Is there a price to pay for being a QVC brand?

[maymorganlondon]

I was just thinking, with the recent news about Mally's company being forced into bankruptcy, if this is just the latest casualty?

Honora Pearls no longer have their 57th Street flagship store just off Madison Ave.

Laura Geller no longer has her flagship store and makeup studio in Manhattan.

Is there something about the way that QVC works which perhaps puts too much pressure on smaller or less financially robust companies?

I'm just thinking about the dominant position QVC must have in the customer base of some of their supplier companies. The huge volumes required to be produced for each TSV and other TV slots (which all must produce a spike in demand from customers) need to be made and someone is paying for materials, labour, design, packaging and shipping into QVCs warehouses in several countries.

If a company has a lot of money tied up in stock, and cannot release that money until it's sold, they are in a tricky situation until they get paid by their biggest and most powerful customers. And if the supplier has any kind of problem with payments (particularly speed of payment) with those customers... I can't imagine the suppliers will feel anything but at a disadvantage particularly in negotiations to speed up payment, as they don't want to risk being dropped and losing the sales volumes.

It may be it's an unintended but inevitable consequence of relying on a massive company to deliver the majority of your sales volume that you can be tipped over into financial difficulties simply because of differences in the speed of payment.

It could also be one of the reasons why many companies we see on QVC in the UK do not also appear in US, Italy, Germany, Japan or China - they simply do not have the resources to service that business and survive.

What do you think?

 

[Sazza]

I think it is more that companies like Honora and LG are giving up their stores and turning to online business, less overheads than the high rental costs in NY!

 

[Mager]

Take Dyson for example: it's no up 'n' coming merchant , i would reckon they've peaked financially and out of personal experience their products were overrated crud that cost significantly more than what their competitors was retailing at. Would i pay £349 for a bladeless fan heater?...no /would i buy one for a third of that sure

In essence any company doing business with IW or QVC sold their sound practices down the toilet when that bright idea moment was sealed , Does Dell really agree with ideal world selling an 8 year old model laptop for the same price as an entry level 2015 model? of course not but Dell have pulled out of the Civilian Sector mostly and make mostly decent workhorse laptops for corporations needs and these machines will often be seen on the tables of trains across the civilized world.

 

[Weathergirl]

I think the OP is spot on. Especially as the supplier bears the cost of returns. Mally would have had a few after the mix up with the TSV a few months ago. And Emma Hardie hasn't done a TSV for ages.

 

[Ellaaa]

Exclusivity is always risky.

 

[donna255]

I agree with Sazza about Laura Geller(who now is online in the UK Beautybay and Feel Unique wider fish pond as many will buy from then rather than QVC. Both offer free shipping, why when you just need a few items and no TSV pay shipping for each item from QVC), and Honora the prices of renting space in NYC must be very very very very very high.

Many companies use QVC as a stepping stone into markets outside the US or even the UK. Liz Earle was on QVC US way back, then moved to one of the other TV shopping channels now ships to the US from the site, the tax is removed so more than covers the shipping charge to the US.

The supply and demand from say just QVC UK must be massive, unless the company is big no way could it supply all the products needed. I will say that is why Emma Hardie does not appear much, she is a small company who also supplied long before QVC SpaceNK and other department stores. In fact her products never disappeared from these when they did on QVC. Mally products where made in China so cheap to produce get made quickly, I know reading QVC community board US many stopped buying any make up or skin care made in China a few years back. Whether that caused some problems who knows. People on makeup boards and now saying her range in Ultra never seemed
to sell.

In cosmetics especially its really all about the hype, you must have the quality, be different and not just the same as every other brand on the market. Unfortunately many brands do not have it, another reason why some will go to QVC trying to get their brand out there. CID, I remember seeing them in House of Fraser and most of it looked like Laura Geller, baked blushes etc. Jemmina Kidd was the same, when I saw it in real life, boring nothing to make it stand out. Saying that QVC these days only really want the highend brands that they can mention in some of the magazines to bring customers to look at QVC. You don't need to go to Harrods, John Lewis, Selfridges, look we sell this brand. Shisiedo has come and gone a few times, people seemed really excited and bang they went again. I have noticed brands which had been on QVC years back suddenly popping up again. How long they will want to stay at QVC when they are so readily available elsewhere who knows.

One thing I will say is, someone on the QVC US community board made an interesting statement the other day in a thread. QVC are losing money compared to profits they made going back. They are still no where near going under but they want their money, look at Mally they are one of the top creditors who stepped in to stop the cheap sale of the company.

 

[maymorganlondon]

I agree, Donna, that QVC seem to be aiming for the prestige brands - when you look at the CEW Awards that were recently announced, all the award winners and runners-up stocked by QVC were in the prestige categories. I also imagine that for QVC to take a sizeable cut, there is not enough margin in the price of more affordable brands for them to be viable on a shopping channel, unless that brand is like Prai and Judith Williams and has made the decision to only sell on shopping channels (albeit JW talks about her salons in Germany.

I wouldn't be surprised if dealing with QVC means that it is risky to be on QVC in all markets which QVC operates in, and therefore if there is an alternative, they won't be on QVC elsewhere (eg: brands on QVC UK which are on HSN in US rather than QVC).

I think Liz Earle has probably been the most successful UK breakout brand - QVC UK were ideal for her original mail-order business model. I suspect that Leighton Denny is trying to break out of his reliance on QVC and that could be one of the reasons why he won't be on air after the June shows. If he's to try and compete with the marketing might of OPI for example - he needs to be on the high street and in good salons, and that will take a lot of work and a lot of money (and could in fact reinforce the brand's status on QVC). The beautician I go to doesn't like OPI but has to stock it due to customer demand (ie: brand awareness, and experience) rather than other brands she rates as superior. I'm sure I've read on here of spas which used to stock LD and now stock OPI.

It must be tempting, when a brand first goes to QVC and sees how many 10's or 100's of thousands of products they can sell in a relatively quick space of time, to think that is the job done as far as creating a natural demand for their products is concerned. Actually at that point they probably need to be thinking about building up a cash reserve to ensure they can continue to meet the QVC demand and continue to identify and develop other routes to sell to customers and develop their own brands in the right places.

 

[boffy]

i am watching britains supermarket revolution and how tescos has treated one of its smaller suppiers. this chap sells these bath toys that actually swim in the bath they look like jellyfish etc. tescos asked him to forget the £42,000 they owed him but they would make sure he would make even more money ubder anather scheme. he could not afford that loss so they dropped him.

cautionary tale.

 

[maymorganlondon]

i am watching britains supermarket revolution and how tescos has treated one of its smaller suppiers. this chap sells these bath toys that actually swim in the bath they look like jellyfish etc. tescos asked him to forget the £42,000 they owed him but they would make sure he would make even more money ubder anather scheme. he could not afford that loss so they dropped him.

cautionary tale.

What is it they say? If you dine with the devil, be sure to use a long spoon! Apologies if I've not got that exactly right, but I think it sums up the situation...

A big contract with a powerful retail can be a blessing and a curse, sometimes both at the same time. They can make or break a company, and as well as squeezing the suppliers margins until the company cannot give any more, they demand payment for more advantageous shelf space positioning, and they have to put up with payment terms which are often at odds with the supplier's other obligations, and I dare say there are other penalties involved for late or incomplete deliveries of stock (though I don't know that for sure). Some of the big supermarket retailers commercial practices have had a detrimental effect on farming in UK with farmers deciding they can't afford to continue. Given that farming is something people don't tend to go into unless they really are drawn to it it must be heartbreaking. In the short-term we the customer benefit from lower prices, but in the long run are we better off as quality declines, choice becomes restricted, and we are no longer supporting our own economy but that of a lower cost-base country?

 

[MrMarple]

A point I'd like to make is reference to Easy Payments.

There is no way that QVC offer them out of the goodness of their heart. If an item is on 4 pay for example and is sold on air today, Q won't pay the vendor for those products until the end of August at the earliest.
That is a long wait for any company to wait for payment, but especially so for smaller companies.
I assume companies must agree to a certain amount of EP's per year and they offset the cost against things that are sold without them.

I know a lot of us love EP's and I'm certainly not knocking them (I recently used EP to buy my Air Ram for example), but they do come at a cost IMO.

 

[Whatsgoinon?]

I'm sure that the 30 day MBG can't help matters, plus the fact the Q doesn't pick up the return cost...the vendor does!

 

[Whatsgoinon?]

Take Dyson for example: it's no up 'n' coming merchant , i would reckon they've peaked financially and out of personal experience their products were overrated crud that cost significantly more than what their competitors was retailing at. Would i pay £349 for a bladeless fan heater?...no /would i buy one for a third of that sure

I gave up on Dyson years ago, when I found out the production had moved from here to China, made for pennies so to speak and charging the same high prices!

This, I realise make, is what the majority of companies do now, but it didn't make sense to me, only Mr Dyson himself and his wallet

 

[louise66]

I love shark tank - Lori is compassionately honest - and all the sharks recognise the immense advantages of getting your product on QVC. More pertinently, the Q knows that, if it gets a supplier desperate for exposure, it can start off with a good deal and, eventually, having seen the company develop into a successful brand, limits it's terms. i.e. only using QVC as an exclusive outlet for sales. But this is how business works. If QVC helped them out, as an unknown brand to market, it expects some loyalty in return.

 

[Boris Bear]

This isn't about QVC bit it makes for interesting reading.

http://www.dailymail.co.uk/news/art...delaying-payment-loans-t-wait-settlement.html

 

[Brissles]

I would be interested to know what percentage Q take on each item sold.

On a tangent, Kipling for example must be thankful for the sales they get through Q, because every time I have passed one of their shops they are empty except for the shop assistants !!

 

[maymorganlondon]

QVC hold all the cards in the negotiations, I expect.

Mr Marple - that's an interesting point about the easy pays. That is a serious consideration for a company that they have to wait for payment in full for their sales. I would hope, from a cashflow perspective, that they do in fact receive the installments that we customers are paying, at least. If 4EPs means a company having to wait 4 months to receive any payment, that's a real worry for any but a very financially robust company to deal with. At least when brands do auto delivery, they limit the number of ADs available, and once they're gone you have only the single purchase available (which you can buy in multiples).

I can imagine that some companies will spend the early part of the year recovering from the financial hit of EPs in the lead up to Christmas (weren't all TSVs from October on EPs?) hence the immediate post Christmas ones tending to be ADs where each set has to be paid for up front. I wonder how many companies teetered on the brink of disaster during and immediately after the Christmas push? You only have to see the news from the DHS in that period to see how easy it is to run out of cash at that time of year.

Presumably QVC pockets 100% of the P&P as well as whatever their percentage is of the "QVC price". Supplier picks up all the packaging costs for fresh stock and just delivers pallet-loads into the QVC warehouse (I'm assuming). Supplier picks up 100% of cost of returns presumably, including postage refunds for faulty products. What about under DSR? Do we assume that once again the Supplier is the one refunding both the price of the item and the P&P, or is the fact a number of people here have reported having to chase QVC for P&P refunds mean that QVC pick up the tab for that?

On the positive side, though, QVC do offer an incredible opportunity - access to an audience who are receptive to sales messages. The time to communicate with the customers about their products and benefits, and what the company is about (assuming the know-it-all presenters give the brand guest a chance to get a word in edgewise).

If a company plans carefully and doesn't over-extend, this can transform an idea into a viable business, and good luck to them.

 

[Pick-a-Lily]

Interesting thread. I would imagine, for suppliers, doing business with QVC is similar to doing business with Tesco. The suppliers will be the ones taking all the financial risks, in exchange for the chance to expose their brand to a potential new market.
Brissles; Kipling are very big in Europe, but much less so here. I expect they are hoping QVC appearances will help them break into the UK market!