Advertising Interviews

Sundeep Malhotra

CEO | 12 Nov 2010

"Biggest learning I have is that if you can provide a product with an assured guarantee and which is a known brand at a value that is unmatched then everyone shops, regardless of which geography you belong to… All tiers have disposable incomes and they are hungry for good quality products but access to products was missing earlier. Today even the best of brands normally distribute their products to 30-50 cities. But India is all of 5000 cities and there are consumers in each of them. The reach of television surpasses the reach of any mall or retail chain one can think of."

Sundeep Malhotra is the Founder and Chief Executive Officer of HomeShop18, India’s first 24 hour home shopping channel from the Network18 group. He joined the company in July 2006 when virtual retail and home shopping was a mere idea. Building on the idea, literally from scratch, he gathered a nucleus team of 100 members and launched the HomeShop18 Television channel in April 2008.

A graduate from Delhi University, Sundeep earned his Masters degree from AIMA, Delhi. He came to Network18 with a rich experience of over 20 years in some of the best regarded organisations. He was the Executive Vice President in PepsiCo India for 6 years. Prior to which he spent 5 years with Benetton India, as their Head of Sales and Marketing and over 10 years with Bata India Ltd, working across various roles from Brand Management to Retail Head. The idea of Home Shopping was received with skepticism and mistrust. But Sundeep, with his keen insight and relentless belief in the business model, steadily built and drove his team to build this new credible shopping platform for both, the Indian shopper and the Indian viewer. Keeping the customer at the centre, he made HomeShop18 well known in 2750 cities across India and gleaned a solid customer base of over 2 million customers.

HomeShop18 has partnered with the best brand owners, such as Apple, Motorola, Samsung, Whirlpool, Philips, Kaya, Reebok, Lee, Levi’s and many more to provide superlative quality and exceptional value. HomeShop18 is committed to providing a delightful and dependable customer experience, through entertaining and outstanding content on TV & the Web and its high quality captive customer sales centre. Its customer-centric practices, including free home delivery, multiple payment options and 15 days ‘no questions’ asked replacement guarantee make shopping with HomeShop18 a smarter and a more convenient experience.

Q. HomeShop18 is India’s first comprehensive virtual retail business. However, when you started business 20 months back, no credible or a well known brand wanted to be associated with you. How did you work to come over this hurdle and what were the various challenges that you faced along the way?

Challenges that we faced were all about mainly two things. Firstly, about the domain itself. The skepticism about the domain was our biggest challenge purely from the brands point of view. And the second challenge was to give them the comfort and the confidence that home-shopping or an alternative distribution platform is a catalyst for their growth and is not a competitor to their existing distribution platform. Partnering with someone like HomeShop 18 was a big hurdle as most did not know what HomeShop 18 stood for. Therefore, their imagery of associating with our brand was associated to the legacy of teleshopping and hence the skepticism. So their worries were about their image getting tarnished by partnering with us. They also thought that we were all about discounts and hence will create problems for their existent distribution network. To a large extent we have overcome that because the brands that were skeptical earlier and started in an apprehensive fashion and today they are investing in building exclusive product lines and exclusive teams, which support HomeShop 18! The only way that we could build this confidence was by proving to companies that there was potential for business far beyond their existing reach and that it does not compete with their existing distribution network. What HomeShop 18 does is very unique because it cannot be done through a physical store. For example, in a physical store you hanker for shelf space. But a product on a static shelf cannot be demonstrated. If there is a function, feature or a benefit of the product it cannot be explained to a consumer. Television, being an interactive medium, is the only medium by means of which you can actually demonstrate the product and what it stands for. There are close to 80 per cent products each year that fail in retail outlets. They don’t fail because the product is bad. They fail because either the proposition or the product benefits were not correctly explained to the consumer. This is also a great launch-pad. For a brand that is city centric and wants to go national can do so overnight. Today we are delivering products to over three thousand cities across the country. That is an unmatched reach and something no other company in India has today. For a company launching a new product and wanting to elaborate what it stands for before it gives it to open-trade, this is a great way of doing that. This is a one-stop shop to increase reach, to build brand equity, because you are on national TV, and to understand who your consumer is because we have every possible data about the customer; the ones who are buying and also the ones who are not buying.

Q. Now that you have reached a point that there are companies that are queued up to be associated with HomeShop 18. Therefore, do you have a filtering process in place for the companies that come onboard?

Yes, there is a filtering process. But having said that we are not going to be brand centric. This like a virtual mall. It is not going to be an exclusive domain of one brand. But the filters that we apply are for brands assuring us quality. Also, the brand has to give us either an exclusive product or an exclusive proposition. In the absence of either of these the brand will not come on television.

Q. HomeShop18 is said to have transformed the TV shopping space into a successful business format. 18 per cent of the clientele are repeat customers. What is the USP or the key to this success?

There are many USPs but clearly, as an Indian and a consumer, there can be only two USPs. First, through HomeShop 18, we have built an alternative distribution platform. This enables the consumer to get unmatched convenience, something he could not have got earlier, and unmatched value, because of the kind of business that we have created. Hence consumers get products they never thought would be available in their cities. It is unmatched convenience because we have payment options that are the widest today. One may choose to pay by credit cards, cheque or even cash on delivery. On top of that we have given a 15-day no questions asked money back guarantee. The consumer has the option to either replace the product with another product or ask for a full cash refund. That is what I call unmatched convenience. Other than the convenience of payment and value proposition there is also ease of shopping. For example if you were to buy a microwave oven you would go to a multi brand electronics outlet and you would ask the salesman to help you. He might or might not be able to provide the information that you are looking for. In our case we put a product on television and we help you take a more evolved buying decision by explaining every functionality, converting every feature into a benefit for the final consumer.

Q. More than 65 per cent of the customers are from tier I and II cities. What do you attribute to the phenomenal success of HomeShop18 in these cities and what can be the learnings for the tier I cities from this to expand their percentage?

Biggest learning I have is that if you can provide a product with an assured guarantee and which is a known brand at a value that is unmatched then everyone shops, regardless of which geography you belong to. Big city people are shopping on HomeShop 18 probably because of lack of time or parking space to go out and shop. Small city people are buying mainly because these products were not available in their cities earlier. All tiers have disposable incomes and they are hungry for good quality products but access to products was missing earlier. Today even the best of brands normally distribute their products to 30-50 cities. But India is all of 5000 cities and there are consumers in each of them. The reach of television surpasses the reach of any mall or retail chain one can think of.

Q. Who are your direct competitors and what is your strategy to hold your market share?

Right now it is not about market share because we are the industry. I think when more people come this will become an industry and that is good because that will just expand the industry. Right now it is about investing in building this domain. It is about removing this legacy and the skepticism that consumers have of the teleshopping era. It is also about investing in infrastructure and consumer confidence. It’s about getting the best products on board and identifying propositions. Lastly, it is about identifying the best fulfillment mechanisms to make the experience a truly enjoyable one. We have completion from the internet and it is equally from the malls because this is a retail model in many ways. Wallet share is what we are competing for and if the money of the consumer is going to be spent on buying electronics in a mall then that is a competitor as well.

Q. What were your revenues in 2009 and what are your projected figures for 2010?

It is a little premature to put a number on it but what we have closed at last year was Rs 320 crores topline, and we are clearly looking at doubling that this year.

Q. Could you please tell us a little about your logistics network and other support services that ensure that a nationwide nexus, such as HomeShop18 products are delivered on time? What are the after-sales services that you provide?

We today have to separate teams. There is a team of close to 650 people who are dedicated in terms of order acceptance and after sales. That team’s sole responsibility is to ensure that products get delivered on time and to ensure that after sale there are no concerns and issues. There are very intricate backend IT systems that have been installed that can track the movement of all the products that are being shipped on a real time basis. We are also building strong logistic relationships with some of the best players of the country.

Q. Please tell us about any new product/category that you have immediate plans to venture into

If you were to talk about products then we bring about 20 new products every day. And there are many products that you incubate over a period of time. Right from the beginning we have been testing and launching one category after the other. Exactly two years ago it was not very clear on categories and we were not even sure whether the consumer would buy or not. We didn’t know what will sell the most and at what price point would it be acceptable to the consumers. Each category that we have launched has gone through its own learning process. The most recent categories that we have brought in are insurance, health and life, and the second one that we have launched just about a month back is lingerie. Again a category that we are just learning about and, the way we have been doing it for other categories, we have brought in the best brand of lingerie, which is Enamor. The early response that we have got is very encouraging. Therefore, going forward I think that will be another big category for us.

Q. Please tell us about the notable brands that are associated with HomeShop18 and the ones that are on the horizon of being associated with you.

There are so many notable brands that we have been associated with and continue to do so. In electronics each category has its own line-up. Samsung, Whirlpool, IFB to name a few. In apparel we have Levi’s, Lee, Peter England, Reebok, Benetton, etc. To give you perspective, today we are the largest microwave retailer for Whirlpool in the country. We are also the largest retailer for sportswear for Reebok. We are already about 4.5 per cent of the entire digital camera industry of India in terms of volume.

Q. Are private labels of HomeShop 18 on the horizon as well?

Private labels are very much a part of our strategy and we have already launched one and going forward we will only expand that portfolio. But one gets into private labels when one starts to think of profitability as a concept and at the moment that is not our priority. The priority is to expand out knowledge and our base of better products and propositions for the consumer. The next priority is going to be to expand and improve our quality of services. To improve the level of engagement with our loyal customers is also on the checklist.

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