This article first appeared in The Edge Malaysia Weekly on July 6, 2020 - July 12, 2020

THE Covid-19 pandemic has hit the retail world hard as demand for non-essential items comes to a grinding halt. Even so, for TV home shopping players, it appears that every cloud has a silver lining.

Despite the gloomy economic outlook, Media Prima Bhd’s CJ Wow Shop is targeting a 30% growth in home shopping revenue this year, according to CEO Kim Yang Hyun.

“Looking at our performance in previous years and in the first half of 2020, we are confident in achieving profitability in the near future. To sum up, we are glad to say that within the e-commerce industry, we have both scalability and profitability,” he says in an email reply to The Edge, highlighting that its new customers have increased and made up a significant portion of total sales during the Movement Control Order period.

Going forward, Kim says CJ Wow Shop will focus on enhancing its multi-platform strategy that embraces TV, mobile and PC. “This will be our next strategic direction. As a content commerce platform, we will enhance our content creativity, influential storytelling and product competitiveness.”

Meanwhile, Astro Malaysia Holdings Bhd’s Go Shop CEO Grace Lee tells The Edge that one of the key learnings from the pandemic is businesses across various industries must have a digital and e-commerce strategy.

“Bricks-and-mortar businesses are pivoting towards digital sales. Go Shop is seeing more merchants wanting to work together to reach consumers across its platforms.

“At the same time, consumers have adapted to the convenience of making purchases online. As a result, Go Shop saw sales orders and monthly active users jump 43% and 97% respectively in 1QFY2021. Given that consumers might be more prudent in their spending due to the economic uncertainties, we are cautiously optimistic that this trend will continue.”

Nonetheless, Lee says Go Shop’s growth strategy is underpinned by content, product and service differentiation. “One of our key strengths is our customer base and our access to multi-platforms. With the power of TV, radio and digital, we have the content production and marketing skills to persuade consumers to shop.

“With this opportunity, we are able to help Malaysian SME (small and medium enterprise) home-grown brands expand their reach and deepen their engagement.”

Both TV home shopping players are positive about market competition.

“With competitors, we can discover opportunities, differentiate and learn from what our competitors are doing,” Lee opines.

Kim says, “Malaysia’s home shopping industry has been around for over five years and is still in its growth phase. We have removed barriers for customers by offering them diverse ways to shop. This creates a conducive ecosystem for this industry. We believe healthy competition will enlarge our market size.”

The local TV home shopping segment has been a battlefield between Astro’s Go Shop and Media Prima’s CJ Wow Shop. Riding on the e-commerce wave, the two media giants are striving to attract customers to shop on their platforms, with both targeting Malay and Chinese consumers.

However, contribution from the segment is still relatively minimal after years of presence.

For perspective, Go Shop raked in RM368 million in revenue for the financial year ended Jan 31, 2020 (FY2020), accounting for merely 7.5% of the group’s total revenue of RM4.9 billion.

The segment registered a higher loss before tax of RM15.8 million in FY2020 compared with RM7.4 million the year before, primarily due to lower revenue. This was coupled with more spending in FY2019, on the back of a tax holiday and sales driven by the Fifa World Cup campaign.

However, for the first quarter ended April 30, 2020, Go Shop managed to return to the black with a profit before tax of RM600,000 against a loss before tax of RM4.5 million previously.

Quarterly revenue grew 14.1% to RM95.3 million, thanks to higher viewership and the festive season during the quarter.

Go Shop, launched in January 2015, had 2.4 million registered customers as at January this year. It is broadcast over three channels on Astro as well as a free-to-air channel through myFreeview.

CJ Wow Shop, meanwhile, reported RM232.2 million in revenue for the financial year ended Dec 31, 2019 — a 9% growth against RM213.1 million the year before.

The top-line contribution from the segment to the group was higher at 21%, though it did not lead to profitability for the segment.

Launched in April 2016, CJ Wow Shop’s customer base reached 1.7 million in FY2019. There are two dedicated free-to-air channels for the home shopping network, apart from the slots across its four TV channels.

Analysts reckon that while the home shopping segment’s contribution is not significant, it has been growing over the years and the momentum is likely to continue.

“For TV shopping, the products are mostly electrical and household items, and prices are cheaper. It’s like a necessity that you can use on a daily basis. So, demand will still be there,” says MIDF Research analyst Khoo Zhen Ye.

HLIB Research analyst Syifaa’ Mahsuri Ismail does not rule out the possibility of the TV home shopping segment seeing more spending in the new normal. “As more people are jumping on the bandwagon of TV shopping, those who are already registered might continue to do so in the future.”

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