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QVC Group Idea Proposal (QVCA)

QVC Group Idea Proposal (QVCA)
 

Will QVC return to revenue growth in the fourth quarter and beyond?

Report Available: December 8, 2016

 

Blueshift’s initial research reveals QVCA sales declining in Q3, facing some customer backlash for its shipping charges, adjusting its credit terms in the face of rising bad debts, and integrating its Zulily acquisition.

 

Observations

  1. After years of consistent sales growth, QVCA’s U.S. revenues fell 6% in the third quarter as average selling prices declined and the number of units sold dropped. The company said sales declines in electronics, beauty, jewelry and accessories were partially offset by gains in home and apparel.
  2. QVCA gets an estimated 5% of its revenue from shipping and handling charges, but is getting pushback from some customers that are becoming increasingly accustomed to free shipping from e-commerce leaders like AMZN. Multiple threads on the company’s community message board focus on shipping charges, with some buyers complaining that they are charged separate S&H fees for each item in an order, even if they ship in the same package, and others saying they often empty their QVCA carts before buying when they see the shipping charges.
  3. QVCA allows customers to pay for purchases in installments, with no credit check, through its Easy-Pay system. The default rate on such credit is less than 2%. However, executives said bad debt expense was up in Q2 because of higher-than-expected write-offs on Easy-Pay purchases starting late last year. The company tries to manage such trends by adjusting when Easy-Pay shows up as an option for buyers and how many months they have to pay off their purchases.
  4. QVC acquired specialty online retailer zulily inc. for $2.3 billion last year in an effort to jump start sales growth. Zulily contributed $359 million to QVC’s top line in Q3, about 15% of total revenues.

 

Is QVC losing customers to online merchants that offer free shipping? Will its revamped credit terms affect buying habits? Will credit default rates surge? Did QVC pay too much to acquire Zulily? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Product suppliers, online competitors, QVC customers, and Industry specialists.

  

Companies: Liberty Interactive Corp.’s QVC Group (QVCA), Amazon Inc. (AMZN), HSN Inc. (HSNI), Evine Live Inc. (EVLV)

 

Research Begins: Nov. 14, 2016