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From the barter system to cash purchases to the concept of plastic money, human ingenuity has developed many different ways to buy and sell. Now, HomeShop18 is poised to revolutionize the way we shop—from the comfort of our homes.

HomeShop18 started in 2007 in a space that was completely alien to Indians. Naturally, then, a plethora of problems were to be expected. “This was just an idea three years ago, and I was the first guy onboard,” says HomeShop18 CEO Sundeep Malhotra. “At that time, the image of home shopping was that of foreign women speaking in different languages selling sauna belts or precious stones. It was more about products that had some element of magic. But nobody has trust without the touch and feel of a product; so the legacy of teleshopping had eroded all trust from the business.”

The first objective for Malhotra was to bring about credibility and trust. The only way for him to do so was to sell genuine products. “Today, if I sell a Sony or Tanishq (via teleshopping), people will trust the brand and credibility will be built.” So, Malhotra and his team went from brand to brand to convince them of his business model. But no one was interested, as they feared that their brand’s credibility will also take a hit.

Moreover, they did not want to offend their retailers and distributors since they would be undercut with this business model. “When we started out, we did not have brands that trusted us. We did not have customers who trusted us. And more than anything else, we had no employees [who were willing] to join us,” says Malhotra.

“In November 2009, we announced strategic investment by GS Home Shopping, Korea, the world’s third largest home shopping network. It will lend its expertise in the areas of sourcing, merchandising, broadcasting and logistics to scale the HomeShop18 business in India,” he adds.

While teleshopping usually involves selling unbranded products for which you do not control the fulfillment and delivery process, HomeShop18 operates in a multimedia environment—television, web, catalog and print—to deliver high quality products and services directly to customers across India.

This direct-to-home home shopping model is very successful across the world, offering an alternative distribution platform. Products that consumers buy from a market have moved from the manufacturer to a wholesaler to a distributor and then to a retailer. Each one of them keeps a certain margin. The direct-to-home model, on the other hand, goes straight from the manufacturer to the customer’s doorsteps. Because there is no intermediary, the cost that is saved is passed on to the customer.

“Today we are the first and only 24-hour home shop company. We are also the only company to deliver to 2,750 cities in the country, and the only one to accept cash on delivery as a payment mechanism.”

HomeShop18 also has a full-fledged 24-hour channel, logistics company that manages its delivery across India, as well as its own contact center and IT systems that can track any order in any city in India.

So how does all this help an SME? Malhotra explains, “Imagine a city-centric brand that intends to go national. It may take it 5-6 years and crores of rupees to build a footprint in 5-6 cities. It will have to build the brand and then go on national TV. However, if it partners with HomeShop18, it goes on national TV from day one and gets distributed, not in five or 10 cities, but nationwide. Most importantly, its products get demonstrated. So, we are transforming small brands into national enterprises, because we give them visibility, brand equity, and a distribution platform that is unmatched.”

For example, a startup that’s manufacturing mobiles may face many hurdles. It may not get a prominent space on the shelves of a shop, it will have to undertake marketing, and if the product has a unique feature, it may go unexplained since no one has the time to explain it in a shop. However, with home shopping, the various advantages a product offers can be explained and demonstrated.

Only 19 months old, the HomeShop18 channel does sales of more than Rs.1 crore a day. “We are already a Rs.400 crore-odd retail entity—we sell about 4.5 percent of all cameras sold in the country every month, we do about Rs.5.5 crore of jewelry. Today, we are the largest retail destination with a new customer every eight seconds. We have two million customers within our CRM, 18 percent of whom have already become repeat customers,” says Malhotra.

According to him, HomeShop18 is an ideal partner for a brand that is starting up or hopes to start up or liquidate inventory. It currently offers the largest distribution platform, and will soon start selling insurance, travel and real estate.

How the System Works:
• Once an order is placed by the customer, the product is reflected at the backend of the producer and the logistics company.
• The producer will prepare an invoice, pack the goods, and keep it ready for transportation.
• The logistics company, which can also see the orders placed by the customer, will pick up the product and transport it.
• The logistics company will receive the payment, forward it to HomeShop18, which will then forward it to the company after deducting its margin.

©Entrepreneur March 2010

Tags:
HomeShop18, shop, Sundeep Malhotra