This report examines the UK marketplace for home shopping, covering the different retail channels where consumers can place orders and purchase goods and services without leaving the home. This therefore excludes the main area of the retail industry - bricks-and-mortar in-store consumer spending - yet covers a broad range of home shopping retail channels:
- e-commerce - this includes the purchasing of goods via television shopping channels, interactive television and Internet retail sites
- general mail order - this covers the retailing of goods from catalogues, with orders then being placed via telephone, post or online to be delivered to the home
- direct marketing - direct marketing channels involved in home shopping include off-the-page selling, direct mail shots and inserts in newspaper and magazine publications, which generate a direct response of a consumer ordering the product or service marketed
- direct selling - this includes the likes of field selling, where agents go in person to the homes of consumers to make direct sales, such as door-to-door/ person-to-person sales, party plan, and multi-level or network selling
As the home shopping market covers a broad range of selling techniques, there is some overlap between the different retail channels; for example, direct marketing channels are often used to supplement mail order or redirect the consumer to e-commerce sites. Although there are several other direct marketing sectors, this market is solely approached in terms of home shopping and so examines just a select few market sectors; advertising and marketing channels do contribute to home shopping sales, yet the channels analysed in this report are those which trigger a direct sales response, such as an immediate phone call or online order to make a purchase, and are not solely viewed as marketing methods.
E-commerce can be subdivided into two principle subsectors:
television sales, e.g. home shopping networks (including interactive digital services and cable and satellite television).
This includes all home shopping of purchases made via the Internet, and can therefore include using a home broadband connection in the house, mobile Internet network or Wi-Fi connection. This form of home shopping, although taking place out of stores, does not necessarily solely cover sales from within a consumer’s home, but includes all transactional sales through this medium, thus covering the scope of Wi-Fi connections in public places and using smartphone mobile phone and tablet applications (‘apps’) and websites to place orders while the consumer is on the move. Therefore, the Internet e-commerce domains for home shopping are:
- Cybermalls/marketplaces - these sites or marketplaces retail a wide range of products and brands from one site, thereby acting as a virtual shopping mall through which consumers can browse and shop a broad range of goods from several retailers. The e-commerce marketplaces can be online boutiques retailing licensed-in brands or they can be used as platforms for different companies or brands to retail their goods on, or used as platforms by third-party sellers. With some e-commerce sites such as Amazon and eBay being used by third-party, individual private sellers, they cover the second-hand online e-commerce domain; second-hand, private retail sales are less easily measurable as they remove custom from the particular brands or retailers themselves, while marketplace websites often take a cut of the profits.
- Individual websites - these are transactional websites belonging to a specific brand or retailer offering their own products or services; the company may be online-only, such as youth fashionwear site Missguided.com, or may be a multi-channel retailer, such as high-street retail store Topshop, which has launched a complementary retail website.
- Apps - the rise in m-commerce has created this new platform for consumers to purchase goods via an Internet-connected smartphone or tablet app; these are often simplified versions of the main website and can be accessed using the user’s mobile network
Internet/online sales allow consumers to browse for products and then use price comparison websites to find the product at the best deal or value. The goods purchased can be delivered to the consumer through home-delivery options or through click-and-collect services, where the goods can be sent to the consumer’s local physical retail store or to collection lockers in convenient locations to be picked up.
Television sales involve the purchasing of goods via home shopping television networks or channels, which usually offer around-the-clock shopping opportunities, with the channels being solely dedicated to home shopping. Consumers can watch presenters and brand ambassadors demonstrate the use of a product live on a dedicated home shopping television channel, such as QVC, bid TV and Ideal World, and are then able to phone the channel to place an order, place an order via the company’s website, or order a product using their interactive television remote control. Products and brands change regularly, and the volume of products are in limited supply, with some channels offering auction-style listings and countdowns to limit the timeframe for purchases and to put pressure on consumers to buy products.
General Mail Order
General mail order involves consumers browsing paper catalogues and ordering goods and services from this medium. Catalogues are usually delivered to the homes of consumers by courier service, with editions usually being published bi-annually to coincide with the fashion seasons of spring/summer and autumn/winter, in addition to mid-season smaller publications or inserts often being sent out throughout the year displaying special collections, sales lines or offers. Consumers can then place catalogue orders through postal orders, calling operators over the telephone or visiting the accompanying website to place an order online.
Many catalogue distributors have entered e-commerce home shopping in recent years, offering a traditional catalogue service along with a modern online transactional website and therefore catering to the differing demands of the various consumer audiences; while the elderly clientele prefer traditional catalogue shopping, the implementation of an accompanying website appeals to a younger demographic. This does, however, blur the distinction between sales through general mail order and e-commerce, with traditional catalogue distributors including Next and Littlewoods also having a following from consumers who do not subscribe to the physical catalogue edition, but who continue to place orders through the transactional website. Products are then posted directly to the consumer’s home by mail, or are sometimes delivered by an agent or house call, while some offer click-and-collect services.
Direct marketing consists of a broad range of marketing channels promoting goods and services, used to trigger a direct and measurable response from a consumer; notably a direct response in this case is a purchase order for products or services. With a vast range of media channels falling under this category, it is to be noted that, for the purpose of this report, direct marketing is examined in terms of the three channels of off-the-page selling, direct mail shots and inserts, and therefore does not cover the broad range of channels covered in this report.
In terms of home shopping, these direct marketing channels are techniques used by mail order companies to generate direct purchasing responses from consumers, and so cover methods used to target consumers in the home for them to then place orders driven directly by the marketing and advertising technique used. Therefore, when direct marketing is referred to in this report, it is based on the definition of the following subsectors:
- Off-the-page selling - this involves advertisements and product descriptions within a print magazine or newspaper publication, which consumers are able to directly respond to. These often include a telephone number next to the advertisement and product description for consumers to directly respond to by telephoning and placing an order. Consumers can also order through the post or e-mail and usually deal directly with the manufacturer. As a fairly small, declining sector, direct response inserts are often found within television guides and women’s magazines targeted at the older consumers who prefer this traditional home shopping method. As well as being used to generate direct sales responses, this marketing method can also be used to generate interest in a retailer or brand for future sales, or can advertise a mail order catalogue with the direct response being measured by the consumer uptake.
- Direct mail shots - direct mail and door drop marketing involves the delivery of advertising material through the post, and is usually addressed directly to an individual targeted by the company or retailers. This can include vouchers and coupons offering discounted orders, leaflets, brochures and free product samples to encourage both existing customers and potential customers to purchase goods and place orders. Individuals are targeted through the company’s provision of a database list, either a company database of existing customers so as to generate repeat custom, or from a list purchased from list brokers, list managers and list suppliers often grouping consumers on matters of age, gender and consumer preferences. The aim of this marketing channel is for the shots to directly translate to consumers ringing or going online to place an order or to take advantage of the free voucher or product on offer by ordering it.
- Inserts - these are paper or card brochures or leaflets distributed inside print publications such as magazines or newspapers. With mail order companies placing the inserts inside specific magazines, they are able to target a specific readership base affiliated with the particular publication on the premise that, for example, consumers reading a fashion magazine will be interested in purchasing from a fashion retailer. Inserts can generate a direct response from consumers through orders being placed over the telephone or via the website advertised on the insert, yet they can also be used to generate non-immediate responses
Direct selling involves the direct sales of products and services between a company representative or brand ambassador and consumers within the home, away from a physical store location. These are highly personal home shopping methods as they allow sales representatives to build a relationship between the consumer and the brand, and enable the customer to often view and trial a product through representatives demonstrating the goods prior to the consumer placing an order; in effect, this brings the in-store experience into the consumer’s home. Purchases and orders are made directly between field agents and the consumer, thus sidestepping online or telephone ordering channels, with products then being immediately provided to the consumer or ordered to be delivered by mail or directly by the agent. Company representatives work on commission in many instances and can be the brand representatives for a specific geographical region, managing their own customer base, often in terms of franchise opportunities. The three main types of direct selling are:
- Party plan - this involves a brand ambassador or company representative visiting a customer’s home to host a party for the consumer and a group of people whom the customer has invited. The representative will demonstrate the brand’s products to the group of people for them to purchase on the day or place orders to then be delivered to their homes, with the host whose home is used for the party often being given a discounted rate. Ann Summers parties and Jamie Oliver parties are particularly popular examples of party plan selling, and representatives usually organise fun games and activities to play with the interested group of people, in addition to the presentation of the products.
- Person-to-person - these sales involve the likes of door-to-door sales representatives distributing brochures and sample products and providing information about a brand and its products either for immediate purchase from the consumer in the home or for future brand exposure. This method has been highly criticised in the past owing to the reputation of the sector being damaged by rogue salesmen; however, it continues to be a popular technique for the likes of gas and electric service providers. A highly popular form of person-to-person sales is that of the Avon catalogue, involving door-to-door distribution of the well-known catalogue by an agent responsible for a target geographical area, who will then return to collect the catalogue with an order form attached and personally deliver the products ordered to the consumer’s home; this is a successful direct sales approach which steers away from the sometimes negatively viewed ‘hard sell’ technique.
- Multi-level or network selling - also known as pyramid selling, this usually involves direct door-to-door sales methods, where there is a representative who has recruited other sales agents, from whom the leading representative receives a cut of sales. This pyramid structure sees the lead representative also directly sell company products for commission while being responsible for the recruited agents’ sales and getting commission from their sales too. This is not very widely used in the current home shopping market, partly due to the negative reputation that pyramid selling has come to hold
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1. Introduction & Definition
2. REPORT COVERAGE
3. MARKET SECTORS
General Mail Order
What’s KEY in the Market?
4. KEY DRIVERS
5. MARKET TRENDS
Rise of E-Commerce
Issues of Home Delivery
Print Decline Threatens Off-the-Page Selling
Royal Mail Developments to Cater to Market Changes
6. ECONOMIC TRENDS
7. MARKET POSITION
HOW ROBUST IS THE MARKET?
Market Size, Segmentation & Forecasts
8. MARKET SIZE & SEGMENTATION
The Total Market
Future Economic Trends
Forecast Total Market
9. MARKET GROWTH
10. GLOBAL E-COMMERCE EXPORTS
UK TRADE RELATIONS
Strengths, Weaknesses, Opportunities & Threats
Business Tax Rates
Difficult Trading Period
Changing Demographics in Direct Selling Industry
Silver Surfers and Greater Accessibility to E-Commerce
Transactional Apps and Mobile Shopping
Social Media Shopping
Consumer Contracts Regulations