QVC’s U.S. web sales grow 12% in 2015
February 29, 2016 12:33 PM
Fewer returns, more customers and units sold, and a higher average selling price all helped television and online retailer QVC Group post U.S. web sales increases during 2015 and the fourth quarter. However, softness offline globally pushed total sales down for the year.
QVC, a unit of Liberty Interactive Group, reported Friday that e-commerce sales reached $3.85 billion in 2015, up 9.1% from $3.53 billion in 2014. QVC is No. 15 in the Internet Retailer Top 500 Guide. The fourth quarter was especially strong online, QVC says, and during Thanksgiving week, QVC’s largest sales week in history, e-commerce accounted for 58% of sales.
In the fourth quarter, 50.4% of U.S. e-commerce orders were placed on mobile devices—that compares with 41.8% in the fourth quarter of 2014 and was the first time the merchant surpassed the halfway point in terms of mobile penetration.
“We continue to invest in our digital platforms, to expand our presence and to adapt to changing technology and consumer behavior,” QVC CEO Michael George told analysts on a conference call transcribed by SeekingAlpha. “We launched our app through the Apple TV in the U.S. in October and in the U.K. in November. We also launched a universal Android app in the U.S., U.K. and Germany in Q4, for both phones and tablets. It delivers a much more robust customer experience and has driven meaningful increases in both conversion and sales.”
Web-only flash sale retailer zulily Inc., which Liberty Interactive acquired Oct. 1, contributed $426 million to the retailer’s full-year results. For the year, zulily posted $1.4 billion in sales, a 13% increase over 2014, though only the merchant’s fourth quarter sales were factored into QVC’s revenue.
In the call with analysts, George provided several updates on how the zulily acquisition has impacted QVC and how the two companies will work together in the coming months. For example, George said QVC is redesigning its website in the first quarter and will include new personalization and optimization capabilities on the site that take advantage of lessons learned from the zulily team.
Also, the two brands began marketing to each other’s customers during the fourth quarter, as QVC sold some of its proprietary product lines on zulily.com and also used zulily as an outlet for some of its markdowns. The company also used the QVC television shopping channel to promote zulily.
“We ran on-air spots on QVC for zulily and saw meaningful traffic to their site in the minutes after those spots ran,” George told analysts. “We conducted digital marketing tests redirecting consumers from QVC.com to zulily. We also ran print promotions with package inserts and ads in our QVC customer magazine, Inside Q. None of these tests were large enough to be material in the quarter, (but) they completely confirmed our thesis, our belief that we can accelerate customer growth and increase purchase occasions for both brands as we work together.”
Matt Nemer, senior analyst of equity research at Wells Fargo Securities, says QVC’s U.S. revenue growth was three times better than that of the best-performing department store in Q4. “All categories at QVC experienced growth except for jewelry, with consumer electronics turning positive (vs. the recent disappointing trends), and apparel sales amazingly up double-digits despite the warmer weather and challenges for the industry as a whole,” he wrote in a note to investors.
For 2015, QVC reported:
- Global e-commerce sales of $3.85 billion, up 9.1% from $3.53 billion in 2014. That represents 44.0% of total sales, up from 40.1% in 2014.
- Mobile accounted for 50.4% of global e-commerce sales, up from 41.5% in 2014. That amounts to $1.94 billion in 2015 mobile sales, up 32.0% from $1.47 billion.
- U.S. e-commerce sales of $3.06 billion, up 11.7% from $2.74 billion.
- Mobile accounted for 49.2% of U.S. e-commerce sales, up from 39.6% in 2014.
- International e-commerce sales increased 13% and grew to 32% of total international revenue from 29% in 2014.
- Total QVC Group revenue reached $9.17 billion, down 8.6% from $10.03 billion.
- Total number of customers reached 12.6 million globally, up 3.3% from 12.2 million.
- Units sold increased 4%, though QVC did not disclose the exact number.
- Average selling price increased 1% to $60.32.
- In the U.S. 18.4% of total orders were returned, down from 18.5% last year.
- Zulily counted 5.0 million customers in 2015, up from 4.9 million in 2014.
- Net income of $878 million, up 18.8% compared with $739 million.
For the fourth quarter, the e-retailer also reported:
- Global e-commerce sales of $1.33 billion, up 10.8% from $1.20 billion in the fourth quarter of 2014.
- Mobile accounted for 51.6% of global e-commerce sales, up from 43.6%. That amounts to $685.2 million in global mobile sales in Q4, up 31.0% from $523.2 million.
- QVC U.S. e-commerce sales of $1.095 billion, up 13.0% from $969 million.
- Mobile accounted for 50.4% of U.S. e-commerce sales, up from 41.8%.
- In the U.S., the number of units sold increased 4%, though the merchant didn’t disclose exact numbers.
- The average selling price per unit increased slightly to $61.89.
- In the U.S., 15.9% of orders were returned,14.3% from $273 million.