QVC Completes First Year in Germany, Expects to Break Even in 1999

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DUESSELDORF, Germany -- QVC racked up sales of 20 million German

marks ($11.1 million) from 100,000 customers in its first year of operating on the

German market that ended December 1.

In the last three months of the fiscal year the monthly growth rate topped 25

percent and weekly sales were as high as DM 2 million ($1.1 million). The

shopping channel, Francis Edwards, CEO of the German operation, said, could

break even by the end of next year.

If it does, QVC will have matched its German rival, Home Order Television

(H.O.T.), which launched a year earlier and also expects to become profitable in


Edwards cautioned, however, that his prediction depended on QVC winning

permission to broadcast across all German cable systems, "a freedom we do not

unfortunately have as yet."

For now QVC is anchored in its German "home state," North Rhine Westphalia,

where it has complete access to the state's cable TV system. In addition it has

cable facilities in eight other German states. Four of them are in the old East


The German cable networks put QVC in 3.5 million cable households with

another 6.5 million households able to receive QVC broadcasts trough the Astra

1D satellite on Transponder 52.

Edwards expects QVC's German customers to top 400,000 by the end of the

year, noting that the shopping channel had been adding up to 1,500 new

customers a day in recent months. QVC's call center fields 4,000 calls a day and

up to 8,500 on peak days.

So far QVC has invested DM 70 million ($38.8 million) and expects to boost

outlays "over the middle term" to DM 200 million ($110 million). QVC

spokespersons would not specify over how many years the investment will be


But the network clearly expects to reap a handsome profit from Europe's richest

market. Edwards estimated that turnover by the year 2000 should hit DM 500

million ($277.7 million).

Edwards said that Germany's short-term teleshopping market potential was DM

1 billion which should rise to DM 2 billion in short order.

"Germany is a strategically important market for us," Edwards said. "Mail order

as a concept is widely accepted here, as the rapid development of the catalog

business has demonstrated."

Teleshopping, he added, is basically the same thing as catalogs. "The only

difference is that it uses a more modern medium and allows us to present viewers

with far more sweeping information about the products we offer."

He also cited a Forsa Institute survey showing that 77 percent of all Germans

have heard "about this new way of shopping," while 4.5 million have actually

bought goods from the TV and another 5 million expect to try it soon.

QVC is on the air 24 hours a day with 14 hours of live programming and the rest

repeats. It offers viewers 15,700 products with jewelry accounting for 47 percent

of turnover and household goods for another 42 percent.

Most products on the channel are made in Germany but 25 percent come from

other European countries and 9 percent from the US.

QVC managed to launch in Germany in 1996 despite complex legal obstacles

that arose from conflicting laws and the authority of individual states and the

federal government over issuance of TV and other licenses.

However, QVC did follow in the wake of H.O.T. which won a court case

keeping it on the air, followed by a semantic twist in German regulations that

labeled home shopping TV as a "media service" and not a broadcaster.

Most important, however, was QVC's promise to create new jobs -- a promise

that proved catnip to the North Rhine Westphalia government, which, like all of

Germany, suffers from double digit unemployment.

It is a promise QVC has kept. Starting with 190 employees in 1996 it now

employs 410 with 180 engaged in administration, 190 in the channel's call center

in Bochum, a town not far from Duesseldorf, and 40 in distribution. n

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