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The contrasting models of Teleshopping vs E-Commerce players and how PE investors are taking notice

From an interesting article in today's Economic Times on how TV shopping in India is growing simultaneously with e-commerce and the contrasting approach adopted by the two types of vendors.
By selling higher-margin items such as kitchenware sets and saris, India's television shopping players are looking to steal a march against their ecommerce peers. HomeShop18 and TVC SkyShop have already reported profits, even as others like Star CJ Alive and Naaptol are expected to hit the milestone in the coming months.

...HomeShop18, which has filed for a US listing, said for the nine-months ending Dec 2013, its television segment reported a profit of $2.5 million, or Rs.15 crore, even as its online arm continues to bleed leading to total losses of $14.5 million.

...Rahul Khanna, MD at Canaan Partners, said the difference between ecommerce and home shopping is pull and push marketing.
..Suvir Sujan, managing director at Nexus Venture Partners, who has invested in horizontal e-commerce players like Snapdeal and Shopclues, said a lot of shopping in this segment is on impulse. “The one issue with this segment in my opinion is that you don’t build a destination users don’t go to a TV channel. They browse TV and shop on impulse.”..But given their high sales in smaller towns, payments through cash on delivery are higher in TV shopping leading to higher returns, according to Sujan. In 2013, HomeShop18 saw 79.2% of its transactions through COD with a return rate of 21.4%, according to a filing. COD payments in the e-commerce business stood at 60% in 2013
From the Venture Intelligence PE Deal database: Three teleshopping providers raised over $90 million from Private Equity investors during 2013. US-headquartered media and telecom focused PE firm Providence invested $50 million to purchase the 50% stake held by Star TV in the latter’s India-focused home shopping channel, Star CJ Alive. Two other home shopping channels, HomeShop 18 and TVC Skyshop, also attracted new PE investors (OCP Asia and Morpheus Fund respectively) during 2013.

Prior to 2013, HomeShop 18 and TVC Skyshop had raised $38 million between them. The last reported investment in the sector happened as far back as in 2008, when SAIF and Capital18 invested $21 million in HomeShop 18.

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