Direct to Consumer: QVC’s HSN Acquisition Impact

Buying a kitchen gadget from Ron Popeil or a new knife set from Chef Tony has long been relegated to the confines of infomercials and television channel networks like QVC and HSN.

From the kitchen to the backyard or bedroom, consumers have bought directly from TVs for years before the Internet went mainstream, and nearly every consumer had a computer or mobile device in their home or pocket. As such, it should come as no surprise in today’s tech-savvy age that the pioneer of television shopping, QVC, has taken aim at the eCommerce arena with its latest move.

Last week, QVC announced plans to buy out the rest of the shares of the Home Shopping Network (HSN). With the power of these two networks under one roof, QVC is looking toward the digital future. As we reported, QVC is buying HSN for $2.1 billion to help build out its presence on eCommerce, mobile and streaming video products.

Essentially, QVC is buying out the remaining 62 percent of HSN’s shares that it doesn’t already own.

In a move to take on eCommerce giants like Amazon and Walmart, as well as a few months after HSN’s CEO Mindy Grossman left for Weight Watchers, QVC’s HSN acquisition puts it third behind  Amazon and Walmart in terms of network-size sales. Following the full merging of these two companies, QVC will have a total of 23 million customers globally, shipping more than 320 million packages  which totals $14 billion in sales annually.

What does all this mean for the forward movement of the eCommerce arena as QVC leaps forward into the sometimes chaotic fray?

In the company’s news release, QVC President and CEO Mike George shared his thoughts. “By creating the leader in discovery-based shopping, we will enhance the customer experience, accelerate innovation, leverage our resources and talents to further strengthen our brands, and redeploy savings for innovation and growth,” George said. “As the prominent global video commerce retailer and North America’s third-largest mobile and eCommerce retailer, the combined company will be well-positioned to help shape the next generation of retailing.”

Shaping the next generation of retailing seems like a tall order to fill for a home shopping television network that some are saying came late to the eCommerce party. “They’re a little bit late to the dance of the online arena, but are catching up now,” said Craig Johnson, president of Customer Growth Partners, a retail research consulting firm.

Aegis Capital’s Internet and media equity analyst, Victor Anthony, commented on the coming together of these two home-shopping powerhouses. “There are some clear advantages to scale. They can negotiate better pricing with suppliers, better shipping costs and other back-end synergies.”

In some senses, industry experts could argue that companies like QVC and HSN are the original inaugural businesses to kick off the direct-to-consumer concept as we know it today in the retail industry.

In direct-to-consumer news this week, we’ve learned that Monoprice has announced its plans to expand its physical and direct-to-consumer presence with a new brick-and-mortar location at its headquarters in Southern California.

After Nike’s move into a more direct-to-consumer role with its items now for sale on Amazon, some are calling into question the future of Foot Locker. As Nike is one of the larger brands Foot Locker carries, the selling of the shoe brand on the eCommerce giant’s site could have a potential downside for the shoe store’s sales.

Whether its consolidating two large business entities or moving items onto marketplaces for sale, the direct-to-consumer approach to retail along with the ease of buying via various connected devices, are helping drive the transformation of the industry. If today’s landscape is any indication, QVC now likely has enough equity and power to help move the ball of becoming an eCommerce power player into its court.