Home-shopping channel Star CJ Alive is ramping up operations to reach out to more consumers. First up is aligning the logistics partners
The lift to Star CJ Network’s office is huge. The colourful, rectangular box forces you to quiz the liftman about its size. It is supposed to take cars to the top floor, not because there is a parking lot there but because Star CJ’s studios are located there. The joint venture between Star Network India and South Korean home-shopping company CJ O’Shopping not only flagged off its 24-hour channel, Star CJ Alive, recently, but has also made arrangements to replicate the Korean trend of selling cars on TV.
But that will have to wait. For now, Star CJ Alive is busy ramping up from the six-hour slot it had on Star Utsav for almost eight months to managing a 24-hour home shopping channel. It already has a two-year-old competitor in HomeShop 18 which even has well-known brands tailoring products for its channels. Star CJ CEO Paritosh Joshi is not harried. He says, “The brands of Star and partners take care of the credibility.”
For now, the priority for the channel is to spread its net wide — reach more markets with its last-mile delivery and register newer customers within those areas. “We have to create more trials and generate more awareness about our channel now. Customer database tracking and customised products from brand partners will follow as we grow in scale,” says Joshi.
Induce trials
In order to get more trials, the channel is spreading products across a wide price range. Average ticket price hovers around '2,500 since the brands are the ones that get sold in conventional retail. But, says Joshi: “To increase sampling, we had to talk to more customers than just premium ones. There has to be minimum risk to the new consumer if he is to give us a shot.” So, rather than just premium products, which afford better profit margins, Star CJ has widened its price range which now starts at '900 goes to over '100,000. “Two years from now, we can upsell. Also, then there will be products which are not on TV,” adds Joshi. Upselling for its rival, Home shop 18, generates 7 per cent of its turnover from a two-million strong database of consumers.
Trials would also increase if it reaches newer markets. But, in its zest to grow, Star CJ is not spreading itself too thin. Joshi says: “It is a Hindi channel. The entire Hindi belt can be addressed. But for now there are some markets which are feasible for fulfillment. For example, in Maharashtra, from the distribution centre and the franchise location at Bhiwandi, last leg deliveries are feasible in Nashik, Pune and Mumbai. Beyond this triangle, the benchmark of five working days for delivery can’t be met for now. Kolhapur, despite being down the road from Pune, can’t be serviced.” The markets in the north are serviced by the franchise based in Pataudi and covers Delhi and its suburbs, most of Haryana, key cities in Punjab but not Himachal Pradesh. But Joshi says the possibilities to tap newer markets are endless: “Hindi-speaking audiences stretch from Goa to Assam. Even this opportunity will take a lot of time to fulfill.”
The biggest challenge for the channel is that most logistics companies in India are oriented for business-to-business deliveries. Delivering from warehouses to residential areas is a different calling altogether. Star CJ Supply Chain Head Eric Chung says: “Most logistics players are geared to deliver in upmarket and business districts of big cities and industrial areas of smaller ones. We are working with the logistics partners on how to expand.” There are two logistics partners for now, with one or two more likely to be added in the next few months. The focus will remain in the north and the west. For now, the task is to expand in Haryana, Punjab and Gujarat.
To avoid tripping on its service promise, the channel is pulling all stops to test the service agreements with its partners before starting deliveries. It is doing dummy deliveries to time them. If it meets the five-day limit, the channel extends its service to that location. “At the call centres, if customers call from areas we don’t yet service, we apologise and tell them that we will inform them once we can deliver,” says Chung.
The team wants to focus on expanding the logistics reach now. Chung says, “Once we put that in place, consumers who are calling up can easily be serviced.” It is working on the partners’ business processes to start with. With the help of its franchises, it is encouraging the logistics companies to ramp up their people strength and vehicles for quicker deliveries. Star CJ has also taken upon itself to sensitise the franchises and logistics providers about the courtesies needed to handle the consumers. The partners have also been taken to CJ O’Shopping’s headquarters in South Korea to acquaint them with the best practices needed for the business.
Information technology (IT) systems connected with the franchises helps the channel track order dispensing, while logistics partners provide it with online delivery tracking. In fact, IT has also helped sourcing for the channel. The initial six months were riddled with hiccups on the supply chain. Chung says: “Brand partners were wary of giving us inventory since we were too new to have proved our impact. At times, we wanted stocks, but they would get delayed. Or, if we wanted 1,000 units, they would send only 500. They wanted more visibility. After the first six months, and now with the 24-hour channel, these setbacks are history.” Communication between brand partners and the channel is propped up with tools such as a website for them to track stocks. Suppliers have better visibility of stocks and know when to replenish them in time. Joshi adds: “It will happen. As a retailer becomes established, suppliers and brands too tailor their dispatch and manufacturing schedule accordingly. With the 24-hour channel, we can now move to a scale that is comparable to their key accounts.”
When piggybacking on Star Utsav, Star CJ had the chance to study the market. Star CJ Merchandising Head Brian Hong says: “When we had launched last year, we had focussed on premium brands. But now, the brand mix also has mid-range products.” Lower priced products not only induce trials but also enable the channel to bring in more products on board since brands take more time to let premium products be retailed.
Right calls
Calls for products are placed with one of the two call centres located in Mumbai and Delhi, which are then routed to the franchises who deliver. The operations are outsourced to BPOs but the team has to monitor the operations closely. HomeShop 18 had burnt its fingers in outsourcing call centre operations and now operates its own. Chung points out: “This business is very different from the regular BPO work. We further train them on how to handle the calls, and track the servicing for a customer. The focus of our call centres is on servicing and not selling. We don’t call the people at these call centres sales agents but shopping consultants. They must support the customer, not push them to purchase something, unlike those on financial service accounts.” When Chung had gone looking for the right BPO partner, he was always asked the question: “Why don’t you expect the call centre to make a sale? We told them that this was not a selling centre for us. It was the customer service centre.” Thirty to 35 per cent of the calls, at any of the 80 stations at the BPOs, get converted into purchases, while each call lasts four minutes on an average. Return rates of 6 to 8 per cent have been maintained, despite “an increase in volumes and portfolio of products”, points out Chung.
If call centres are the face of servicing for this retailer, the TV shows are its sales window and also its pitch. Star CJ’s immaculately turned out hosts and use of physical sets have helped spruce up the look of the shopping channel. The hosts spend no less than 30 minutes on each brand.
Having started with just 14 brands, Star CJ Alive now showcase 150 and hopes to take the list to 250 soon. Hong says: “That will ensure that we have fresh products to show the consumers round the clock.” To make the most of the long-format presentations possible on the channel, brand teams from the supplier companies and the merchandising team plan out the presentation. Joshi says: “Some of our vendors, such as Satya Paul, have found a demand surge from across the country every time we air their products. Long-format content allows us to showcase saris, for example, in a way that conventional retail doesn’t. Instead of swamping the viewer with choices, the presenters spend more time on two or three pieces explaining everything from the weave to the material. Same goes for most brands on our channel.” Footwear and jewellery too have sold well, apart from the usual suspect — mobile phones. Star CJ aims to offer value-additions instead of stark discounts on the brands on offer. To reinstate credibility, Star CJ monitors the installation process for products such as ACs and water purifiers, which are done by the manufacturers/suppliers so that there is no missing link in the chain.
According to Ernst & Young, the television home shopping industry is around '300 crore, growing at 30 per cent a year. However, the challenge, points out Ernst & Young Partner (retail and consumer products) Pinakiranjan Mishra, is to widen the net beyond housewives and young professionals to the larger retail audience who are more averse to risks.
The channel has lined up a campaign that underlines the pitfalls of conventional shopping. A family stuck in a traffic jam on their way to a shopping destination or splashed with muddy water by a passing vehicle as they return from their shopping spree are two instances used in the TVCs to remind viewers that home-shopping does not involve any of these inconveniences. Star CJ will also use festivals and national holidays tactically. With aggressive offers, it claims to have made sales of '1 crore on Independence Day.
Star CJ claims to reach nearly 50,000 households, around 500 of which have made repeat purchases. Chung and Hong, both from CJ O’Shopping, claim that India allows it to attain 50 per cent of its sales target than the 10-20 per cent of target in other countries. From five to seven transactions, Star CJ Alive now sees around 300 transactions per day. While its performance matrices could equal HomeShop 18’s, it has to be seen what scale does to its operations. Star CJ knows that there is still some distance to go before it can take a page out of CJ O’Shopping’s book which instructs on how to retail cars, financial services and even condominiums without compromising credibility.
