans in these ranks, those interested in the business should take advantage of the opportunities in this fast-breaking industry. It’s not an arena for the timid: Aggressive individuals with computer, retail sales, finance and marketing skills can do well in this skyrocketing industry.
There is certainly no shortage of opportunities. In fact, $2.24 billion in sales is not bad for an industry that was scoffed at when it first appeared nationally on cable television a decade ago. But no one is laughing now at the Home Shopping Network (HSN) and its rival, QVC, as they corner the burgeoning television shopping market.
Yet, American TV viewers still don’t know where to find these stations on their television sets, much less on a map. Nevertheless, although neither of the networks is located in a major media center, HSN (St. Petersburg, Fla.) and QVC (West Chester, Pa.) have made TV shopping a tale of two channels.
Once the stepchild of the retail business, television selling was cast in the lot with late-night commercials for steak knives and nostalgic audio cassettes. Feeding that schlock image was the new shopping network’s staple of low-priced clothing, household kitsch, cheap collectibles and budget jewelry.
While this merchandise is still part of the repertoire, brand-name computers, cameras and camcorders by industry giants like IBM, Kodak and Sony are also offered. In addition, shoppers can find fashion favorites from designers Pierre Cardin, Elizabeth Arden and Diane Von Furstenberg. In fact, such celebrities as Joan Rivers, Victoria Principal and Ivana Trump have bypassed retail shops, preferring instead to pitch their jewelry and apparel on the two lucrative television channels.
HSN and QVC have managed to muscle out a dozen or so competitors over the last decade. But hot on their heels are mail-order giants (Spiegel) and chain stores (Macy’s and Nordstrom’s) that are entering the TV retailing fray. Even music video giant MTV is starting its own shopping program. If the next millennium brings 500 television channels into American homes, even more companies will be scrambling for a piece of the action.
With over 60 million households at their fingertips, QVC and HSN split the $2.24 billion in revenues consumers spent television shopping in 1993. Both have expanded into niche markets. For example, HSN has a joint venture with Black Entertainment Television (BET) to produce a two-hour, Afrocentric shopping special on BET called B.E.T. Shop. In addition, QVC and HSN also offer their own proprietary brands of merchandise.
In an effort to keep up with technology and each other, cyberspace consumers can take advantage of both networks’ online shopping services. Both companies, along with other local TV shopping channels, like the Minnesota-based Valuevision, are also entering the fastest growing segment of electronic retailing: infomercials.
HSN’s Home Shopping Club began as a local Florida cable show in 1982. The network now employs over 5,000 people. With its moderately priced merchandise, HSN, headquartered in St. Petersburg, is considered the “Kmart” of television shopping, compared with the more upscale QVC (its initials stand for “Quality, Value and Convenience”). But HSN has no intention of changing that image, and is “comfortable catering to middle America,” says Louise I. Cleary, HSN’s vice president, corporate communications.
Its counterpart, QVC, has focused on a younger, active and more affluent consumer. Since 1986, QVC has aimed to educate shoppers as well as sell to them, devoting segments to lifestyles and the products that go with them. With 4,500 employees, QVC’s modest office complex facilities are in West Chester, Pa., 30 minutes outside Philadelphia. In 1993, Barry Diller, former Fox Broadcasting Co. chairman, bought a controlling interest in the company and became chairman and CEO. Talks about a possible merger between HSN and QVC fell through and there are no plans for a merger on the horizon.
With the increasing competition and the money to be made, career opportunities will flourish. Retailers and broadcasters who want to play will need individuals who know how to buy and sell merchandise.
“People with retail industry experience will be important to online network companies and television upstarts,” says Stephen Sibert, vice president of retail affairs and industry research for the International Mass Retail Association. These companies, Sibert notes, currently lack the talent to market, and will look for people who can sell to an increasingly demanding customer base.
The need for producers with degrees in journalism, communications or marketing, along with talented executives with expertise in business analysis, is there and immediate, says Edward M. Vaughn Jr., senior vice president of human resources for HSN. Of HSN’s 1,200 management positions, only 25 are held by African-Americans. Of QVC’s 518 managerial posts, blacks hold 54.
THE SOFT SELL OF THE SHOW HOST
Definitely the most visible and one of the most lucrative careers in the business is that of show host. Mason is one of only three African-American hosts among HSN’s 37-person sales force. Fashion is Mason’s specialty on the Home Shopping Club. The other two African-American hosts are Tina Berry, who sells collectible dolls, and Clarence Reynolds, who sells jewelry and appliances.
Seven years ago, Mason, a former broadcast news reporter, entered the business after doing a feature story on HSN for a local television station. The story piqued her interest. Her experience as a broadcast reporter/anchor in such cities as Tampa and Greenville-Spartanburg gave her the stage presence needed for the job. The sales training came later.
“It was a brand-new industry that was exciting and financially rewarding,” says Mason. Although she won’t reveal her salary, she admits that her income last year was three times what she made when she started. Entry-level hosts can start at $30,000. Depending on your time slot, your ability to move merchandise and your gift of gab, bonuses can push that amount well over the six-figure mark.
For QVC show hosts, a portion of their quarterly bonuses are based on their popularity with viewers. “Operators would poll shoppers while they placed an order, asking them how they liked the show host’s look and voice,” explains Phyllis Lampkin, one of the original full-time hosts of QVC’s “Fashion Channel.”
When not chatting with product-touting celebrities like Ivana Trump, HSN’s Mason (who reports to the director of the on-air talent department) also works very closely with the show’s merchandisers to find the best mix of products. At QVC that function is handled solely by sales planners, although some hosts do make product suggestions to the network’s buyers.
More than just on-camera presence is needed: A show host must motivate, influence and educate viewers. That soft-sell approach requires an intimate knowledge of the products being sold. In order to successfully ad-lib through a five- to 15-minute pitch, a host must be able to speak knowledgeably about a product’s history, available sizes and about any other pertinent information. In essence, show hosts function as the eyes and hands of the shopper.
ON WITH THE SHOW
Producers like Tina Yates-McGarrah make things happen behind the scenes. With a degree in fashion merchandising from North Carolina A&T State University, Yates-McGarrah joined HSN as an assistant fashion buyer nine years ago. “It was explosive when I started here, says the 31-year-old. “In a matter of 15 minutes we could sell a thousand units of a blouse. You could not keep up the supply because the demand was so great.
Yates-McGarrah moved quickly up the television retailing ladder, traveling the world as a senior buyer. When HSN’s merchandising and production departments temporarily merged in 1993, the network’s only African-American buyer became their only black show producer.
During her rigorous 10-hour days, Yates-McGarrah–also a producer for B.E.T. Shop–is responsible for ensuring that every aspect of the show is perfect. From the set to the product to the models, Yates-McGarrah, who reports to the vice president in show sales, makes sure the stage is visually correct so that projected sales goals are met. It’s an avenue open to individuals with degrees in communications, marketing or journalism who have some experience in the field.
At QVC, producers are required to have more technical experience, says Gary Mathern, QVC senior vice president of human resources. People with a background in television production begin in areas like video graphics, post production or the audio department before becoming producers. Salaries in production, since these are non-union jobs, can range from $18,000 to $65,000 a year.
CHOOSING THE RIGHT PRODUCTS
Getting the right products on the air is an integral part of the success of television shopping. This is the job of the buyers, and they are on the front lines of the home shopping battle for viewer dollars. Currently, neither company has any African-American buyers on staff. This is also an area that will experience immense growth in the coming years.
People with college degrees and at least three to five years retail buying experience have the background to break into buying. “It’s extremely helpful to have a background in the area in which you’re specializing,” says Amy Rosen, director of merchandising, entertainment, books and music for QVC. Merchandising departments are so specialized, says Rosen, that “you must know the players in your field. If you work with sports products, for instance, it’s important to know the companies and the hottest products out there.” Buyers must also be experienced in developing market sales plans, working with vendors on product development and overseeing assistant buyers and other staff members.
There are various levels of buying that range from the junior to assistant level, starting at $30,000 to $37,000 a year. Buyers and senior buyers can command salaries between $45,000 and $85,000 annually.
AT THE HUB OF TV SHOPPING
As senior vice president of customer services, John Hunter is responsible for QVC’s 2,800-person phone center telemarketing pool, which accounts for more than 50% of QVC’s workforce. “When the headhunter called me, I didn’t even want to come up to look at the place,” says Hunter, 43, who was turned off by the idea of television retailing at first. “I didn’t know what QVC was, but with my experience in telemarketing, I understood that people were going to do more shopping over the phone in the future,” he adds. After earning a degree in marketing from New York’s Pace University, Hunter worked in sales, marketing and service for nine years at Avis Rent-a-Car. Before joining QVC in 1991, he was a senior vice president of telemarketing at Citibank.
Interfacing with merchants, marketing, programming and production people are part of Hunter’s day-to-day responsibilities to ensure that QVC’s 60 million callers a year are treated right. It’s a much faster industry than he was used to, but Hunter says it’s an excellent one for African-American professionals. “The growth is so fast and furious that companies are saying we want someone who can help me now,” says Hunter. “Unlike other companies that have staunch lines of demarcation, a lot of opportunities exist here.” For executives of Hunter’s caliber, salaries can top $150,000 and may include stock options and bonuses as well.
Both QVC and HSN seek to increase the merchandise they offer, but a major roadblock stands in their way. They need the distribution channels so that viewers don’t have to wait two hours to see the product they want, says Robert Dansby, vice president of Analysis Group, an economic and financial consulting group in Cambridge, Mass. Constrained by the fact that only one product at a time can be presented on television, HSN and QVC are looking to offer interactive shopping, where an audience can view any product any time and make purchases through their TV sets. This technical advance will depend on the ability of telephone companies to become involved in interactive video services, says Dansby. Viacom and Time Warner are already testing it. With any success, consumers will not have to leave their homes to shop; they’ll just point and press their remote control.
As those shopping opportunities continue to change and expand, so will the career options within the industry. “It’s an industry that is experiencing so much growth,” says Mason, HSN’s sales host. “But people don’t know how to get into the business.” Yet that could change with the click of a remote.
RELATED ARTICLE: THE ARCHITECTS OF TV SHOPPING
The unlikely idea of TV shopping was born in 1982 after two Florida entrepreneurs, Roy Speer and Lowell Paxson, converted their successful Home Shopping Club radio sles program in to a cable show. HSN set up shop in a strip mall in St. Petersburg–employees had to go outside to get from one department to the next.
Growth has been phenomenal since going public in 1986. The 1993 revenues of the home shopping pioneer were more than $1.04 billion. For the nine-month period ending September 1994, net sales grew to $824.8 million, a 10% increase over sales for the previous year.
HSN’s St. Petersburg headquaters now stretch acroos 55 acres, venerably nicknamed “the campus.” In 1993, the company shipped over 21 million packages from here and three other warehouses located in Waterloo, Iowa, Reno, Nev., and Salem, Va. The Network now has three channels: HSN 1; HSN 2, which is similar to HSN 1 but is broadcast from a dozen UHF broadcast stations; and HSN Spree. Their audience is enormous: More than 60 million households in the United States are reached by HSN. Meanwhile, a state-of-the-art voice answering system named “Tootie” answers the roughly 158,000 calls received daily. First-time callers and Home Shopping Club members with specific questions can also speak to one of the 2,000 human operators.
In a joint venture last September, HSN and Black Entertainment Television began a 13-week test run of B.E.T Shop. The show has done so well that it’s been extended another 13 weeks. Co-hosted by Mason and another African-American HSN host, Tina Berry, the two-hour program, broadcast from HSN’s Florida headquaters, offers jewelry, clothing and cosmetics aimed at the black consumer. BET also plans to creat a new distribution outlet for African-American manufacturers interested in marketing their products.
HSN has even opened its corporate doors to outside entrepreneurs, such as John E. Oxendine. In 1988, Oxendine, chairman and president of Blackstar Communications Inc., bought the first of three broadcast stations affiliated with HSN. He says that his venture with HSN makes good business sense; it worked because HSN, like African-Americans in the field, is in the minority.
“They were outsiders,” notes Oxendine. “They were entering the broadcast arena to show programming that was not the typical fare. They could identify with those of us who have traditionally been out there.”
Oxendine’s three stations, in Portland, Ore., Ann Arbor, Mich., and Orlando, Fla., came with a price tag of $14.3 million, and have more than doubled in value. Currently, Oxendine is trying to raise $215 million for the initial acquisition of 11 television stations to be affiliated with Fox Broadcasting Co.
Until 1986, HSN was virtually alone in the television retailing business. Then at that point, Joseph Segel, founder of the Franklin Mint–makers of mail-order collectibles–joined the bandwagon of 17 other shopping channel contenders. Unlike the other upstarts, QVC survived, and its growth and potential sparked the interest of Barry Diller, former chairman of Fox Network Inc. Diller invested $25 million in the network in 1992, becoming its chairman and CEO.
Shipping over 38 million packages last year from distribution centers in Chesapeake, Va., and San Antonio, Texas., QVC had sales of $1.2 billion in 1993–surpassing HSN. That lead may continue as 1994 sales were projected to hit $1.4 billion. Their two channels, QVC and Q2 (which broadcasts from New York), reach 50 million American homes. QVC, the Bloomingdales to HSN’s Kmart, seeks to cater to a more sophisticated customer, with high-end, targeted merchandise. Like HSN, QVC also relies on high-profile individuals, including Diane Von Furstenberg and Joan Rivers, to pitch products bearing their names.
RELATED ARTICLE: GETTING YOUR PRODUCTS ON THE AIR
“African-Americans will find that the greatest opportunity in home shopping will be in getting their products on the air,” declares John E. Oxendine, chairman and president of Blackstar Communications Inc., and owner of three home shopping stations affiliated with HSN.
Both HSN and QVC look for a wide variety of unique, quality goods that will appeal to a broad spectrum of men and women. Exclusive product launches and first-time offers are also welcomed. Vendors wanting to get their products on one of the TV shopping stations should contact the respective networks and obtain a vendor kit. Inside will be a product description sheet that must be filled out for each item.
Be prepared to answer questions regarding terms of the sale, price, liability insurance, warranties, patent numbers, if any, and the names of stores and catalogs carrying the product. Enclose a color catalog sheet or picture; it will help with the evaluation process, which can take up to three weeks.
QVC avoids products in the following categories: junior apparel, furs and fur-related products, guns and gun-related products, subscriptions, personalized items, 900 phone programs and service-related products. It is also unusual for QVC to accept retail items with a selling price of less than $15.
If your product is accepted, a sample will be requested. The sample must pass rigorous quality assurance requirements before it is approved. Once approved, the merchandising department will work out a sales plan for your product. Restrictions may also apply on the minimum amoun of merchandise they will accept, depending on the product.
QVC products must be individually packaged, labeled and shipped directly to its warehouses. (This is not a requirement with HSN.) Once the product has been processed and assigned to a warehouse, it is ready for television.
QVC recently launched a national campaign in search of merchandise across the country. QVC’s “50 States in 50 Weeks” will run from January till December, and interviews with vendors and guests will be broadcast on QVC channels. For more information, call the vendor relations department at QVC at 601-701-1000. Call HSN’s purchasing department at 813-572-8585.
COPYRIGHT 1995 Earl G. Graves Publishing Co., Inc.
COPYRIGHT 2008 Gale, Cengage Learning