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India's leading broadcast network Star India
announced last month that it was exiting the
Star CJ joint venture (in favour of Providence
Equity) which it had set up with South Korean
home shopping major CJ O Shopping, observers
wondered about the course the four and a half
year old company would take in the Indian
market.
The two had over that period established a
24x7 home shopping channel called STAR CJ
Alive, which reaches more than 50 million
homes, a web-based portal StarCJ.com which
allows third party sellers to list their products
for sale, and had managed to attract more than
5 million shoppers.
A large part of that acceptance in India was on
account of Star. The latter has a lot of clout
thanks to its large channel bouquet, giving it
lots of leverage in India’s highly competitive
broadcasting and fragmented cable TV markets.
And then there is the credibility of the Star
brand with Indian viewers, especially
housewives, who bought products from TV
because of that trust.
The question was: would Star CJ Network be at
a disadvantage without Star?
Star CJ Network India CEO Kenny Shin does not
think so. He says that the joint venture has
about a year before it will have to drop the
Star tag. Already, the company has designed a
new mascot ‘Shoppie’ which will work at
bridging the gap between the current name
and until the new name is finalised. “The name
has to be such that consumers can connect
with it as Star will be moving out of the brand
name,” says Shin. “However, Star India was
only a financial investor. It was we who were
managing the business and we are extremely
optimistic about the market.”
Indeed it was Star India ad sales and
distribution president Paritosh Joshi who had
been deputed by CEO Uday Shankar to lead the
Star CJ joint venture in its early days. But Joshi
got the company on its feet and running and
quit in 2012, after handing over to Shin who
has been at the helm since.
For the south Korean firm which is the second
largest home shopping company in the world,
India is among the high growth and focus
markets, after China, and hence it is
imperative that its India play pans out right.
Global home shopping leader QVC Home
Shopping (part of Liberty Interactive) turns
over $8-9 billion dollars each year, CJ O
Shopping which notched up revenues of $4.6
billion has a lot of catching up to do; though
its vice-chairman Miky Lee is gunning for
global leadership status by 2020. Apart from
China and India she is driving the company
towards expansion in other markets such as
Vietnam, Indonesia, Japan, the Philippines,
Thailand, Turkey and even Latin America.
CJ O Shopping believes it has a good partner in
Providence to help achieve its ambitions in
India. Says Shin: “We have a long term
partnership with Providence. Their global
average investment relation is and average six
years. That’s a long time. Providence also has
knowledge of the business with their
investment in the German shopping channel.”
Home shopping in India is about a Rs 2,000
crore opportunity today and Star CJ Network
accounts for about 35-40 per cent of that. And
that despite the fact that the 700 employee
strong company is working in a restricted
manner in India as compared to other
territories. Because of foreign direct
investment restrictions, which prohibit multi
brand retail in the country, Star CJ operates as
a wholesale cash and carry retailer. Viewers
call in after watching the product capsules on
Star CJ Alive to its call centres which then pass
on the order to one of the five franchises it
has appointed nationally. These then deliver
the products to the home shopper through
logistics partners.
Star CJ on its part handles the backend, which
includes content creation for the television
channel, product selection, procurement,
warehousing and marketing. An extremely
efficient ERP system works as the glue for the
whole operation.
Headquartered in Mumbai with three studios
and three control rooms, it has offices in
Delhi, Chennai, Bengaluru and Ahmedabad as
well. Warehouses are located in Delhi-NCR,
Bangalore and Mumbai.
It has plans to open a warehouse in West
Bengal at an investment of about Rs 2 crore by
2015 in order to ensure fast delivery in the
eastern part of the country, apart from
establishing a more efficient warehouse and
logistics management system. About 70 per
cent of its revenues come from urban India
and it delivers to more than 4500 pin codes.
Currently the company has a little less than
2000 products from 210 brands. 49 per cent
of the products are Indian such as Satya Paul,
Tanishq, Asmi, Videocon; 26 per cent are
international brands such as FILA, BlackBerry,
LG, Canon, Dell, Sony, Samsung, Adidas,
Reebok and the remaining 26 per cent are
exclusive Star CJ brands such as Malhar,
Sharika. 20 per cent of transactions are
accounted for by kitchen appliances followed
by 17 per cent contribution from both IT/
cameras and small appliances. Fashion trails at
14 per cent.
All the products go through a quality test and
are put through sampling by 20 customers. If
they meet with approval, they get onto the
Star CJ catalogue. Despite this rigorous
filtration process, products are returned to
vendors and providers if they don’t move fast
from the warehouses.
The average customer transaction value is
around Rs 3000 currently, reveals Shin. He is
hoping to take this up by bringing in more
international brands as well as travel goods.
Revenue has been growing at a rapid clip of
about 50 per cent annually and estimates are
that Star CJ Network clocked in Rs 800 crore in
sales last year. Estimates are that more than
$100 million has been sunk into the venture
and losses are at about half that. Shin,
however, is sanguine of breaking even this year
and has set his eyes on $1 billion in sales by
2018-2019.
Shin’s predecessor Joshi believes that the
numbers are achievable, keeping in mind the
buoyancy amongst India’s consumers.
“About 55 per cent of India’s GDP is consumer
spending. This accounts for about $1 trillion.
Of this 20 per cent is accounted for by
organised retail. Estimates are that the home
shopping business is going to swell to $10
billion, leaving enough room for many
players,” says a media observer.
Indeed, Star CJ Alive’s closest competitor-
Network18’s Home Shop 18- has already
applied for a listing and public offering on the
New York stock exchange. Shin says he is
hoping to get Star CJ Network listed on the
Bombay Stock exchange in about three years.
Currently, Star CJ Alive can be viewed on
almost all the DTH platforms Tata Sky, Dish TV,
Videocon d2h and Airtel Digital; the only one it
has not managed to get on to is Sun Direct. It
has deals in place with the major multisystem
operators such as Hathway, Den Network,
Fastway, GTPL and Siticable. Again it has not
managed to get carriage on major MSOs in
south India.
The lack of distribution in the south has meant
that only 10 per cent of the company’s sales
emanate from there. But Shin believes that this
will be overcome in the not too distant future
when the channel will start beaming its
product capsules in regional languages. The
company will be seeking governmental
clearances for the same in terms of licensing.
“We are looking at a regional expansion in the
next two years post our rebranding,” he says.
Around 5 per cent of its total sales come from
its starcj.com portal, with 65 per cent of the
traffic coming from users on PCs and laptops.
The remainder log on to the portal from their
mobile hand phones or tablets. Shin wants to
double and treble revenue from starcj.com
over the next few years. A mobile app is being
developed to make mobile shopping an easier
experience for shoppers.
“Looking at the change in the consumer
behaviour in India due to the penetration of
online shopping, we intend to strengthen our
presence online and reach out to a wider
consumer base, ” Shin had told
indiantelevision.com sometime back. “TV home
shopping is however going to be our linchpin.”
Shall we say amen to that?
announced last month that it was exiting the
Star CJ joint venture (in favour of Providence
Equity) which it had set up with South Korean
home shopping major CJ O Shopping, observers
wondered about the course the four and a half
year old company would take in the Indian
market.
The two had over that period established a
24x7 home shopping channel called STAR CJ
Alive, which reaches more than 50 million
homes, a web-based portal StarCJ.com which
allows third party sellers to list their products
for sale, and had managed to attract more than
5 million shoppers.
A large part of that acceptance in India was on
account of Star. The latter has a lot of clout
thanks to its large channel bouquet, giving it
lots of leverage in India’s highly competitive
broadcasting and fragmented cable TV markets.
And then there is the credibility of the Star
brand with Indian viewers, especially
housewives, who bought products from TV
because of that trust.
The question was: would Star CJ Network be at
a disadvantage without Star?
Star CJ Network India CEO Kenny Shin does not
think so. He says that the joint venture has
about a year before it will have to drop the
Star tag. Already, the company has designed a
new mascot ‘Shoppie’ which will work at
bridging the gap between the current name
and until the new name is finalised. “The name
has to be such that consumers can connect
with it as Star will be moving out of the brand
name,” says Shin. “However, Star India was
only a financial investor. It was we who were
managing the business and we are extremely
optimistic about the market.”
Indeed it was Star India ad sales and
distribution president Paritosh Joshi who had
been deputed by CEO Uday Shankar to lead the
Star CJ joint venture in its early days. But Joshi
got the company on its feet and running and
quit in 2012, after handing over to Shin who
has been at the helm since.
For the south Korean firm which is the second
largest home shopping company in the world,
India is among the high growth and focus
markets, after China, and hence it is
imperative that its India play pans out right.
Global home shopping leader QVC Home
Shopping (part of Liberty Interactive) turns
over $8-9 billion dollars each year, CJ O
Shopping which notched up revenues of $4.6
billion has a lot of catching up to do; though
its vice-chairman Miky Lee is gunning for
global leadership status by 2020. Apart from
China and India she is driving the company
towards expansion in other markets such as
Vietnam, Indonesia, Japan, the Philippines,
Thailand, Turkey and even Latin America.
CJ O Shopping believes it has a good partner in
Providence to help achieve its ambitions in
India. Says Shin: “We have a long term
partnership with Providence. Their global
average investment relation is and average six
years. That’s a long time. Providence also has
knowledge of the business with their
investment in the German shopping channel.”
Home shopping in India is about a Rs 2,000
crore opportunity today and Star CJ Network
accounts for about 35-40 per cent of that. And
that despite the fact that the 700 employee
strong company is working in a restricted
manner in India as compared to other
territories. Because of foreign direct
investment restrictions, which prohibit multi
brand retail in the country, Star CJ operates as
a wholesale cash and carry retailer. Viewers
call in after watching the product capsules on
Star CJ Alive to its call centres which then pass
on the order to one of the five franchises it
has appointed nationally. These then deliver
the products to the home shopper through
logistics partners.
Star CJ on its part handles the backend, which
includes content creation for the television
channel, product selection, procurement,
warehousing and marketing. An extremely
efficient ERP system works as the glue for the
whole operation.
Headquartered in Mumbai with three studios
and three control rooms, it has offices in
Delhi, Chennai, Bengaluru and Ahmedabad as
well. Warehouses are located in Delhi-NCR,
Bangalore and Mumbai.
It has plans to open a warehouse in West
Bengal at an investment of about Rs 2 crore by
2015 in order to ensure fast delivery in the
eastern part of the country, apart from
establishing a more efficient warehouse and
logistics management system. About 70 per
cent of its revenues come from urban India
and it delivers to more than 4500 pin codes.
Currently the company has a little less than
2000 products from 210 brands. 49 per cent
of the products are Indian such as Satya Paul,
Tanishq, Asmi, Videocon; 26 per cent are
international brands such as FILA, BlackBerry,
LG, Canon, Dell, Sony, Samsung, Adidas,
Reebok and the remaining 26 per cent are
exclusive Star CJ brands such as Malhar,
Sharika. 20 per cent of transactions are
accounted for by kitchen appliances followed
by 17 per cent contribution from both IT/
cameras and small appliances. Fashion trails at
14 per cent.
All the products go through a quality test and
are put through sampling by 20 customers. If
they meet with approval, they get onto the
Star CJ catalogue. Despite this rigorous
filtration process, products are returned to
vendors and providers if they don’t move fast
from the warehouses.
The average customer transaction value is
around Rs 3000 currently, reveals Shin. He is
hoping to take this up by bringing in more
international brands as well as travel goods.
Revenue has been growing at a rapid clip of
about 50 per cent annually and estimates are
that Star CJ Network clocked in Rs 800 crore in
sales last year. Estimates are that more than
$100 million has been sunk into the venture
and losses are at about half that. Shin,
however, is sanguine of breaking even this year
and has set his eyes on $1 billion in sales by
2018-2019.
Shin’s predecessor Joshi believes that the
numbers are achievable, keeping in mind the
buoyancy amongst India’s consumers.
“About 55 per cent of India’s GDP is consumer
spending. This accounts for about $1 trillion.
Of this 20 per cent is accounted for by
organised retail. Estimates are that the home
shopping business is going to swell to $10
billion, leaving enough room for many
players,” says a media observer.
Indeed, Star CJ Alive’s closest competitor-
Network18’s Home Shop 18- has already
applied for a listing and public offering on the
New York stock exchange. Shin says he is
hoping to get Star CJ Network listed on the
Bombay Stock exchange in about three years.
Currently, Star CJ Alive can be viewed on
almost all the DTH platforms Tata Sky, Dish TV,
Videocon d2h and Airtel Digital; the only one it
has not managed to get on to is Sun Direct. It
has deals in place with the major multisystem
operators such as Hathway, Den Network,
Fastway, GTPL and Siticable. Again it has not
managed to get carriage on major MSOs in
south India.
The lack of distribution in the south has meant
that only 10 per cent of the company’s sales
emanate from there. But Shin believes that this
will be overcome in the not too distant future
when the channel will start beaming its
product capsules in regional languages. The
company will be seeking governmental
clearances for the same in terms of licensing.
“We are looking at a regional expansion in the
next two years post our rebranding,” he says.
Around 5 per cent of its total sales come from
its starcj.com portal, with 65 per cent of the
traffic coming from users on PCs and laptops.
The remainder log on to the portal from their
mobile hand phones or tablets. Shin wants to
double and treble revenue from starcj.com
over the next few years. A mobile app is being
developed to make mobile shopping an easier
experience for shoppers.
“Looking at the change in the consumer
behaviour in India due to the penetration of
online shopping, we intend to strengthen our
presence online and reach out to a wider
consumer base, ” Shin had told
indiantelevision.com sometime back. “TV home
shopping is however going to be our linchpin.”
Shall we say amen to that?
