The home shopping market and the industry that serves it are changing, and much of the change is a result of the Internet. The Internet has transformed how consumers obtain information, communicate and even conduct business. Once predictable and staid catalog merchandisers now direct customers to their websites site for more timely bargains, much in the same way television shopping channels urge viewers to place orders online.

While three of the home shopping channels covered in this report have experienced modest to healthy growth recently, Internet home shopping has expanded at a current-dollar rate of over 22% a year for the past four years, steadily gaining market share at the expense of mail order/catalog, television home shopping and direct selling. As the U.S. economy continues to mend and retail activity continues to strengthen, all four home shopping channels stand to benefit from increased consumer activity.

The term “home shopping” is usually associated exclusively with television shopping, as in the Home Shopping Network. For purposes of this Mintel report, however, home shopping’s definition has a much broader scope, and includes the four primary methods of shopping that allow one to obtain goods and services without leaving home to visit a retail store or other physical outlet. Those channels include the following:

1. Mail order:
   
   This form of home shopping is as old as the catalogs distributed by Sears, Roebuck and Company beginning in the 19th century. For decades, catalog shopping was synonymous with the names of large retailers like Sears, JC Penney and Montgomery Ward. More recently, specialty catalogs, primarily featuring lines of clothing, have become prolific, and offer firms the advantage of regional or even national reach without the investment in brick and mortar outlets. However, some companies that began as pure catalog merchants have expanded into retail locations as well. The Sharper Image is an example, as is Land’s End Direct Merchants. Further blurring the definition of this (and other) channels, many catalogers have developed a Web presence as well.
   
   
2. Direct selling:
   
   Person-to-person selling is one of two methods employed in this channel, and comprises residential door-to-door sales, and sales in one’s workplace. Typically, agents deliver catalogues to individuals and later return to take orders. Avon and Mary Kay Cosmetics are examples of companies that function in this manner.
   
   
   
   A related but distinct type of agent is one who operates as part of a multi-level or network organization. In this type of direct selling, agents are expected to recruit other agents, who in turn recruit other agents, and so forth. Unlike pyramid selling, which is illegal, upstream agents receive commissions on the sales of the downstream agents in their sales organization. All agents sell directly to consumers. Amway and Shaklee are examples of multilevel marketing organizations.
   
   
   
   The second method of direct selling is the party plan. Agents sell by demonstrating products, typically in the home of one of the prospective buyers who has agreed to host the party, which is attended by several other invitees. The host usually is given some of the product in exchange for hosting the party. Tupperware is perhaps one of the best-known examples of party plan direct selling.
   
   
3. Television shopping:
   
   This channel comprises three types of home based shopping—shopping programs, infomercials and direct response ads. The first are ongoing programs, some of which are broadcast 24 hours a day, purvey a wide variety of goods, and are broadcast on network, cable, and satellite television. The Home Shopping Network and QVC are two primary players in this category.
   
   
   
   Infomercials are program length TV commercials devoted solely to one product. Generally, the latter have matured from their early days of product hype by gushing celebrities and have become, as their name implies, more soberly informative while at the same time selling the product. Direct response ads are typically sixty-second spots containing an explicit call to action to order the featured product (e.g., “Call this 1-800 number now!”).
   
   
4. Internet shopping:
   
   This is the fastest growing channel for home shopping, and comprises both pure players like Amazon.com and E-bay, which sell only via the Internet, as well as conventional and mail order retailers that have extended their accessibility by including e-commerce access. An example of the latter is JC Penney’s website, which is in effect an online version of its mail order catalog. Many manufacturing firms enable consumers to order replacement parts online, rather than visiting a local distributor to obtain, for example, components to repair a broken kitchen appliance or lighting fixture.