Analyst Insight by Michelle Grant - Head of Retailing Research
On 17 August 2015, Liberty Interactive Media, which owns the homeshopping brand, QVC, announced that it would acquire internet retailer, Zulily Inc, for US$2.4 billion. With the homeshopping channel dying, this is an attempt for Liberty Interactive Media to stay relevant for the long term. Similar moves in the travel industry, though, indicate that this acquisition will fail in positioning Liberty Interactive for the future.
Main goal: driving sales growth
The main goal of the acquisition is to drive sales growth for Liberty Interactive Media. According to Euromonitor International, the sales via the homeshopping channel declined by 6% in 2014 and are expected to decline by 13% over the next five years. Because the companies have different types of customers, the hope is that they’ll be able to cross sell customers and perhaps, leverage Zulily’s experience in mobile transactions for growth:
“With the two companies under one roof, “we can expose brands to more customers,” and there will also be opportunities to introduce QVC’s customers to Zulily and vice versa, Mr. George added. The two companies also are hoping to ride the growth of shoppers who increasingly buy on mobile devices.” –Wall Street Journal