D&C is not embarking on anything that has not been done before,
but has been done in different pieces, no one has put together all
the parts in a very branded, detailed oriented and focusing on
creating completely a new customer experience.
Dogs & Cats Shopping Network will have the following
• Key would be creating a Home Shopping Network exclusively
for Dogs and Cats.
• In the beginning using the paid programming slots (infomercial
time) on select tier-2 channels
• Creating a D&C shopping marketplace – like Amazon.com
marketplace, invite product reviews, highlight products,
becoming the “publisher” and “store” for the huge cottage
industry which produces the pet toys. Eventually to produce
infomercials for products for the website and do product
“Dogs and Cats Shopping Network” agenda is to bring a very
media rich and high-end shopping experience to the owners
of dogs and cats to their homes.
D&C aims to establish really fast a premium brand for
shopping for pets, and that brand could be easily expanded
to bricks and mortars store, other media & entertainment
ventures and also D&C branded merchandise.
• 72 million people own a pet, which is 63% of all
• Number of Dogs & Cats in the US are 163.1 million
• Average amount spent for common pet products for Dogs
is $530 and Cats is $272 and this does not include food or
medical expenses annually
• Currently there are 44.8 million dog-owning households in
the US, of those 78% bought a gift for average $10 which
translates to an astounding 39.4 million gifts or 394
million spent on gifts every year.
Dogs & Cats Shopping Network (C) Confidential 2008 2
Abstract Cottage industry market strategy now
D&C Marketplace model
products for no
This is the first building block of D&C. The marketplace addresses
the issue of a highly fragmented, and primarily cottage industry
manufacturing pet toys.
Most small manufacturers (most of them out of their) homes have
no resources to market their products, they create websites think
the traffic would come, or if they are bigger they try to get their
products in to pet boutiques.
D&C Marketplace is an e-commerce website which does not carry
any inventory. Pet toys manufacturers put their toys on
themselves for a 25% share of the revenue. The model is the same
D&C Marketplace will market to the consumers through print ads,
SEO and through relationships with non-profits etc.
D&C Marketplace would also seek consumer rating of vendors,
and also products (some of the product reviews will be pre-
Once D&C Marketplace has got some traction, would also create
small 2 min paid infomercials for the vendors and put them on the
site. This would also attract more consumers as its more emotive
and they can see how it would fit into their lifestyle.
Producing infomercials' (low quality) for the web is not costly,
costs approximately $500 per edited min if done in-house.
D&C Marketplace will become the model for reaching the
consumers for the cottage industry.
Dogs & Cats Shopping Network (C) Confidential 2008 3
Customer Experience Revenue
Main issue with large number of SKU’s is customer getting
overloaded with information, and most of it is not relevant to
D&C Marketplace main goal for the customers would be to have
“relevance” as the main focus. Some of the areas of relevance that
we would focus on:
• Breed of Dog
• Lifestyle – urban or suburban
• Price range
• Sending them reviews of new products if its relevant to
• Registery for dogs
• At some point also we would start creating products
generated from what the consumers want.
• Become the place for vendors to launch their products
• Develop a configuration tool based on the profile of the
Dogs & Cats Shopping Network (C) Confidential 2008 4
Major cost & drivers Sub Drivers Notes Annual
Development & running D&C
This includes development, maintenance, customer service, merchandising
Marketing Marketing would include print advertising in dog magazines, banner ads in high
traffic dog related websites, relationships and revenue share with non-profits like the
SPCA, and finally through short infomercials $ 600,000
Management Including President, finance and marketing support $ 400,000
Miscellaneous including leases etc $ 200,000
Total expense for a year $ 2,945,000
There are 3 components for projecting the revenue
• Price point – preliminary research and experience shows that
the cart size average $30
• Traffic – through marketing we are confident to reach a
minimum of 1 million hits, this is very conservative.
• Conversion – We would have a higher conversion rate as we
want to have the maximum number of sku’s available to the
consumers looking at a 5% conversion rate
• Projected revenue $1.5 million a month and a revenue share
of 25% would net for D&C $375K or $4.5M a year
• The growth of this on annual basis is directly proportional to
the traffic and conversion, and they are based on the
consumer experience. We think could increase traffic
substantially every year.
• This does not include the revenue from creating a short
infomercial business for small pet manufacturers. . This
would enhance the customer experience on D&C.
Abstract Home Shopping Network (with a difference)
D&C growth plan
Start with 1
hour on paid
time (late night)
or middle of
and have a
Create the first ever shopping network exclusively for dogs and
cats. It would be similar to QVC or Home Shopping Network
(Direct Response) with exclusive pet products. However as there is
a very high emotive factor we would have for sure dogs/ cats on
the sets, maybe shoot b-roll of products with the pets etc.
• The show will be a hosted show initially for an hour
• The show will air on all week nights
• As a start would air in the late night paid programming slots
• Every week have a celebrity talent (like Paris Hilton) for a short
• Have 3-4 people representing different psychographics with
their pets on the show, where the pets are the expert testers
• Shoot one day a week.
• 8-12 products
• Edit every week day the show, based on what sold the day
before. Introducing a new product every day.
The Direct Response
• Have a direct response company deal with all the logistics of
shipping and taking the calls 24/7
• Also have 24/7 customer service and web orders
• Merchandising the right products and the other side is getting
the vendors to agree to give “large” numbers on a consignment
Dogs & Cats Shopping Network (C) Confidential 2008 5
Major cost & driversSub Drivers Notes Cost Annualized
Distribution Channel On dedicated Paid Programming Channels at say 10pm, with sufficient buy in
advance both on cable and satellite
hour $ 2,600,000
Length of show 1 hr show
Frequency 5 days a week at 10pm
Production Real time/ off
To start with recording for 5 days/ 8-10 products in 1 day and editing the
content for 5 days. Once there is a certain viewership established going to the
live model with online analytics support
hour $ 3,322,800
Celebrity talent This would bring in the viewership, everyone wants to know what Paris Hilton
gets her dog stuff
Direct Response &
To start with outsource DR & fulfillment. Normally it costs 2% of revenue, and
is built into the S&H costs Nil
Analytics Offline analytics, change the show everyday based on the product responses Nil
Merchandising At least 2 merchandiser, and a person they report to who is the business guy $150,000/ year $ 150,000
Marketing This would be a mixture of "cross channel promotion", print and PR $600,000/ year $ 600,000
Management Corporate Management, Finance and Marketing $400,000/ year $ 400,000
Miscellaneous Including legal + office + etc $200,000/ year $ 200,000
Total expense for a year $ 7,272,800
Strategic Assumptions Revenue
D&C growth plan
Dogs & Cats Shopping Network (C) Confidential 2008 6
The revenue is based on 2-3 components and having an extremely
well produced show
• Number of viewers (primary) – we think given the quality of
the show and marketing done prior to launch we could start
with 5 million viewers a show
• Price points – most infomercials peg the price to be shy of
$30, we think with the celebrity talent the average could be
• Conversion – we think that the conversion would be 0.1%
• Merchandising -- the merchandising would be generated
more from the celebrity talent and making sure that its
hitting different price points.
• Revenue per day $150,000
Facts about QVC Financials
• QVC, Inc., one of the largest multimedia retailers in the world, broadcasts live 24 hours
a day, 364 days a year. Founded in 1986 by Joseph Segel, QVC is a wholly owned
subsidiary of Liberty Media Corporation attributed to the Liberty Interactive Group
(Nasdaq: LINTA). Mike George currently serves as the company’s president and CEO.
• QVC employs approximately 17,279 people worldwide.
• QVC has international broadcast operations in the United Kingdom, Germany, and
• QVC reaches approximately 96% of all U.S. cable homes and nearly 25.3 million satellite
homes, totaling more than 166 million homes worldwide.
• QVC’s buying staff of more than 168 people searches the world for quality
merchandise. Product categories include: Home, Electronics, Cooking and Dining,
Collectibles, Health and Fitness, Beauty; Jewelry, and Fashion.
• QVC introduces more than 1,600 products each week (250 of them, new) to our
• QVC.com achieved sales of over $1 billion in 2006.
• QVC.com (U.S. site only) attracts an average of 5 million unique visitors each month
and receives between 1,500 to 2,100 product reviews and customer ratings daily. This
traffic is the largest daily review volume of any Bazaarvoice client to date.
• In 2006, QVC received close to 179 million phone calls in the United States alone. The
record for the most calls handled in a 24-hour period is 1,246,387, set on April 8, 2006.
• To date, more than 45 million people worldwide have shopped with QVC.
• Over the last 21 years, QVC has shipped more than one billion packages in the United
States. In 2006, QVC shipped more than 165 million packages worldwide.
• On November 12, 2006, QVC set records both in number of shipments (600,682) and
number of items shipped (678,078) during a 24-hour period.
• QVC’s U.S. distribution centers can pack up to 300,000 packages daily.
• QVC achieved its best sales day on December 2, 2001 with more than $80 million in
orders taken; the Dell Intel Pentium IV personal computer was the most popular item
sold on that day.
Market Cap (intraday)5: 9.62B
Enterprise Value (19-Feb-08)3: 15.77B
Trailing P/E (ttm, intraday): 15.26
Forward P/E (fye 31-Dec-08) 1: 20.55
PEG Ratio (5 yr expected): 1.09
Price/Sales (ttm): 1.23
Price/Book (mrq): 1.20
Enterprise Value/Revenue (ttm)3: 2.07
Enterprise Value/EBITDA (ttm)3: 8.139
Fiscal Year Ends: 31-Dec
Most Recent Quarter (mrq): 30-Sep-07
Profit Margin (ttm): 8.40%
Operating Margin (ttm): 14.89%
Return on Assets (ttm): 3.70%
Return on Equity (ttm): 6.91%
Dogs & Cats Shopping Network (C) Confidential 2008 7