Why the QVC model still works for beauty brands

GLOSSY

by JESSICA SCHIFFER

APR 4, 2018

At a time when much of the beauty conversation is happening online, QVC may not seem like the smartest outlet for new brands looking for a place to launch or expand their reach. But, to this day, the 32-year-old television shopping network remains a key platform for those young brands to gain exposure, as well as for international beauty brands hoping to test the waters in the U.S.

“They’ve built a very loyal following over the years, and beauty products are very demonstrative, which is perfect for TV,” said Anisa Telwar Kaicker, the founder and CEO of Anisa International, a beauty product development company. “Like most of us, their audience likes seeing experts demonstrating how products can change their appearance. It’s the original YouTube.”

This week, industry veteran Bobbi Brown announced that she’d be launching her new wellness brand, Evolution_18, on the network alongside a branded website. It’s an interesting choice for a mogul, who likely had her fair share of options, but 90 percent of QVC’s revenue comes from women. In the fourth quarter of financial 2017, QVC’s revenue grew 1 percent, to $8.8 billion. A majority of its demographic is the affluent Gen Xers and baby boomers who grew up buying Brown’s namesake cosmetics line, the Estée Lauder-owned brand she left in 2016.

The company isn’t just courting brands with history (and an older audience) on their side: Other brands that have recently begun selling on the network include newer entrants like Le Métier de Beauté, Phace Bioactive and the cult-loved Australian skin-care brand Lano. Buzzy, internet-born brands aren’t immune, either: It Cosmetics, which launched on the channel 10 years ago, is one of today’s buzziest brands and continues to sell its products there. In 2017, It Cosmetics sold to L’Oréal for $1.2 billion.

For its part, QVC has evolved beyond the TV screen. The company — owned by Liberty Interactive Corp., Qurate Retail Group, which bought rival HSN for $2.6 billion in July — has made strategic moves to adapt to today’s consumer preference for online content. Its beauty shows (under its umbrella channel, BeautyiQ) are both simulcast and available on-demand via its website, its mobile app, Facebook, AppleTV and Roku. All of its hosts — many of whom are key to the brand’s popularity — have dedicated Facebook pages.

It also helps that the dated phone orders QVC once relied on are no longer its main bread and butter. As of the third quarter of 2017, e-commerce accounted for 54 percent of its U.S. sales, growing at a rate of 8.3 percent year-over-year, to $740 million. Altogether, its global e-commerce sales grew by 10.3 percent during the same period, to $973 million.

“The brand name has lasting power, but it has also successfully remained relevant,” said Mai Kang, associate vp of client services at data analytics firm Fuel Cycle.

For newer beauty brands, or those without any U.S. presence, QVC is also appealing because it works as a turn-key solution, said Jason Goldberg, svp of content and commerce at the digital agency SapientRazorfish.

“They create the audience of shoppers who want to discover new products, and they handle all of the marketing content and take the orders, and handle payment processing, fulfillment and customer service,” he said. “It’s an extremely low-risk, low-investment way to pilot a new product in the U.S. market.”

It also provides these brands with significant storytelling opportunities, which can be especially important with market unknowns.

“Without your story and intrinsic value communicated, your product is just another product on the shelf,” said Kang. “The experts at QVC help to bring your brand and product to life.”

This is especially true for founder-led brands, added Kaicker.

“Viewers have the opportunity to see the passion behind the brands and establish trust with them directly,” she said. “When a consumer is invested in the founder’s story, they are more likely to test what they’ve created.”