- You can't fake it.
You go on live for a broadcast, whatever happens happens.
- You could also feel the sense
of stress and performance within the office of QVC.
Everyone there is there for one thing only,
and that is to sell as much as they can.
- The blender was one of the first products
that we launched on home shopping network.
As soon as we heard the noise drowning out the speech.
(blender whirring)
Rachel and I looked at each other
and we were like, oh no, this is going to be a disaster.
(upbeat music)
- Live shopping has existed for decades, QVC and HSN
the two biggest names in the space, sell products live
on TV in real time.
And now gadget makers who are willing
to try something different and take a risk
are finding incredible success
and reaching new audiences on these shopping channels.
Creators pursue live shopping
on the promise of selling hundreds of units in minutes.
But at the same time, they face enormous risk.
One bad live shoot, and that's it.
Their chance at viral gadget sales is over.
- I'm Evan dash.
I'm the CEO and founder of StoreBound.
We market our products under several different brands
including dash kitchen appliances.
We make smart furniture under the Sobro brand.
We started the company about 10 years ago.
My wife and I were ex retailers.
And we saw that there was really a need
for a better way of bringing products to the market.
The team from home shopping network came in
and they came to us and said, we want to launch your brand.
We worked for about two years doing product development.
And then in 2012 we launched our first products
on home shopping network for us
to be able to tap into 92 million homes.
Once we understood the reach
and then started watching videos and saw the way
that we could actually present
the products we almost didn't want to sell it
any other way at that point.
(bright upbeat music)
- I am the founder of Somnox
and we are a company that is helping people sleep better
in a device that we call the Somnox sleep robot.
Back in the university of technology Delft.
I was a robotics engineer.
And during that time, my mom was suffering from insomnia.
Basically me creating robotics and seeing my mom suffer
I was like, why not combine the world
of robotics and sleep into an invention?
- So why did you think QVC was the best place
to sell the sleep robot?
- Our product is expensive
and it is a high entry to start using it.
I would say it's very hard to do
in a very short advertisement on Facebook and Google.
And at QVC that's what I found.
You really get the opportunity to explain
to people, okay, what is it?
Why do you need it?
And I think that's why it is working for us.
- Let's talk about the way that this works then Julian.
'Cause I think that's really important
because once you're holding it, you can really feel
what this is doing.
- Exactly, so you can see the falling
and rising of the breathe.
And once you feel that breathing pace, it will start
to synchronize to you with sensors
that can see how you're sleeping.
(upbeat music)
- Everybody wants to tell something about their product
and everybody wants a compelling story
because you want to justify your purchase.
I'm Lauren Beitelspacher, and I am an associate professor
of marketing at Babson College and also
the division chair for marketing.
- So I guess it really doesn't surprise you that, you know
we've talked to all these gadget creators
that they've found success on there.
- Yeah, no, not at all.
QVC home shopping, live shopping, things are great
and really appropriate for technology
because it allows the customer to see it in use.
We can almost as a customer feel it
and see ourselves doing it.
- As a company we gravitate toward products
that require a lot of explanation.
They have cool stories behind it.
We sold close to 40,000 pieces that day.
I mean that single day with live video selling of it.
We've also put the product into retail stores
and it has literally sat and collected dust
in a retail environment.
The biggest challenges of any type
of live video based retailing is that you're live.
There's no safety net.
In the case of the blender, it's exceptionally loud.
I mean, it is a loud blender, and you could hear
the sound drowning out the sound of the host and the guest.
And they were able to adjust it very quickly.
But what we can't do is just fake the video
and pretend to set the blender on over here
and then actually bring back one that's already run.
I mean, they are so strict about making sure that anything
that we're broadcasting is done 100% authentically.
That can be a really, really daunting type of experience.
It's very rare that people are in that type of situation.
- So once I understood that QVC was actually life, you know,
the night before I barely couldn't sleep.
It was actually really tough
because in a way you need to forecast
the amount of units you think you will be selling.
And then you just fingers crossed, you will be selling out.
And in the first batch we did like 60 units or so, entering
the studio seeing six robots, camera man and lighting.
And they have like different settings
with a bedroom and a kitchen.
And there's models doing cheetah.
There's this big dashboard within the studio
where you can see in real time,
how many orders came through.
And within the minute there was like
beep, beep, we're out of stock.
And the salesperson would say
okay, well, hold up, you can't order anymore.
There's no stock.
And I was like, wait, is this a dream?
Can someone pinch me?
And like wake me up, is this real?
That's also the danger because you're
in such a hype mode that you think,
okay, well, this is it, right?
We need to go all in.
And that's where you're going to make mistakes.
- It's kind of a win lose, right?
If you do sell through it great,
however, that's your window.
And so then you don't really get another chance
versus like traditional brick and mortar stores.
You get a little bit longer selling season
to sell through something.
QVC, or, you know, other kinds of live tapping events.
You really get that window that time.
And if it doesn't work, you might not get another chance.
- So the second time we went live, we scaled up
to a bigger batch of 240 pieces because we were all
so certain it would be a huge success again.
However, the show didn't go as well.
First of all, we didn't sell out well
that's okay where the quantity was much bigger.
But second of all, also the storyline was different.
There was a different hype.
Some of the users that bought it, they received it
without a particular charger or there
there was some delivery issues which resulted
in initially some reviews that were not helping us out.
During the live airing, I was already feeling
that it wasn't going well.
You could just, the salesmen felt
that the camera man felt it.
There's this huge pressure on you
because the big screen is showing you, are you performing?
That didn't sell out the way we predicted they would
which resulted in that the stock
that was there was being shipped back to us completely.
And we were actually quite disappointed about, okay, wow.
It was such a great start.
And now we have maybe even
a bigger burden than a bigger win.
- To understand why QVC can be so risky.
You have to understand the basics of retail.
There are a few different models and both QVC and HSN
don't like to talk about the specifics of their deals.
So it could vary based on brand.
In traditional retail, the ideal scenario
for creator would be a store buying a product
at a wholesale or cheaper price.
The store would then mark the products' price up
to make money and is incentivized to sell that product
because it has already spend its own money to acquire it.
The creators make some cash
but not as much as they could have made selling it
on their own website, but still, it's something.
What QVC does at least for some brands
is buy inventory it thinks it can sell.
But then stipulates that whatever doesn't sell has
to be bought back by the brands.
This can be terrible for small creators
who are already strapped for cash.
They could lose a ton of money if nothing sells
because they had to front manufacturing costs and lose
the cash they thought they made on the units QVC bought.
To offset this risk, QVC
and HSN offer a different experience for brands.
For one their products aren't just sitting on a shelf
without anyone pushing for them to sell.
The team employs other tactics as well,
to show off a product design and encourage shoppers to buy.
(upbeat music)
- Live shopping really makes people feel excited.
Consumers go through this decision-making process
and all good retailers, all good salespeople want
to drive them through that process quickly and limit
the amount of search that they do for other competitors.
And so there's lots of different strategies that you can do.
There's pricing strategies.
- It'll make it under $60 to get this home
which it would save you $110.
There's a clock ticking
and we see inventory quantity is going down.
250 of those left.
I've got a few more minutes to get that
or those ones will be all gone.
- They have the same problems and the same challenges.
And it creates this sense of empathy and friendship.
You know, this comradery that we're in this together.
- And I will tell you, I am one of those individuals
that I was terrified.
And even the prospect of jumping a car just a few days ago.
- I don't want you to miss this because I care about you.
And I know that this is going to make your life better.
- Mophie made this for us.
They made this for you.
- HALO bolt, which is the car starter
that was really brought with the QVC, HSN consumer
at mind forefront because it's such a demonstrable product.
and it demonstrates so easy on that channel.
- We've started that vehicle.
- Shannon.
- Goodbye.
- We did it.
- Oh my goodness.
- Chris Ahern is the CEO of ZAGG, the company
behind brands like mophie and iFrogZ.
Zack acquired its competitor HALO in 2019 specifically
because of its relationship with QVC and HSN.
So, does your product design change for QVC or HSN
or do you change your products?
Because you know they're going to be on live shopping.
- Before we acquired HALO, speaking to the team
when they started off with QVC, HSN
they brought to market a straight black power bank.
It was not successful at all.
But having that partnership, they went back
and listened to the insights that the team brought
to them from QVC HSN and put together a number
of colorways for the exact same power bank
with different touch, feel and material.
And it was a complete success
- Even though all the brands we've talked to have had
some success with live shopping not every segment is a hit.
On top of risking a lot of cash to go live,
small creators products might not have a lot
of reviews which might make shoppers wary.
The odds of the selling out, then get even lower.
(upbeat music)
- QVC isn't a guarantee to success.
It could be summarized into the bigger the risk
the bigger the reward.
These guys know what they're doing
and have very strict regulations upon the performance
upon the delivery, upon the supply chain.
And if you are not ready
for that as a company, then you might consider waiting
for a bit until everything is a bit more grown-up.
- Although QVC and HSN came about decades ago
there's still a sort of magic to them.
That's why we see live shopping, picking up
on the tech platforms like Instagram and Amazon.
For creators with money to spend and the tenacity
and passion to make live shopping work for them
they could end up selling lots of products and tapping
into a whole new audience of potential buyers
but there's no guarantee of success.
All retail is still a gamble.
Thanks for watching.
This was the first episode
of the second season of In the Making.
We have another episode coming soon, all
about the challenges that Chinese entrepreneurs face
when they try to break into the US.
So make sure you subscribe to The Verge
so that you don't miss that episode right when it comes out.
Alright, I'll see you later.
Bye.