Shopping channel holds its own against web retail

Dubai: Few media categories have been able to withstand the onslaught of anything and everything being delivered online. In the process, they have had to rework their business models and even try and compete in the same space to remain in contention.

But the Gulf’s TV space still seems to be doing all right. Viewership numbers are holding up, and even rising in key markets such as Saudi Arabia and the UAE. TV broadcasters may have tinkered here and there with the formula — more reality shows, for one — but nothing too drastic either. Which suits the people at CitrussTV — the stand-alone home-shopping channel — just fine.

It is projecting $30 million (Dh110 million) in sales by year-end and looking to be in the $70 million to $90 million range by 2017.

What CitrussTV does is quite straightforward — showcase its extensive merchandise cutting across categories to a committed viewership base, predominantly women, in all of the key regional markets. And rather than the relatively static displays they would get browsing an online store, potential shoppers get to view the desired products being put through the paces. Once the orders are placed via CitrussTV call-centres, deliveries are done between one to three days.

“A lot of preconceptions surrounding tele-shopping ventures in a digital world ... but even in the mature TV viewing markets of the US, Japan or (South) Korea, they are still holding their own,” said Nicolas Bruylants, Managing Partner. “Growth in those markets still average 4-5 per cent annually, but in the Gulf those numbers are in the high double-digits.”

CitrussTV, which last year completed its first round of private equity financing, are billing in $250-$300 on average for each transaction. Beauty products remain the best-seller, followed by home and kitchen appliances. “These are all supported by comfortable margins, such as 50 per cent (on cost) for the home accessories line, while it’s 45-47 per cent on the kitchen goods,” said Bruylants.

Since last year, it started selling ethnic fashion, and working on a plan to bring in western apparel too. “It will probably take time, because we need to be associated with the right brands to make it work,” Bruylants said. “By the first half of 2016, we could expect some big change.” Fashion accounts for 7-8 per cent of the current revenues.

Selling fashion will work wonders for the bottom line given the margins can average 55-60 per cent. (Interestingly, it is also the tack that the big names in the region’s e-tailing business are working on after they find that margins on tech gadgets will not give them much by way of cash flow flexibility.)

Apart from its own 24-hour channel, CitrussTV also has alliances with leading regional broadcasters such as MBC. “These partnerships are a win-win for all by creating additional revenue streams,” said Bruylants. “More so as part of huge marketing budgets are getting shifted online at the expense of TV stations.”

On its own channel, Bruylants wants to add to the number of hours of live TV from the current two hours or so.

On whether a second round of financing was on the cards, he said: “That’s something we have discussions about. But whether we go ahead with it or not depends on whether we need funds for an immediate expansion or we want for our revenues to build up and use those.”

Valoris Capital picked up a stake of around 30 per cent in CitrussTV in May last year. The value has not been disclosed.