In the popular Japanese TV show Hero, superstar Takuya Kimura plays a public prosecutor who has only a high-school education. Fans enjoy the character's mix of a casual, athletic-shirt-and-jeans style with a sharp nose for crime. But what really amazes viewers is his inability to resist the allure of TV shopping networks-the program often shows him in the sacrosanct confines of the investigators' offices trying out machines that stretch the hips or air floatation mattresses that he has purchased from one of these networks.

Shopping from your living room

Real-life Taiwanese society and the world of Japanese TV do share at least one similarity: more and more people are falling in love with shopping in "TV department stores."

EHSN, for example, has grown from 200,000 members in its first year of operation four years ago to more than 1.3 million members today. The network maintains a product line of over 600 items from month to month, including everything from high-end designer handbags, diamond rings and watches to computers and cell phones, and even high-quality teas and luwei (foods stewed in soy sauce).

The network sometimes offers items in only limited quantities, and viewers often find that the counter showing the number of items remaining whets their appetite for a product.

This past May, the SARS epidemic resulted in a sharp decline in the number of people spending their leisure time outside their homes. Yet when EHSN offered five-day trips to Bali to its viewers for NT$15,000 each, it sold a remarkable 3800 units. Sales of the network's NT$108,000 one-carat diamond rings were just as hot-EHSN sold out its entire inventory. SARS forced Taiwanese consumers to restrain their urge to shop; Taiwan's shopping networks gave them an outlet.

Late last year, EHSN even offered cars to its viewers for the first time. The network sold 250 vehicles in just two hours, even though most people believe that a test drive is a critical part of the car-buying process.

Although the SARS epidemic drew shoppers to their TVs, today's TV shopping networks still face the challenge of changing consumers' less-than-positive impressions of TV shopping.

"SARS gave a boost to virtual distribution channels by making consumers who didn't dare go out more willing to give this medium a try," says EHSN president Jennifer Sung. Sung notes that when EHSN began broadcasting at the end of 1999, many consumers were reluctant to let their friends know that they had bought things from the network because at that time most people would have thought they were idiots to have bought something from the TV.

EHSN has invested tens of millions of NT dollars in changing this impression. The network built a flashy, modern studio, hired good-looking models and sells its products on live broadcasts. It has also gathered information about its customers, and made "Seven Promises to the Buyer" its slogan. These promises include a 30-day lowest price guarantee, interest-free payment plans, seven-day delivery of purchases, a 10-day free trial, a one-year guarantee and free returns. Once the network had built a solid reputation, its sales began to take off, rising from NT$2.2 billion in 2001 to NT$7.2 billion in 2002 and on toward a projected NT$20 billion this year.

The need to be number one

Although revenues have been rising steadily, "Profits," according to Sung, "are not explosive. Neither are they small. They are microscopic." She explains that running a TV shopping network-which requires evaluating products, producing programming and operating a phone center, as well as delivering products to people's homes-is extremely expensive. EHSN currently employs more than 1600 people, and because they must have sufficient staff to handle both order taking and after-sales service, they rely on economies of scale to make money. In short, they have to be number one in their field to survive.

Sung cites Synnex International, a retailer of IT products, as being in a similar situation. Synnex has several hundred stores around Taiwan, and annual revenues of NT$20 billion, but its net profits are only around 2% of sales.

From TV, EHSN has branched out into radio, the Internet and mail-order catalogs in an effort to put itself into contact with a greater variety of consumers, but TV continues to account for 70% of the company's revenues.

Sung says that on average Taiwan's retail market generates annual sales of NT$3.2 trillion, only NT$30 billion of which (about 1%) originate with virtual sales channels such as TV, the Internet and mail-order catalogs. Consequently, Sung believes that virtual channels still have a lot of room to grow.

Ten years ago, Taiwan's television retailers had a brief moment in the sun before fading out of sight. More recently, they have succeeded in changing the traditional model of consumption, which relied on seeing goods for oneself before buying, with startling rapidity. The variety of goods now available through this medium boggles the mind. With any luck, the shopping revolution now sweeping the small screen will turn out to be a win-win situation for everyone concerned-producers, consumers and distributors alike.