769. What QVC’s Bankruptcy Teaches Us About Growing a Product Brand

QVC, the company that invented live selling on video, just filed for bankruptcy. Let's get into it. So how does a company that invented live selling all of a sudden go bankrupt, right? They're $6.6 billion in debt at the height of live video selling. Like what happened and what got them there? So I wanna break it down for you with some of the stats. I've got my notes right in front of me so we can kind of go through what happened and what this means for you and your small business. Hi, I'm Jacqueline Snyder, and this is the Product Boss Podcast. I've helped launch and grow thousands of product-based businesses, even one of my own. And over the last 20 years, I've seen behind the scenes of businesses just like yours. Whether they are makers, manufacturers, artists, or food and beverage businesses, I have spent so many hours studying it all. I've discovered what makes them successful, what mistakes they could have avoided, how did they turn their ideas into a successful business, And what are the strategies that they have used to make more sales and be discovered by more customers? And this is what this show is all about. Whether you're just starting out or you're looking to become a million-dollar product boss, I'm here to give you the permission to chase your dreams, no matter how big or small. All you need is the right mindset, a little courage, strategy, and support, and you too can be the next million-dollar product boss. Let's do this. Hey everyone, I'm Jacqueline Snyder. Welcome back to the show. Welcome back to The Product Boss. I'm so incredibly glad that you are here. Now here at The Product Boss, if you're new here, we help you build your brands and the business behind your brands. Because honestly, if you're always just constantly trying to sell product for product for product, you're building a commodity-based business. But what we really want to do is build a brand because brands get to move wherever the customers go. They have a shelf life. They will survive, you know, the ground that keeps shifting and moving beneath us. And the only way that they grow, the only way that you get to that million dollars, that $5 million, that $10 million, is building the business, right? The operations, how you run it and how you lead it. And so we dive into all that in our episodes. We touch on a bunch of it and mindset, because I also believe that business is one of our greatest transformational tools as entrepreneurs. It's always going to reflect back to us. Some of the things that we get to work through. Yes, we are so lucky. So I am so glad you're here. So let's get into it. QVC filing for bankruptcy. What happened? Well, one of the biggest things that I know, and what's interesting, you guys, I actually have this like secret job that I always wanted. I used to think like in another lifetime I would be a seller on QVC. I love it. I love the hit, right? I'm someone who loves results. So I love being there and be like, oh my God, like we We have only like 200 left, 10 left, 1 left. Okay, you got the last one. There's something about the way that the energy of live selling that I loved where it was conversational and then also when you're like putting it up and like you're seeing the numbers tick and tally. Okay, so if you're like me that have a little bit of an unhealthy relationship with results, welcome. We're all here. But the idea here is that, and I'm going to read this for you. Okay, so QVC was a group. Interestingly enough, QVC, HSN, And they had 72 subsidiaries. All right. They filed Chapter 11 on April 16th in Texas with $16.6 billion in debt and $1.3 billion they had to cut. All right. And they have this like 90-day plan for it. Now the stores are keeping running, vendors are getting paid, and there's no planned layoffs. I mean, bankruptcy is definitely there to build it, but what actually happened? Let's get into the mechanics of it all. So when was the last time you guys watched QVC? I'm going to say probably in my high school bedroom. Okay, so what has happened over the years? Customers have moved off of television, especially live television or cable surfing, right? QVC, HSN— those were things that I would watch like late at night sometimes when there was nothing else to watch. You can kind of watch it and be any— I liked being in the energetics of it. So what happened is TV and cable are shrinking, viewers are shrinking, and they lost— listen to this stat— almost 900,000 customers in one year. Okay, 900,000 customers in one year. So they went from 7.9 million to 7 million. You're like, okay, that's still 7 million, but for a company of that size, that's huge. That's a huge amount of people. So what happened is quarter over quarter, revenue's been dropping, and their revenue dropped about 6%, and their cash flow flipped. It flipped from $102 million in cash flow to negative $184 million in 9 months. It's a killer, right? And the thing that's really even more of a killer is that debt, that $6.6 billion in debt, it was borrowed against the audience from the past. So when people were showing up, they were borrowing the money, but then all of a sudden, slowly but surely, the audience started to leave. And what I believe and know to be true is that, you know, we saw this happen. I'm gonna go back to my '90s roots. And the '80s and everywhere before that is like, think about Blockbuster. Think about the warehouse where we would rent videos. They just did not pivot and shift with the times. I remember there was this one strip mall by my house and there was a warehouse to rent movies and just a couple doors down was a grocery store and in front of the grocery store was a Redbox. Because I don't know if you guys remember, you could rent DVDs of like the newest movies out of it. Like you could just like, like a vending machine. And then eventually they were like, well, people don't really want to drive to the place anymore. What if we could mail them their DVDs in the mail? My Husband's grandparents would always have them mailed to them because they kind of lived in the middle of nowhere in California. And so they'd always have them mailed. And I always thought like, I would never mail them back. It just, you know, it was something for me, but it was like, oh, people were getting them mailed. And then introduction to TiVo. Remember TiVo? It would record your TV. And then we started to get into streaming and everything was recordable. And then Netflix literally landed on, on TV. So we no longer, we could like rent. So technology moved. So what happened with Netflix? I mean, look at it now. They're buying studios and they exist in like this massive, massive way, and the warehouse and Blockbuster are gone. So when we're starting to see the trends and the culture shift, you either get to get on board and shift and change with it, or you get to get swept up with the tide and disappear. Okay? Just like they did. And so I don't want that for you. And that's what we're gonna learn from with QVC. The idea here is that people were no longer sitting on their couches ordering. Through the platform. I mean, I start, I think about like if I was directing them, if I was in charge, I'd be like, okay, who are the biggest influencers right now that are selling stuff? Right? Because if you think about creators and influencers, all of them are trying to sell brands that aren't theirs. They've got Amazon links and they've got like to know it's and all that. What would happen if they hired these people to stream on their channels and bring their audiences over? They could have adapted with the times. Because it's literally one of the hottest times in the world right now to sell live. Like one of the hottest times people are buying. They're sitting on their phones though, and they're scrolling through apps with like Shorts and Rapid and just things moving really fast. And so they just did not switch over fast enough to the platform. I also think there was probably a divide between their ideal customer, which was probably an elder, an older customer. Now, okay, me, a lot of us are getting older, but I wouldn't go land back on TV, right? That generation is moving out of that, that target market, but they're not adjusting to where we are. I bring this up, I actually used to work with someone who worked at White House Black Market, and White House Black Market, if you know of that store, they did a major rebrand some years ago. Because if you know this brand, White House Black Market was very— it was like the Missy category. So the Missy category was, I'm gonna say in your 50s, but 50s is like the JLo 50s, so not that. But let's just say like when we were younger, what 50 used to be. But the Missy category is just kind of like covered arms, you kind of longer jackets to cover your butt. Like I'd say probably now it's like 60s to 70s. So they were an older demographic than the traditional contemporary, uh, design world. But in order to stay relevant, because they saw their customers aging out, they were probably getting into their 80s and 90s, no longer shopping there, they went, they skewed younger, they skewed trendier, they skewed probably, I would say, to the corporate 40s, I'd say 40s to 50s, so they skewed younger, so they had to do an entire rebrand. They caught it earlier instead of kind of fading out with the rest. So this is something that QVC just didn't do. They just didn't do it, and now they filed for bankruptcy. Now let's talk about live selling, okay? To add that on to some things that are happening, they have the exact skill that literally everyone on TikTok Shops is doing, um, or that TikTok Shops is actually trying to emulate. There's an app called Whatnot. There's all sorts of ways. I actually used to work— I was a one-on-one consultant for some of the top sellers on LuLaRoe. If you ever watched that LuLaRoe documentary, um, they were on it. And I remember it was this point because LuLaRoe was crashing out. So if you don't know what LuLaRoe is, it was a direct seller company where, you know, moms would go and buy like $1,200 worth of product. They'd get random products shipped to them and then they would try and sell it to their friends, right? It was like a direct sales, uh, multi-level marketing type platform. Now where, and my clients, the ones that I had, they were the ones who were kind of the people who invented and started this. It's all confidential, so I can't say it exactly, but they were the people who started selling live in Facebook groups. They were doing $1 million a month, $1 million a month. I was like, the big brands don't even know this is happening because it's happening in Facebook groups, but they were live. I mean, it was so cool. I went and I went to their place. They had this like huge, amazing house and this like barn, which was their production studio with all the product everywhere. And this is before any of the apps were created. And they used coat check tickets or like, or dry cleaner tickets where it's like you tear it off and it's like number 32, you hold that and number 32 is over here. And they'd put it on the hanger and they'd show the product. Some of you might've been people who shopped on them and they'd hold it and they'd be like, hey, who wants number 32? It's the extra large lipstick t-shirt. Because the thing with LuLaRoe, it was scarcity. It was like people were looking for certain prints and certain sizes because you never knew what you were gonna get in the box, okay? So they were doing this live and there was always like 32, And then they would like literally handwrite it. There'd be someone on an Excel doc writing it in. You'd message and you'd give them their info. So they were actually some of the first people with some other LuLaRoe people who invented the app and the company called CommentSold. So CommentSold basically took this idea of what they were doing in that world and they decided to make it where it's like you kind of preregistered and you would comment and it would preregister and help you pay for the product. So it's like, I want it and you were first one to say it. Then it would like automatically sell from your comment. So it didn't, it took out all the manual nature, right? So live selling has been happening for a really long time. Whatnot, if you guys go watch it, it's kind of maniac on it. I don't, I don't yet teach it or share it with my clients because I think the people who are on it is very specific. Like a lot of people have kind of like, here's a Louis Vuitton wallet, you know, it's like the kind of flash sale stuff. Maybe it works for people with crystals, things like that, 'cause it's kind of like TikTok shops. It's not a place that I've really told any of the brands that I'm working with to go and do, but I do love a good live sale, right? I do love doing the live sales. So this is a time where people are buying in this manner. So a company that invented it didn't catch up with where the customers were, didn't catch up with how to do it. And so they're literally filing for bankruptcy at the height of video selling. I think the other side of this though is we've made it accessible. We don't have to get our product onto QVC to live sell. I also used to have a client who had a really big brand. It used to sell at Claire's and things like that. And what she did is she advanced that and she started selling on QVC. Actually, when I had cuffs, I had an agent try and get me on QVC, and I remember getting prepped for it. And it was like, if they ever did take on my brand, I would have to go— I don't remember if it was Indianapolis or the Carolinas. I'm forgetting exactly where it was, but I would have to go and be trained, like video trained. Like you go to training school and they actually teach you how they had— they taught all the sellers because you'd be met up with like the person, like the main host, and then you as a seller, and they taught you how to do it. And I was so excited. I was like, oh my God, I'd love to go and be like, look at this, and you know, fancy nails. So I digress again. So it's this idea of it's at the height, but they didn't go where the customers were. So here's why I think this is important, okay? This is really important because I want you to just kind of pay attention to the flags so that you can really have this foresight for your business if something like this starts to happen in a place that you're selling. Because like I said, my friend, she sold there. My husband knows a major celebrity performer who had her product brand on there. So there were people selling like massive, massive brands on there. I think we actually had a friend from back in college that ended up being a host on it. So we know people that have been on the platform. It makes a lot of money for people, so it's really unfortunate of like what it's done. But hopefully this helps them recalibrate. Hopefully this is the wake-up call for how they get to shift it. 2 things: video selling is working. If you like it, do it, okay? Because you have access to do this by yourself. Now the 3 things I want you to check on, like in a worst-case scenario, okay? And this works at any size of business. Ready? So what I want you to do is we've gotta look at customer count versus revenue, okay? And why this is important is we can start to see these red flags if you start to see customers start to go down. So not necessarily a revenue play, like, oh, my revenue's dropping, that's not it. Let's say you used to have 500 customers a month, and then all of a sudden it drops to 450, and then it repeats again, but now it's down to 400, and you see it continuously start to drop. There's something wrong in the system. There's something incorrect. So it's like, oh, are people hopping off this platform? We, you know, I don't, I don't know if it's airing before or after this, but I just did an episode on Amazon and Amazon sellers revolt on it. So, you know, are we seeing patterns shift with customers? Are they leaving sales channels? Are they being pulled somewhere else? We actually saw that happening with LuLaRoe when I helped these, these people who, when Here's back to how I worked with them. They saw that Lula Roe was in trouble. They saw that people were pissed, customers were pissed, their their downline was pissed. And so what we were doing, why they hired me because remember I was a consultant designer. I was literally the person who ideated, built, designed, did everything like one-stop shop. So all these brands like came out of my head. So with them, we were creating leggings. That were similar to that, that were printed, that were super soft, so that they had leggings to sell but in their own designs. The model that she wanted to copy was hard because the scarcity play that LuLaRoe had, which it was one-off because they had so many sellers, you know, that they could set— they could still make 10,000 of a legging but then send one of each to 10,000 different sellers, right? So when you're doing yourself You've got minimums and all of a sudden you're gonna have 100 of the same legging in the same print. So that part was like a little bit of a learning curve with them, but they hired me 'cause they saw it, they had customers to sell to, they knew exactly how to sell it, but they needed to compensate and create their own brand now that they could sell directly to customers. So they had customers, they had an email list, they had direct contact. So no matter what happened with that brand, they knew that they could sell anything to them and they did. And that's what I helped them build. Okay, so you gotta count trend when it comes to customers, not revenue. So when we're looking at the customer count, the second thing is you've gotta look at, pay attention to what's happening with that sales channel. What are the threads saying about it? What are comments saying about it? Is that platform dying? Cool. Good news for everybody here. Okay, so there's an interesting thing that's happening. At one point, retail, the retail environments, malls were dying. I don't know if you remember, but like nobody was going to malls anymore because it was, We always swing. The pendulum swings. So it's like everyone was like, okay, we're not going to go to malls anymore. We're going to buy online and TikTok and Instagram. And everyone went to e-com. Well, malls are making a comeback. All right. I think it's Gen Alpha is hanging out at malls more than anything. People in a world of AI and digital are looking for human experiences. And so malls are like blown up. My kids, if I could take them anywhere, like every night they'd want to go to the mall. Welcome to where I live. in Southern California where it's like malls are our main street. Okay, so that's happening. The other thing to know is that 5 out of $6 that people, customers spend are being spent in real life, in retail environments, in retail stores, right? In real life. So still only $1 out of every $6 is spent online. So think about that because humans are always going to want human connection. People can think about buying online and they do, but there's also that level of like you either know the brand and you could buy a shirt because you know you fit it. But how many of us buy and then have to return, right? So sometimes like it's just about easier if I go and try it on in real life, if I could smell it in real life. So I'm not saying not to be online, but there is a big shift back to in person. And the next thing is what I saw as a trend because I love to study brands and I love to study retail environments. Like that's my expertise. That's why you listen to this show, I can support you in it, is there's this thing happening right now with the TJ Maxx brands. So TJ Maxx owns HomeGoods. They have like tripled in the last 10 years, okay? They've tripled. They're expanding, I think, 1,800 stores. And what I know about, let's call it HomeGoods, is the buyers think in discovery. So what that means is you go and you don't know what you're gonna find, right, at HomeGoods. You're like, it could be a Highland cow just like a, Ballerina or Highland cow dressed like the 4th of July, right? Like there's all this random stuff that you find there and there's usually limited. It's like 1 or 2. It's straight up Noah's Ark in there. It's like 2 chairs, 2, you know, maybe it's 1 table, 4 dishes, and you're like, I gotta get it when I find it. And it's discovery. You're just kind of like, what can I find? That feeling, the reason that that store is doing so well is kind of taking the feeling that people have when they go to the markets and they meet you. When they walk in new towns and they discover new stores. Humans want discovery. It like lights us up. It hits us in like our dopamine and, and just like brings joy and discovery. So this is what's happening. So retail environments in person is growing as well. So if you find that a platform is shrinking, just know, and if you're one of my students or you listen to the show, we're building brands that can move. That's not stuck on a single channel. If you still feel like you're super stuck on a single sales channel, this is again another sign from the universe. If you're hearing this, that it's time to diversify, and you'll hear me say this over and over again: build an email list because you own the customers that you have an email list of direct to consumer and business to business, and have your own website. Is it the thing you build in the season right now? No. If you don't have it, that's okay. Just build your email list because then no matter what happens. You get to pivot. Okay. And finally, we talk about building profitable product-based businesses here. And when I'm telling you that I'm, I help you build the brand, but also the business behind the brand, what comes to that is not only profitability, but understanding your margins, understanding your cash obligations, understanding where your money is going. So as you lead your company, the framework here at the Product Boss is learning how to lead your company, how to run your company, and how to grow your company. Okay, so grow, I know you guys are always so focused on growth. I love it, but how's it running? Can it handle the growth? And how are you stepping into leadership? And part of it is knowing your numbers. That's just straight up part of it. So you wanna know what are your obligations? Where, where are you at? Where are you at financially? Like if you have a lease, how long is it? Your manufacturers or co-packers, what's their minimums? I used to work with a fabric vendor that we had to spend a certain amount per year to be able to buy from them. So just kind of being aware of your debts, your leases, the size of your business, and what you need to be able to hold and how you can be agile with it. Okay? The cool thing is that big businesses like QVC and like, uh, HSN and Amazon and these huge companies, they're literally the Titanic. So if there's an iceberg straight ahead, the Titanic could not turn and get outta the way fast enough. It was too big. You are on these cute little speedboats. Okay? Like all of us have our cute little speedboats. And if you see the iceberg straight ahead, you go, Zip, and you just zip around it. Okay. That's the beautiful thing about having these small businesses. And when I say this, this is for you guys. Like I would say $5 million, you're still pivoting. I think when we get to $10 million, there's, there's more that we have to pay attention to. Like, you know, there's, there's more that are happening, but you're still small enough that you can pivot faster. Okay. And so you just want to be agile. And so that's the blessing of this conversation is like, you've got everything stacked for you, not against you. And we get to just learn from some of the mistakes that the big guys make. And like, tell me your biggest takeaway. Okay, so drop on over to Instagram, or if you're watching this on YouTube, or you want to leave a review, like, let me know your biggest takeaway. Like, was this supportive to you? Do you like hearing about the stuff that's happening in the news? Or more strategy? Like, what do you want to hear? I'd love to hear from you. Slide into my DMs, as the kids say, which they don't. And let me know over there, like, what do you want to hear on the show? Maybe ask me a question and I'll bring it to you on, on this episode. Okay, amazing. And And, and, and I wanna tell you how we can support you. There's some really cool things happening. Make sure you're on our email list, okay? Or what we'll do is we'll drop a waitlist link in the show notes. We have an event coming up in September. We are starting to create more events. We talked about in-person events in this world of AI, in this place of separation. Again, people wanna come back together, and so we're throwing a, an event in late September. It's going to have very limited tickets. If you are in the collective already, we have already messaged you and told you like about your ticket and that you've got, you have to claim it by a certain time because we have a certain percentage that we're gonna offer to our audience and to our email list, right? That will be available to purchase. So click that link. It's either a waitlist, it's either available to you and you can grab your ticket, or it might've sold out and then you can be on the waitlist for the next one. We are going to be creating more live events and the more time you come and the more you guys show us that you really like them, I mean, My vision is that we have like a much bigger event with like hundreds, hundreds of you there and keynote speakers. Like that's the vision I'm holding my, for myself next year. But right now we're doing these smaller events and this one in September is going to support you in getting ready for the holiday season. And there's gonna be lots of things coming up over the next few months because this is what we do. We help you with your holiday season and how to plan your promotions. But this one's going to be live and it's gonna be freaking awesome. Okay, so drop the link. Every single week we do a live workshop. I'll just leave all the information down below if you wanna come join me in my live workshop. Or if you've been listening and you're like, I really need help, I don't know what I don't know in my business, and I'm really ready to grow it, and I want support during the holiday season, we also offer free calls, or free scaling strategy calls with one of my growth advisors that are people that are trained experts at your size of business, 'cause when you come and do it, you'll tell us like, your size of business, and we literally connect you with the right person for you. And then we can talk about where your— what your vision is, what's getting in the way of what you want to happen in your business and your personal life, and what we could fix in the next 3 months and what we could fix in the next year. And then we'll tell you about the different ways that we can work together. It's literally no pressure, it's just a discovery call, but also one in which you can kinda see where you're stuck and what to focus and fix next. So if you want that, you can head to theproductboss.com/bookacall. I know I just gave you a whole bunch of things to do, but I just I just wanna make sure that we're super supportive to you 'cause we are going into the busiest time of year for products. I love it. Oh my gosh, I can't wait to hear all of your wins and to support you through every moment of it. Okay everyone, I will see you on the next one. Thank you for being here and listening all the way through the Product Boss Podcast. 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