It sounds so glam and fun, right? Who wouldn’t want to go on QVC or one of the other major home shopping networks and sell a ton of product? And earn credibility? And have a “free” advertising/infomercial created?
Following are some considerations before you take this plunge:
- Can you extend to the home shopping network 50-70 pt margins and still make money? Be sure to also factor in other expenses such as: your travel (you will need to be trained and then there is your on-air date so you might be traveling 2x); special packaging (you must provide your product ready to be mailed – i.e. in re-shippable packaging); and there is your rep commission, if you have a rep. There is a ton of time in preparing for this experience. Are you prepared to invest your time (in paperwork, coordination, training, traveling)? If you are doing this, you are not selling somewhere else. There’s always an opportunity cost.
- This will be a guaranteed sale — meaning if you don’t hit the dollar per minute criteria established by your buyer, you don’t get invited back. Leftover product is returned to you. The network may pay for this product to be returned (you should negotiate this ahead of time), but you will now have leftover product in re-shippable boxes that hopefully you can still sell even if it means pulling all the product out of those re-shippable boxes and re-packing them (all an additional time/resource suck on your part). And, they will deduct from invoice for this returned inventory. So, take into consideration the cash flow setback (i.e. you thought you would have payment by a certain date and now you don’t).
- Are you prepared to provide this network with large quantities of inventory that you may not sell and have it be returned to you? This can be one of those times where less is more. In other words, negotiate lower quantities and sell out. Then you have the benefit of “selling out” and you are not stuck with leftover inventory. Go back and produce more now that you know you have a winner on the network. You will be able to gauge which flavor combo or color combo did best. You can then apply this learned information to your next airing. Note: there are many variables outside of your control that will impact your sales, including who your host is (how well did they “nail” your product and its uses – did they ramble on too long about something you felt they shouldn’t have – every second/minute counts when you are on air and you are going to be invited back (or not) based on how your $ per minute sales. Also, the day and time you air will also have an impact on sales. Certain days/times have much larger audiences. Know what your buyer’s $ per minute goal is for you ahead of time. And also know that you do not get to pick which day, time, and host you get. You may be waking up at 1am and have to be in the studio by 2am. Yup, you might be tired (your adrenaline will kick in though).
- How will your other retailers feel about the discounted price that you are offering on air that likely undercuts them? The on air network will want to sell your product at the best value possible. So, offer some other flavor or color combo or some other variation (i.e. two pack vs your normal one pack) than what you offer your other retailers to justify this price difference.
- Do you have the cash flow to front the product and the special packaging? And then the terms they extend to you? There are the pohsnhsn, qvc, reta, qvc, retassible returns mentioned in #2 above. Another reason to realize that a smaller PO (vs a large one) can be a good thing. You are managing your risk.