Theshops.tv has the answer to the next generation of the home shopping experience.
According to cofounder and chief executive officer Esther Kestenbaum, “Cable is going away, as is appointment television in general….The other issue is that on TV, you can only sell to people one thing at a time.”
Her company, which is an on-demand streaming video shopping experience, aims to solve those issues. Kestenbaum, her cofounder, Rod Ghormley, and the management team are seasoned Silicon Valley executives with experience in e-commerce and in home shopping. The company was founded in February 2015, but the site just launched a few weeks ago. It is funded through a seed round, and the company expects to complete a Series A round over the coming months.
Kestenbaum said that in the traditional form of home shopping on cable, every merchandising decision that is made takes away from some other selling decision because of the shopping model’s format. “The driving metric in all TV shopping sites is dollars per minute. Every merchandising decision is driven by dollars per minute. Growth is very hard — it is a zero sum game.”
Instead of relying on shoppers setting aside a certain time to catch a specific product show, Kestenbaum’s model has a series of product videos that can be accessed by the viewer whenever and wherever they want. The site can be accessed on the web or on a mobile device. And with the smart TVs that are now sold, the shopping site can be accessed via any television that is connected to the Internet.
The company’s founders believe that on-demand streaming is the future, particularly when comparing the data on users cutting the cable cord. At the Consumer Electronics Show in January, technology research firm Gartner expects that up to 50 percent of newly formed households will never subscribe to pay-for-TV services, and will rely instead on video-on-demand services. Statista.com projects that by 2017, the number of television devices connected to the Internet will be 147 million. In 2012, that number was 78 million.
“In Canada, 20 percent of Canadians have disconnected from a cable operator. We are following that trend. America is bigger and slower on the uptick. When we get moving, we will move very fast [to disconnect],” Kestenbaum said.
And quarterly results at the home shopping networks could have been better, even though everyone has been operating against a tough retail backdrop. Liberty Interactive, the parent of QVC, said first-quarter results saw adjusted net income fall 12.9 percent to $176 million on a total group revenue gain of 22.1 percent to $2.37 billion. Over at HSNi, net income dropped 15 percent to $28.6 million on a 3 percent decline in net sales to $816.8 million. Ceo Mindy Grossman said digital-now represents over half its sales. Evine Live, which reports fourth-quarter results in March, said net income was $667,000 compared with $3.3 million a year ago, while net sales rose 5.1 percent to $211.5 million. Mobile was its fastest-growing platform, gaining 47 percent year-over-year.
While many video hosts at Theshops.tv have held the same jobs at the home shopping networks, the clips aren’t live, which helps to hold down the capital expenditure for the entire operation. And from the merchandising side, it also has its share of “celebrity” lines, such as the handbag offerings from Gretchen Rossi, one of the originals on the reality show The Real Housewives of Orange County.
According to the ceo, the service can operate multiple channels at the same time, similar to the different video channels on YouTube. That means that different channels — each for a different product category — are available at the same time, giving users a choice of shopping categories whenever they feel like shopping, whether they are home, in transit on a train or bus or taking a short break sitting on a park bench.
The company works with the brands it sells to have them drop ship to the consumer. Theshops operate the site and process the transactions. The brand owner sets the pricing, and TheShops remit the balance after taking its margin cut. That margin varies by category, Kestenbaum said.
The company just added a financing feature called XtendPay, providing six, 12 or 24 payments. Financing offers are determined at checkout.