Thursday, July 18, 2002
St. Petersburg, Fla. Bobbi Ray Carter is at the top of her selling game, describing in loving detail an elegant beige jacket with a ruffled collar.
She has been going at it on live television for three hours, with nothing more to guide her than some talking points, a knowledge of her audience and some abiding principles: Be trendy, be youthful and wear something fabulous.
Bobbi Ray, flawless, polished and wearing a double-strand bracelet of cubic zirconium, is a star to the people who watch and buy from the Home Shopping Network.
"We are in their homes every day," said Carter, who started at HSN 20 years ago and has developed a loyal following of viewers who have stuck with her through new hairstyles, marriages, divorces and childbirth. "They start shopping with you, and they feel they really know you. It's like you're a friend."
HSN started 25 years ago this month when a broke advertiser gave a local radio show 112 electric can openers to sell on the air. The appliances sold so well that the concept of home shopping was born, and in the 25 years since, HSN has become a high-powered blend of show business and commerce with nearly $2 billion in sales last year.
The company, now owned by Barry Diller's USA Interactive, also spawned an industry. Rival QVC, founded in 1986, has actually grown bigger than HSN, with $3.9 billion in sales last year. No. 3 is 12-year-old ShopNBC, with $463 million in 2001 sales.
HSN became a success by appealing to the women who do most of their family's buying, and offering them a way to shop and be entertained at home.
"There's a comfort zone here," said HSN president and CEO Mark Bozek. "It's an old quote, but people can buy underwear in their underwear."
Bozek said the company has such abiding customer loyalty that during the Sept. 11 attacks, thousands of HSN customers logged on to chat rooms at the company's online shopping site to comfort one another.
To people who aren't fans of HSN or its competitors, home shopping can conjure up stereotypes. For example, that companies like HSN sell little more than cubic zirconium jewelry. But HSN's trademark fake jewel, Absolute CZ, accounts for only 2 percent of its sales ï¿½ the company offers everything from cookware and home paint to diet foods and sports memorabilia.
Another image many people seem to have is that it's small-town America that sustains HSN. Not so; it's the nation's shopping hotbeds ï¿½ New York, Los Angeles, Chicago, Philadelphia and San Francisco ï¿½ that are its top five markets.
"I think there is this perception we sell exclusively to blue-haired ladies living in trailer parks buying cubic zirconium," said Paul Guyardo, executive vice president of marketing and television promotion. "That is a portion and we are happy to have them, but it's not everything."
The demographics of HSN break down this way: 75 percent female, age 40 and older with an average income of $63,000. Its competitors claim audiences with similar demographics.
HSN once sold $1.5 million worth of $900 mattress sets in one day. A guitarist named Esteban once sold $1 million worth of his recordings in four hours, charting on the Billboard 100 based on his HSN sales alone.
Actress Suzanne Somers drew 2,000 women on a Bahamas cruise last year that was sold on HSN and billed as the world's largest floating pajama party. It was broadcast live from sea.
Bozek, a former Fox entertainment news producer, became head of HSN in 1999. He's seen the company through its debut on the Internet and its expansion overseas. HSN reaches 143 million homes worldwide, including broadcasts in Germany, Austria, Switzerland, Italy, Japan and China.
The competition for home shoppers is intense, both in the United States and abroad. HSN, QVC and ShopNBC are all trying to win a bigger share of the market using similar products and tactics, including the Internet.
"The real future of home shopping is in the combination of television used in conjunction with an online catalog," said Christopher Dixon, a PaineWebber analyst who follows the home shopping industry.
Home shopping also combines the two biggest strategies in retail, he noted, impulse buying and comparison shopping.
It is not a business without its challenges. While department stores struggle to maximize dollars per square foot, HSN's focuses on dollars per minute.
"If something doesn't work, you put something else in for the next 15 minutes. Unlike a store that puts a product into the market, in television if it's not working you know immediately, you say it doesn't work and let's give it the hook," Dixon said.
The company sees plenty of room for its business to grow. Guyardo, the executive vice president, said that what works in HSN's favor is that it has only tapped about 5 million of the 50 million people in its target audience.