Interview with Mr Sundeep Malhotra, CEO, HomeShop18
27 April 2009, IndiaRetailNews.com

HomeShop18 has launched its new show Reebok 20:20 Cricket Mania from 26 April (8pm and 12:30am everyday). The show has exclusive Reebok merchandise of Chennai Super Kings, Kolkata Knight Riders, Royal Challengers and Kings XI Punjab and will also have offers on Reebok jerseys, caps, and bags. Mr Sundeep Malhotra, CEO, spoke with IndiaRetailNews.com about his business and the retail industry.

IRN: Can you tell us a little bit about the evolution of HomeShop18? At what stage did you get involved?

Sundeep: We started two and a half years ago. There were two original partners Network18 and Saif Partners who invested in our idea. We are in the business of virtual retail and pioneered the concept of home shopping in India. This is along the same lines as e-commerce or tele-shopping. I was the first person on board and have led the beta stage where we have tested and piloted everything. Since this is a new business model for India, the consumer knowledge did not exist; we had to gather everything from scratch. We wanted to change the legacy of home shopping which had been given a bad name by some previous attempts. In the beginning, there weren't too many people who believed this was possible. Not too many brands wanted to sell through us. Today, we have a 600 member team and sell 350 brands. We distribute products to 2600 cities and towns across India. We are India's first and only 24 hour shopping channel. We get a new customer every 12 seconds. It has been an exciting journey.

 

IRN: Can you tell us a little bit about your business model?

Sundeep: The philosophy behind our business is building credibility for the domain called 'Home Shopping'. Teleshopping had eroded credibility because of the kind of products that were sold. We stay away from spirituality, wellness and health-related products that have typically been sold. All our products are genuine branded products.  Our business model is a direct-to-home model. Typically any retailed product involves a manufacturer, distributor, wholesaler, C&F agent and retailer. We bring the products straight from the manufacturer to the customer's door. The inventory is held by the manufacturer. We bring the ability to demonstrate the widest range of products and an alternative distribution model that provides value to both the brand and the customer. We provide the easiest way for an international brand to enter the country or for a city-based brand to go national.

 

IRN: What categories of products work best in your model?

Sundeep: We are constantly adding new categories as we expand. Currently, our best categories include electronics, household appliances, gadgets, jewellery. A lot of these categories hinge on impulse purchases. As our relationship with our consumer strengthens, we expect other categories to contribute significantly to our business.

 

IRN: What are some of the interesting trends you have discovered about the Indian shopper? Any surprises?

Sundeep: We thought only women would shop. Turns out the entire family loves to shop on TV. Initially, we thought it would be the small towns that would latch on to the concept, but big cities have been equally enthusiastic. When we started off, we didnt know how consumers would react to our price points, use of credit card vs cash, etc. We offer cash on delivery option as well and don't charge for shipping. We are constantly learning.

 

IRN: What has been the most challenging part about ramping up this business?

Sundeep: This has been a greenfield project for us. Everything has been locally developed and we prefer it that way. Initially, the most challenging part was convincing the brands, the Sonys, Philips and LGs of the world, that this was not a threat but a complementing channel for them to sell their products. Convincing the customer also took some time. We had to build the trust that what you see is what you get and that this was the most convenient way to shop.

 

IRN: Who do you identify as your target customer?

Sundeep: We have realized that most shopping decisions for our business are made by the entire family. This is natural as most households are still single TV households in India. In terms of location, our customers are equally spread from Tier III towns to the metros.

 

IRN: What has been your approach to tackle the downturn?

Sundeep: We are growing 10-15% every month, so there has not been any impact of the downturn on our business. In general, the consumer becomes more careful though and there is a shift from discretionary to value. We are able to convince our customers that we offer unmatched value.

 

IRN: What are your plans for the short-term future?

Sundeep: We have two key priorities. Expand our reach and expand our relationship with our consumer base. Expanding our reach includes plans with cable and satellite and DTH. In terms of our customer base, we have plans to implement our loyalty program and expand our CRM base.

 

IRN: What is your advice to young professionals who might be disillusioned by the current downturn in the Indian retail industry?

Sundeep: Every crisis is an opportunity. Retail has faced the brunt of this downturn. However, the learnings from it have also made it stronger. Before the downturn, expectations had gone a little astray. A growth of 30-40% every year regardless of investment and experience was just unrealistic. For many young professionals, this gave an incorrect perspective on life and career. The slowdown has shaken us a bit and brought us down to realistic terms.My advice to young professionals is to stay invested in your skillsets, use this time wisely to learn and upgrade yourself and you will come out stronger. This too shall pass. Better times will come. All of us will come out as better executives, better managers and better entrepreneurs.