Home Shopping Moves Beyond TV Screens... Competing with E-Commerce

Declining Influence of TV Broadcasting
New Marketing Strategies Like 00 Day as an Escape Amid Competition Between Online and Offline Channels

[Asia Economy Reporter Cha Min-young] Large-scale online shopping festivals centered on e-commerce channels, such as '00 Day' and '00 Festival,' have also appeared in the domestic home shopping industry. Amid the decline in the influence of TV broadcasting and fierce competition with various channels, it is expected to become a new survival strategy for the home shopping industry.

According to the Korea TV Home Shopping Association and industry sources on the 24th, the ratio of broadcast sales to total sales in the domestic home shopping industry has continuously declined over five years, from 67.3% in 2015 to 56.6% in 2019. This is based on the combined amount of purchase sales and commissions from seven TV home shopping channels and five data home shopping channels. Broadcast sales stagnated at 3.1495 trillion KRW over five years and retreated to 3.1495 trillion KRW in 2019.

Home shopping companies are also trying new online-centered marketing strategies. Lotte Home Shopping achieved a cumulative order of 1 million during the five days from the 16th to the 20th through 'Gwangkeuljeol,' a large-scale brand discount event introduced for the first time in the industry. The average daily number of orders increased by more than 50%, TV home shopping orders rose by over 100%, and mobile orders increased by more than 60%. Notably, orders from customers in their 20s and 30s accounted for 43% of the total, marking success in attracting young customers, a common challenge in the home shopping industry. The event featured bold luxury deals, a 'Dyson' brand discount event, sales of affiliated hotels, and exceptional membership 'ELotte' point accumulation benefits.

Gwangkeuljeol is one of the major projects promoted by Lotte Home Shopping CEO Lee Wan-shin. To introduce a brand shopping festival to the home shopping industry, which previously had no large-scale discount events, a dedicated task force (TF) was formed. Three executives, including Kim In-ho, head of the Digital Transformation (DT) division, and 11 team leaders from online, mobile, and TV departments collaborated closely. CEO Lee emphasized to the TF members, "The era of competing through TV home shopping is over," and "We must advance into an integrated media commerce group through digital transformation such as online and mobile." This led to the creation of 'Gwangkeuljeol.' The term 'Gwangkeul,' commonly used online, also reflects the commitment to online transition.

The background for the emergence of such a large-scale brand event for the first time in the industry can be found in the traditional home shopping channel structure. Since it mainly deals with small and medium-sized enterprise brands, individual negotiations are difficult, and the typical low-margin, high-volume sales model does not yield good profitability relative to the average transaction value. Because home shopping companies operate on a commission basis, it is also challenging to fully adopt the strategies of online and offline channels that lower prices through advance direct purchasing. An industry insider said, "Due to the high volatility and the focus on small and medium-sized enterprises, it is not easy to carry out large-scale pre-planned events in home shopping," adding, "The industry is watching with curiosity whether such attempts can continue."