These days, nobody seems to want to mess with Amazon. Well, maybe not “nobody.” It seems TV retailer QVC is setting itself up to go toe-to-toe with the online juggernaut. At least, this is the market speculation after QVC took the drastic step of absorbing its arch-rival HSN recently. The $2.1 billion investment gives QVC a much larger footprint and many more resources to fight back against the skyrocketing consumer appetite for online shopping.
And, while QVC does offer customers that “convenient” TV shopping experience, they have also invested heavily in online sales in recent years. In fact, when looking at the combined numbers for both QVC and the, now former, HSN, the companies racked up about $6 billion in online sales last year, accounting for about 49 percent of their combined revenue. The merger instantly makes QVC the third largest online retailer in North America, behind – you guessed it – Amazon and Walmart. This puts the company in the unique position of playing spoiler as the ultimate big box and the online giant battle it out, day to day.
That’s not to say there’s a clear idea of what will happen going forward. Scuttlebutt on this has QVC and HSN remaining different brands, and also the main shareholder, Liberty Interactive, breaking the cable business off into its own brand, called QVC Group. There’s also the potential reality of diminishing returns. Sure, QVC gains a lot in this deal, but they also have to deal with HSN’s recent history of slipping sales numbers, as well as some of HSN’s recent brand acquisitions that haven’t really delivered as yet. Of course, there is one potential issue that many mergers or buyouts face that QVC won’t have to: namely, what to do about HSN’s CEO. Because they don’t have one. HSN has operated without a CEO since this past spring when Mindy Gross split to take over Weight Watchers International.
And there are other positives to this deal. Since QVC will no longer have to compete with HSN, either for air time, customers or products, their direct costs of doing business will go down, in some areas rather substantially. Yes, they will still have to market, but they won’t have to worry about a mirror competitor stealing that market. As to what this will mean for consumers, specifically for consumers who are accustomed to buying through the TV, the jury’s still out.
Will QVC continue to push television sales, or will they slowly inch the percentage of their online business higher, anticipating a primarily online retail environment in the future?