Faced with sluggish performance, the home shopping industry is seeking to improve profitability through various channels, including the YouTube shopping integration service. The image shows Lotte Home Shopping’s character brand ‘Belly Bear’ utilizing its YouTube account to provide a shopping integration service. (Image courtesy of Yonhap)
SEOUL, Nov. 15 (Korea Bizwire) – With the home shopping industry facing significant challenges, major players in Korea are grappling with a somber third-quarter performance. The primary culprits behind this downturn include dwindling television viewership and the growing burden of broadcasting fees, which home shopping companies must bear to maintain channels on pay-TV networks.
Notably, the shrinking number of TV viewers constitutes a structural issue, as highlighted in the Korea Communications Commission’s ‘Broadcasting Media Usage Behavior Survey Report,’ revealing a departure of core TV shopping customers in their 40s and 60s.
Between 2018 and 2022, the survey indicated a substantial decline in the percentage of people deeming TV an ‘essential medium for daily life’: 72.8 percent to 52.5 percent among those in their 60s, 50.2 percent to 31.8 percent for those in their 50s, and 23.8 percent to 9.2 percent for those in their 40s.
Simultaneously, the burden of transmission fees has steadily increased. According to the Korea TV and Home Shopping Association, the transmission fees’ share of sales surged from 46.1 percent in 2018 to 65.7 percent last year.
Powerhouses like Lotte-Hyundai Home Shopping and GS Shop have reported dismal results. Lotte Home Shopping recorded a provisional operating loss of 8 billion won in the third quarter, a 14.3 percent decrease from the same period last year, with sales plummeting to 219 billion won.
GS Shop and Hyundai Home Shopping also experienced double-digit declines in operating profit. GS Retail’s home shopping division (GS Shop) reported an operating profit of 21.3 billion won, down 18.7 percent, while sales fell 10.2 percent year-on-year to 259.8 billion won.
However, CJ ON STYLE bucked the trend by growing its operating profit amid the slowdown. In the third quarter, while revenue dropped by 2.9 percent year-on-year to 303 billion won, operating profit surged by 23.2 percent to 7.1 billion won.
The company credited its success to a one-platform strategy seamlessly integrating commerce channels like TV and mobile, forging partnerships, and enhancing content through the reinforcement of mobile live commerce, which is more cost-effective.
In response to the industry’s prolonged slump, home shopping companies are exploring channel diversification as a potential breakthrough. The strategy aims to increase customer touchpoints by securing new channels.
Lotte Home Shopping is pursuing exotic content planning, exemplified by the “Fashion Rank Show,” a fashion program launched in May. This program combines live shows and rebroadcasts, condensing popular weekly fashion broadcasts into short-form segments for sale on TV home shopping broadcasts.
GS Shop is fortifying its business structure with a focus on mobile. In March, it introduced ‘Cross Live,’ connecting TV broadcasts and mobile apps.
This initiative aims to expand the customer base for both channels by integrating TV and mobile customers, recognizing the preferences of the middle-aged and elderly for TV and the youth for mobile broadcasting.
CJ ONSTYLE, distinguished as the sole company achieving operating profit growth, solidified its one-platform business model with the goal of “breaking down the boundaries between channels to propose a lifestyle that meets customer preferences.”
Ashley Song (ashley@koreabizwire.com)
