Shilpa Shetty & Raj Kundra have got off to a flying start in their entrepreneurial journey. First, they have roped in an undisclosed private equity fund which has invested Rs. 32 crore for a 15% stake. This values the venture at Rs. 213 crore. The other partners in the venture are Akshay Kumar & Sonakshi Sinha.
The business model is simple. It is a 24×7, free-to-air home shopping channel available across all major cable and DTH platforms as well as online.
The venture will start with 30 products covering lifestyle, home, health, fashion and beauty.
The products will be priced between Rs 2000 to Rs 6000.
Raj Kundra pointed out that they did a trial run by putting 6,000 SSK sarees, created by Shilpa (Shetty Kundra) on Home Shop 18, priced at Rs 2,000 each. They sold out in 22 minutes.
This is the first time in Indian television that a celebrity teleshopping channel is being launched. The celebrities on the channel will not be brand ambassadors but will be signed on a profit-sharing model.
Some celebrities who will appear on the channel are cricketers Ajinkya Rane, Yuvraj Singh, producer Ekta Kapoor, Shilpa Shetty and Sonakshi Sinha.
Sonakshi Sinha will launch her own line of products where she will design and be involved in other processes like packaging of the product. She is the brand face and also the co-owner of the channel along with Akshay Kumar and Raj Kundra.
— Akshay Kumar (@akshaykumar) March 6, 2015
Size of the market & competition:
The size of the market for Indian home shopping market on television is over Rs 13,000-crore.
Currently, the top three players, which include Star CJ Network & Home Shop 18, hold 60% market share.
International examples of success:
QVC, HSN and Vaibhav Global are international examples of the success of the model. In a note written in the context of Vaibhav Global, Prof. Sanjay Bakshi talks about QVC:
“The beauty of QVC’s model is that it’s highly free-cash-flow generative — and it takes very little capital reinvestment. Unlike a brick-and-mortar retailer that has to continue to put up new physical locations to grow in the future, QVC really doesn’t have that constraint. It’s a business that tends to feed on itself. And the customer base is extremely loyal. That vast majority of the purchases are made by people who have been customers for quite some time and who are very loyal repeat customers.”
So, it does look like this entrepreneurial venture is destined for great success.