While TV shopping has been a staple of television in the US and Europe for many years, with the likes of QVC and HSN well-known channels for buying consumer goods, the Middle East was a relatively late entrant to the game.
The absence of TV shopping in the region was noticed by entrepreneurs Nicolas Bruylants and Michael Truschler, who established Citruss TV, the MENA region’s first TV shopping channel in Dubai back in 2005.
Bruylant says that the overall concept of the company is simple. “It’s a department store, so we buy and sell products but using TV as the medium instead of a brick and mortar shop.”
Citruss TV, which rents its studio space in Media City from Ten Sports and also uses its transponder, is available in 17 countries across the Middle East and North Africa region.
It also has an office, call centre and warehouse in Dubai, and a second warehouse in Saudi Arabia. Outside the UAE and Saudi Arabia, it works with various partners to distribute and deliver its products – which range from cookware to electronics, luxury goods and perfume - to customers across the region.
Citruss TVs biggest markets are KSA, UAE, Kuwait and Qatar. The company is also performing well in Egypt and was proving successful in Libya and Iraq until political instability dented growth.
In addition to selling products on its own channel, it also has 52 minutes of airtime each week on MBC4, the result a deal signed with MBC in 2007. “We started on a shared business model [with MBC] where we would receive airtime from their side to broadcast some of our programmes and the revenue would be split between us.
“That gave us a much larger audience. MBC has definitely been a great partner and a great marketing tool for us,” he says.
The company’s scale attracted the attention of Valoris, a European consulting and investment firm, which took a 30% stake in Citruss TV in mid-2014. Bruylants says that this investment will be transformative for the company. The funding from Valoris is being used to fund the new premises in Studio City and to hire additional staff.
The premises in Studio City will be about 12,000 sq ft including 4000 and 5000 sq ft of studio space. It will also include offices for production and post-production work, and a green room. However, the entire company will not relocate to Studio City, with some parts, such as the call centre and warehouse, remaining in their current locations.
Bruylants explains that the firm had already hired an additional 33 staff in the past four months, giving it a current head count of about 93 people. The company expects to have about 150 employees by the end of 2015.
Citruss TV is also planning to start broadcasting live programmes from its current studio at Ten Sports in Media City this year. The channel will initially broadcast one hour of live footage a day, increasing to two hours by around November.
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The company will then increase its live production to four hours a day when it moves to a new studio in Dubai Studio City at the beginning of 2015. “These live broadcasts will probably be from 2-6pm and we’ll hopefully go to eight hours a day by the end of 2015,” Bruylants says.
He expects the introduction of live broadcasts to be transformative for the company, helping it to interact better with its customers, increase sales and improve its ability to control sales.
“The big change for us will be having our own facility to shoot on a daily basis and also being live, which adds a great aspect to our business. This will provide interaction with our customers who know it’s happening live.”
Indeed, by broadcasting live Citruss TV will be able to respond to sales trends in real time. For example, if part of the presenter’s demonstration is particularly effective, the production controller could request them to repeat it. Live production will also help with inventory management.
For example, if a surge of orders came in for a particular product for which stocks were becoming depleted, then the production co-ordinator could decide to move on to another product.
“It will reduce pressure on the call centre and website, and will help us to avoid being out of stock. If we can see that a product demonstration is not generating much interest we can move to something else. In short it will enable us to tailor make our programmes at the demand of the people,” Bruylants says.
With the investment from Valoris in place, Bruylants says that Citruss TV will also look to expand its range of products. This is particularly important in the TV shopping business in order to maintain interest from regular viewers and customers.
“We want to increase drastically the number of products we stock,” he says. “The product offering is very important to the business and if don’t keep bringing new products our customers are interested in, then they will get bored. We plan to increase our sourcing team as well as the production team.”
Furthermore, to improve the efficiency of the retail side of the business, Citruss TV is also looking to invest in a new IT system. “We need a good IT system for the retail side. We’re in talks with SAP to implement their cloud solution called Business By Design which deals with the retail side, inventory and ordering. We also plan to expand marketing and increase visibility,” Bruylants adds.
Another aspect of the business that Bruylants and Truschler intend to change – in some countries at least – is its storage and distribution. This function is carried out by outsourced partners at present in most countries apart of the UAE and Saudi Arabia, and the company will look at each country on a case-by-case basis to assess whether it is worth bringing these functions in house.
Bruylants explains: “Since 2010 we started growing in other countries where we had ready demand but had to look for partners with trade licences in order to import products and distribute.
“We signed lots of deals with agents who store and distribute our products when orders arrive. This helped us understand more about the demand and the customers. But now as part of our development we will start to take over these functions in those countries one by one.
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“We’re already doing this in Oman, where we now own facilities and also have partners. We want to have the same line of quality across the different countries, and the best way is to do it ourselves.” However he added that in some smaller markets Citruss TV may continue to work with agents.
Bruylants and his business partner Michael Truschler decided to enter the TV shopping business back in 2004. Truschler came from an investment banking background and Bruylants hadrecently completed a business and engineering degree in his home country, Belgium.
“We were both looking at opportunities, what we could do in this part of the world that is booming. We started listing ideas, one of them being TV shopping. We noticed that TV shopping was not present in this region. It is a business model that works very well in many markets so we believed there was an opportunity for us.”
He adds that in the beginning, the pair planned to just handle the TV production and the sourcing and delivery of products, rather than actually having a full TV channel. “We wanted to use existing channels to broadcast our programmes,” Bruylants explains. “But when we came up with a business model and spoke to existing channels at that time, no-one was really interested.”
The problem was that TV shopping was seen in a negative light by many people. “Everyone saw TV shopping in this region as cheap quality products, cheap quality production. Infomercials at the time had bad customer reviews,” he says.
“We were a bit let down; we had spent a lot of time on the business plan, meeting people and trying to make this happen.”
The entrepreneurs’ break came after they spoke to some executives at Ten Sports who suggested they create their own channel and make use of Ten Sports’ transponder connection and direct play out. “We said ‘why not? let’s start our own channel and let’s build the business plan around building our own channel, and then see if we can raise money, so we did this’,” Bruylants says.
“It actually went quite fast. We created the company with the support of Dubai Media City in January 2005. We received a licence in January 2005 and we were on air by April.”
In the early days, Citruss TV had a workforce of about five people and relied on a small pool of freelancers. “We were producing the programmes and then broadcasting them after editing.”
Bruylants says that while it was relatively easy to source products to sell, the challenge was a general lack of awareness of the concept of TV shopping in the region. “It was difficult to find presenters or crew who understood the concept. We planned to make this for the Arab world so understanding Arabic was a big challenge and we had to rely a lot on the people, but slowly, with help from Ten Sports, we built the business.”
Another challenge in the early days was logistics. “We started with only a warehouse in Dubai and we were shipping our products internationally. We quickly saw that our business was growing rapidly in Saudi, so we opened a warehouse there at the beginning of 2006. “We had to make alliances with different partners. We were importing everything into Dubai and then sending part of it into Saudi and doing local deliveries there.”
TV shopping combines broadcast with retail and distribution, and Bruylants says that it is vital to source good products that can be promoted well on the medium of TV.
“The star is the product so we needed to source good, interesting products and make sure that we had charismatic presenters who are good at selling and explaining the products to our viewers.
“Then we had to train people and let them know that what we are selling is not what they have seen before on TV. We are not selling cheap products, we are offering direct returns, money back guarantees. We are offering an easy shopping experience and so that is it. It took a lot of time to grow the business.”
- 30% The stake that Valoris owns in Citruss TV