Television shopping in China embraces e-commerce

PUBLISHED : Monday, 20 January, 2014, 12:20am
UPDATED : Monday, 20 January, 2014, 2:36am

Shanghai Oriental TV Shopping, the largest television shopping operator on the mainland, said the industry must embrace e-commerce to fend off fierce competition from rivals like Alibaba's T-mall or Walmart-backed Yihaodian.

"Our growth dropped significantly last year as the Shanghainese felt that they were less rich in light of the lukewarm stock market and the curbs in surging property prices," said Kim Heung-soo, managing director for SMG-CJ Homeshopping, a joint venture between Shanghai Media Group and Korean media company CJ, which runs Shanghai Oriental.

E-commerce sales in China were estimated to have grown by a quarter to 10 trillion yuan (HK$12.7 trillion) last year, analysts said.

"The relationship between e-commerce and home-shopping is getting increasingly dynamic," said Benjamin Lee, a sourcing agent for TV shopping channels on the mainland. "Hong Kong manufacturers will want to use more than one channel if they want to tap the market."

Last year, Shanghai Oriental's sales rose only 10 per cent, compared with 63 per cent yearly growth posted over the past 10 years.

Shanghai Oriental airs two television shopping channels in the city. It saw its sales increase to 8.5 billion yuan last year from 150 million yuan in 2004, cashing in on an emerging middle class in Shanghai who snapped up jewellery and designer handbags while watching their television sets.

But Kim said intense competition from Alibaba, Walmart and JD.com has hurt Shanghai Oriental.

Walmart and other e-retailers attracted droves of customers with the slogan "everyday low prices", while the TV shopping channel was unable to gain any traction with its slogan of "everyday new products".

Television shoppers and internet shoppers are two distinct yet slightly overlapping groups, said Kim. Most TV shoppers are female ranging in age from 30 to 60 years old. They look for pricier goods from handbags to items such as home appliances and cars. The average purchase per individual at Shanghai Oriental topped 1,200 yuan, as opposed to 60 yuan at Alibaba's T-mall.

But Kim is convinced that television shopping has reached its peak. "We would be out of business if we didn't adapt to the new media such as internet and smartphone retailing."

Kim said the channel has formed partnerships with groups such as T-mall and is now discussing terms with Youku, the mainland's leading internet video hosting site, so it can launch e-commerce content on their platforms.

"We are good at telling the customer visually what the product is about. We are now trying to condense the 30 minutes of air time into a 30-second clip and stream it to mobile phones," Kim said.

"We know how to tell a story and market the product through a clip, which is our niche over pure e-retailers. By combining both, we believe our business model will thrive."

By 2020, the company estimates half its sales would be generated by new media. Kim said Shanghai SMG-CJ Homeshopping is seeking to list in either Shanghai or Hong Kong, but no timeframe was given.

The television shopping market is highly fragmented, but the industry should consolidate as the government is liberalising it by allowing broadcasts across a number of provinces.