German Home Shopping Channel to Break Even Next Year
It plans to break even next year on schedule when the sales volume is targeted at DM 370 million ($231.2 million).
This month H.O.T. is opening another electronic distribution channel by going on line with a regularly updated selection of 250 products, chosen from seven merchandising categories.
The channel has been on the air since 1996 after surviving a bevy of legal challenges, and thus indirectly paving the way for QVC's entry into the German market last year. QVC also expects to break even next year.
An EU directive member states must convert into national law this year has done away with most legal restrictions on home shopping and has thus rescued the industry from a quasi-legal limbo that allowed them on the air, but under threat of cutoff.
H.O.T.'s annual report, released last month, shows strong growth across all fields of activity. Live broadcasts were boosted to 16 hours a day in May with the rest reruns.
Daily orders first reached the DM2 million mark in March of this year, and spurted to DM3 million early in October. "We are absolutely convinced we will exceed that total during the Christmas season," Andreas Buechelhofer, the channel's CEO, said.
More than a thousand new customers are added daily, the annual report said, with the October level at 630,000 people who have bought H.O.T. product. Buechelhofer expects to pass 750,000 before the year is out, double the 355,000 customers last year.
Some 8,000 different products are sold on air this year, up 25 percent over 1997. Jewelry accounts for the largest slice of sales - 39 percent. Do It Yourself, Home Electronics and Automobile Accessories are at 22 percent.
While some 78 percent of the products sold on air are sourced in Germany, 12 percent come from the US. H.O.T. taps into the product display of 500 companies.
After expanding into Austria and Switzerland this year, the home shopping channel can be received in 18.5 million households in the three countries.
In Germany itself 8.7 million of the 16 million households receive H.O.T. via the ASTRA 1D satellite. Cable services another 7.2 million households, double last year's cable reach.
The Nuremberg call center handles an average of 8,000 calls a day and a peak of 18,000. Some 9,000 orders are fulfilled daily. More than half of all buyers are between 30 and 49, and 33 percent are over 50.
Finally in the spring H.O.T. completed Germany's first teleshopping studio at a cost of DM21 million.