QUESTION
- Can you tell us what happened at QVC? Its being talked about on a board.
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ANSWER
We were given a 4-minute test. We prepared a kit for this purpose, two 30.7 oz bottles and trigger sprayer for $19.95. A remarkable number of kits were sold in this four minutes, by our standards; 240 kits. Averaged out, 1 every second. However, there were severe constraints placed on proceeding further.
There was significant legal control, in advance, over what could be said. This prevented a natural presentation. It was a requirement to produce a large quantity of QVC branded packaging in anticipation of each airing, but with no guarantee of sale, thus ensuring a perpetual inventory of unsold material because being out-of-stock is a big no-no. Also, we as manufacturer cannot control when the presentation will appear, for how long it will be on the air, with what stain types being shown, etc. Furthermore, the QVC profit margin expectation was high in proportion to what we would be permitted to earn.
Most importantly, an inherent contrary interest is created by the fact that the on-air merchant would rather sell things which are not readily available in stores, whereas from the perspective of a manufacturer of a product that deserves to be in every home, retailer relationships are vital. As successful as QVC is, a huge proportion of potential customers would be excluded if the product were effectively exclusive to this medium. Retail sales activity is more predictable, scalable, has more opportunities for collaboration, spontaneous purchases and other advantages.
As impressive as QVC is – and it is impressive – its total sales are still a mere fraction of the top U.S. retail chains. Thus we decided that our long term future was better suited to collaboration with traditional retailers where exclusivity is not required. Suitable DRTV in the future remains an option, to supplement retail exposure. Much of value was learned from the QVC test and our DRTV test, both. For this learning, they were both good investments in the future.
