Chase-it.tv - a concept too far?

Chase-it.tv - I don't see how it can survive. I was bored a little tonight, so i decided to see just what sort of profit they make in an hour.

Generally, 8 til midnight is the time when they sell the most - out of these hours, they hardly have any callers and rarely sell anything (except for the loss-leading 'chases'.)

I watched the chases between 11.20 and 12.20 this evening and have worked out that, at PEAK time, they probably have made around £600. These are truly terrible figures for a shopping channel, given the fact that it is an expensive business and this type of 'sale' tries to replicates auctions and price-drops (sell all the stock at the lowest possible profitable margin).

I feel the whole concept is flawed - I have bought from many of the other shopping channels but I know with the other ones that everyone will pay the same price as me - no slipping fingers on the hash key will disadvantage me.

What do you think of Chase-it? Does it have a future, or will it need to change its gimmick?

-------------------------------------------

For those of you who are interested, this is how I came up with the figure of £600

Assume two concurrent calls per chase for the entire duration per product offered, yielding 25p per minute each. Assume Chase-it.TV buy the products at 10% on watches, 15% of jewellery, 20% on general products or 30% for electrical goods. All guide prices, estimated purchase prices and final chase prices exclude VAT.

18ct White Gold Small Diamond Heart Pendant
Guide: £1276
Est cost per product: £191
Quantity: 6
Timings - 23:19-23:23
Total purchase turnover - £236 (1 sold)
Est purchase profit - £45
Total calls turnover - £6.00
Total profit - £51

Eligio 18ct Gold Plated Chronograph Watch
Guide: £591
Est cost per product: £59
Quantity: 10
Timings - 23:25-23:28
Total purchase turnover - £324 (4 sold)
Est purchase profit - £88
Total calls turnover - £15.00
Total profit - £103.00

Vivitar 6.3MP Digital Camera Deal
Guide: £510
Est cost per product: £153
Quantity: 10
Timings - 23:33-23:37
Total purchase turnover - £600 (3 sold)
Est purchase profit - £141
Total calls turnover - £20.00
Total profit - £161

9ct Gold Sparkle Heart Torque Bangle
Guide: £60
Est cost per product: £9
Quantity: 20
Timings - 23:40-23:44
Total purchase turnover - £160 (9 sold)
Est purchase profit - £79
Total calls turnover - £40.00
Total profit - £119

18ct White Gold Baguette 1.45ct Diamond Cross
Guide: £2753
Est cost per product: £412
Quantity: 2
Timings - 23:46-23:50
Total purchase turnover - £0 (0 sold)
Est purchase profit - £0
Total calls turnover - £2.00
Total profit - £2

Van Nistelrooy Goal Signature Display
Guide: £191
Est cost per product: £38
Quantity: 9
Timings - 23:53-23:56
Total purchase turnover - £87 (2 sold)
Est purchase profit - £11
Total calls turnover - £7.75
Total profit - £18.75

18ct White Gold Solitaire Diamond Pendant
Guide: £4500
Est cost per product: £574
Quantity: 2
Timings - 23:58-00:02
Total purchase turnover - £0 (0 sold)
Est purchase profit - £0
Total calls turnover - £10.00
Total profit - £10.00

A/V Wireless Security Camera
Guide: £136
Est cost per product: £40
Quantity: 14
Timings - 00:06-00:10
Total purchase turnover - £291 (6 sold)
Est purchase profit - £51
Total calls turnover - £14.00
Total profit - £65.00

Portable MP3/VCD/CD Player
Guide: £102
Est cost per product: £31
Quantity: 18
Timings - 00:13-00:17
Total purchase turnover - £223 (6 sold)
Est purchase profit - £51
Total calls turnover - £18.00
Total profit - £69.00

Total = £598.75

I happened to catch a few minutes of Radio 4's You and Yours yesterday lunchtime (Wednesday) and they did an exposé of Auction World's Eligio watches:

Listen again: www.bbc.co.uk/radio4/youandyours/ram/youandyours_20040908_1.ram

Today's item was a follow-up to one last week:
www.bbc.co.uk/radio4/youandyours/ram/youandyours_20040901_1.ram

Aria Technologies in Manchester (a computer web-seller) have been selling VCD/MP3 CD personals for £15+VAT. I would therefore imagine that they're buying them in for little more than a tenner a piece. Auction World will be paying a similar amount, so the profit is likely to be a fair bit more than that, having said that it still can't be any more than a hundred quid.

I do agree though, this channel can't possibly be making enough profit to cover its costs. I've also thought similarly about Auction-World in the past, although they do at least sell the occasional product for £thousands, which probably does affect the bottom line considerably.

As for the watches, it's fairly obvious that the guide prices are insane in some cases. Come on, £10k for a gold-plated watch with only "swiss movement" (traderspeak for cheap Chinese parts with a sweeping second-hand)?

Some of those cost prices are a bit generous Johnny Boy.

I seem to remember auction world reporting losses of over £2 million after tax last year so it would stand to reason that their future looks less than rosy unless they can promote buyer confidence. This ‘you and yours’ report will go no way to doing that.

But remember, Auction Worlds hottest rival (Sit Up TV) does pretty much a similar thing with their watches. The difference being (and the reason why they have never been caught out) is that they commission a well known manufacturer with a brand to make their watches. In this case Zeon. Auction Worlds failing seems to be that they are the brand holders as well as the product commissioner so from the Corporate Responsibility stance, you can easily argue how Auction World is misleading their customers.

Unfortunately for Auction World, this bad example seems to have fed back to its customers, which is why they seem to have such difficulty in shifting stuff. If you compare Auction World and Chase it with Price Drop and Bid up, the quantities shifted are nowhere near parallel. Some of the quantities (if they are genuine) on Price Drop are incredibly high and when you sell Gucci’s for a single £, you suddenly create interest amongst customers.

Bid Up has been extremely clever in promoting customer confidence. Look at best bidding; they promote this concept as ‘Radical’ and ‘new’. When really it’s no difference to a Dutch auction. But what it does is it places them one step ahead of Auction World because they are seen to be helping their customers make more savings. When in reality we know that profits only stand to increase with the influx of new customers.

The Dutch auction process has been shown to make higher profit in any case, IF you can get enough people to be interested, because more people will be inclined to get involved this way, and will bid higher earlier.

It also makes it easier to rig the auction, upping the price so you get as much money as possible whilst selling as many items as possible. So if the lowest winning bid over 100 items is £30, but 90 of these bidders are bidding £45 or above, you raise the price to £45. This kills 10 of your winners (so 10 go unsold), but the remaining 90 are paying more so you make more profit, and you can always sell the remaining 10 later. It's more difficult to do this with the older Auction-World style of doing things. Not that I'm suggesting sit-up would do such a thing you understand

I notice the latest ploy by Auctionworld is to refund the price of a lot if the customer does not receive it within 100 hours. If they receive the item after that time, they get to keep the lot.

When the channel seems to only sell about 10 items an hour, makes you wonder what if any money can be made for them. Rumour has it that they will be appearing on Watchdog on Tuesday. Should be interesting.