 You can't fake it. You go on live for a broadcast. Whatever happens, happens. You could also feel the sense of stress and performance within the office of QVC. Everyone there is there for one thing only and that is to sell as much as they can. The blender was one of the first products that we launched on Home Shopping Network. As soon as we heard the noise drowning out, the speech, Rachel and I looked at each other and we're like, oh no, this is going to be a disaster. Live shopping has existed for decades. QVC and HSN, the two biggest names in the space, sell products live on TV in real time. And now gadget makers who are willing to try something different and take a risk are finding incredible success and reaching new audiences on these shopping channels. Creators pursue live shopping on the promise of selling hundreds of units in minutes. But at the same time, they face enormous risk. One bad live shoot and that's it. Their chance at viral gadget sales is over. I'm Evan Dash. I'm the CEO and founder of Storebound. We market our products under several different brands, including Dash Kitchen Appliances. We make smart furniture under the Sobro brand. We started the company about 10 years ago. My wife and I were ex-retailers and we saw that there was really a need for a better way of bringing products to the market. The team from Home Shopping Network came in and they came to us and said, we want to launch your brand. We worked for about two years doing product development and then in 2012, we launched our first products on Home Shopping Network. For us to be able to tap into 92 million homes, once we understood the reach and then started watching videos and saw the way that we could actually present the products, we almost didn't want to sell it any other way at that point. I am the founder of Somnox and we are a company that is helping people sleep better in a device that we call the Somnox Sleep Robot. Back in the University of Technology Delft, I was a robotics engineer and during that time, my mom was suffering from insomnia. Basically, me creating robotics and seeing my mom suffer, I was like, why not combine the world of robotics and sleep into an invention? So why did you think QVC was the best place to sell the Sleep Robot? Our product is expensive and it is a high entry to start using it, I would say. It's very hard to do in a very short advertisement on Facebook and Google. And at QVC, that's what I found. You really get the opportunity to explain to people, okay, what is it? Why do you need it? And I think that's why it is working for us. Let's talk about the way that this works then, Julian, because I think that's really important because once you're holding it, you can really feel what this is doing. Exactly. So you can see the falling and rising of the breath. And once you feel that breathing pace, it will start to synchronize to you with sensors that can see how you're sleeping. Everybody wants to tell something about their product and everybody wants a compelling story because you want to justify your purchase. I'm Lauren Betelsbacher, and I am an associate professor of marketing at Babson College and also the division chair for marketing. So I guess it really doesn't surprise you that we've talked to all these gadget creators, that they've found success on there. Yeah, no, not at all. QVC, home shopping, live shopping, things are great and really appropriate for technology because it allows the customer to see it in use. We can almost as a customer feel it and see ourselves doing it. As a company, we gravitate toward products that require a lot of explanation. They have cool stories behind it. We sold close to 40,000 pieces that day. I mean, that single day with live video selling of it. We've also put the product into retail stores and it has literally sat and collected dust in a retail environment. The biggest challenges of any type of live video-based retailing is that you're live. There's no safety net. In the case of the blender, it's exceptionally loud. I mean, it is a loud blender and you could hear the sound drowning out the sound of the host and the guest and they were able to adjust it very quickly. But what we can't do is just fake the video and pretend to set the blender on over here and then actually bring back one that's already run. I mean, they are so strict about making sure that anything that we're broadcasting is done 100% authentically. That can be a really, really daunting type of experience. It's very rare that people are in that type of situation. So once I understood that QVC was actually live, you know, the night before, I barely couldn't sleep. It was actually really tough because in a way you need to forecast the amount of units you think you will be selling and then you just, fingers crossed, you will be selling out. And in the first batch we did like 60 units or so, entering the studio, seeing six robot cameramen and lighting and they have like different settings with a bedroom and a kitchen and there's models doing cheetaladay. There is this big dashboard within the studio where you can see in real time how many orders came through. And within the minute there was like beep beep, we're out of stock and the salesperson would say, okay, well, hold up, you can't order anymore, there's no stock. And I was like, wait, is this a dream? Can someone pinch me? Like wake me up, is this real? That's also the danger because you're in such a hype mode that you think, okay, this is it, right? We need to go all in and that's where you're going to make mistakes. It's kind of a win lose, right? If you do sell through it, great. However, that's your window. And so then you don't really get another chance versus like traditional brick and mortar stores, you get a little bit longer selling season to sell through something. QVC or other kind of live shopping events, you really get that window, that time. And if it doesn't work, you might not get another chance. So the second time we went live, we scaled up to a bigger batch of 240 pieces because we were all so certain it would be a huge success again. However, the show didn't go as well. First of all, we didn't sell out. Well, that's okay. The quantity was much bigger. But second of all, also the storyline was different. There was a different hype. Some of the users that bought it, they received it without a particular charger or there was some delivery issues which resulted in initially some reviews that were not helping us out. During the live airing, I was already feeling that it wasn't going well. You could just, the salesman felt it, the cameraman felt it. There's this huge pressure on you because the big screen is showing you, are you performing? They didn't sell out the way we predicted they would, which resulted in that the stock that was there was being shipped back to us completely. And we were actually quite disappointed about, okay, wow, it was such a great start and now we have maybe even a bigger burden than a bigger win. To understand why QVC can be so risky, you have to understand the basics of retail. There are a few different models and both QVC and HSN don't like to talk about the specifics of their deals, so it could vary based on brand. In traditional retail, the ideal scenario for a creator would be a store buying a product at a wholesale or cheaper price. The store would then mark the product's price up to make money and is incentivized to sell that product because it has already spent its own money to acquire it. The creators make some cash, but not as much as they could have made selling it on their own website. But still, it's something. What QVC does, at least for some brands, is buy inventory it thinks it can sell, but then stipulates that whatever doesn't sell has to be bought back by the brand. This can be terrible for small creators who are already strapped for cash. They could lose a ton of money if nothing sells because they had to front manufacturing costs and lose the cash they thought they made on the units QVC bought. To offset this risk, QVC and HSN offer a different experience for brands. For one, their products aren't just sitting on a shelf without anyone pushing for them to sell. The team employs other tactics as well to show off a product's design and encourage shoppers to buy. Live shopping really makes people feel excited. Consumers go through this decision-making process and all good retailers, all good salespeople want to drive them through that process quickly and limit the amount of search that they do for other competitors. And so there's lots of different strategies that you can do this. There's pricing strategies. It'll make it under $60 to get this home, which is going to save you $110. There's a clock ticking, or we see inventory quantities going down. 250 of those left. We've got a few more minutes to get that or those ones will be all gone. They have the same problems and the same challenges and it creates this sense of empathy and friendship, you know, this camaraderie that we're in this together. And I will tell you, I am one of those individuals that I was terrified at even the prospect of jumping a car just a few days ago. I don't want you to miss this because I care about you. And I know that this is going to make you make your life better. Mophie made this for us. They made this for you. Halo Bolt, which is the car starter that was really brought with the QVC, HSN consumer at mind at forefront because it's such a demonstrable product and it demonstrated so easy on that channel. We've started that vehicle. Shannon, look at that. We did it. Oh, my goodness. Chris Aheron is the CEO of Zag, the company behind brands like Mophie and iFrogz. Zag acquired its competitor, Halo, in 2019 specifically because of its relationship with QVC and HSN. So does your product design change for QVC or HSN or do you change your products because you know they're going to be on live shopping? Before we acquired Halo, speaking to the team, when they started off with QVC, HSN, they brought to market a straight black power bank. It was not successful at all. But having that partnership, they went back and listened to the insights that the team brought to them from QVC, HSN and put together a number of colorways for the exact same power bank with different touch feel and material and it was a complete success. Even though all the brands we've talked to have had some success with live shopping, not every segment is a hit. On top of risking a lot of cash to go live, small creators' products might not have a lot of reviews, which might make shoppers wary. The odds of selling out then get even lower. QVC isn't a guarantee to success. It could be summarized into the bigger the risk, the bigger the reward. These guys know what they're doing and have very strict regulations upon the performance, upon the delivery, upon the supply chain. And if you are not ready for that as a company, then you might consider waiting for a bit until everything is a bit more grown up. Although QVC and HSN came about decades ago, there's still a sort of magic to them. That's why we see live shopping picking up on the tech platforms like Instagram and Amazon. For creators with money to spend and the tenacity and passion to make live shopping work for them, they could end up selling lots of products and tapping into a whole new audience of potential buyers. But there's no guarantee of success. All retail is still a gamble. Thanks for watching. This was the first episode of the second season of In The Making. We have another episode coming soon all about the challenges that Chinese entrepreneurs face when they try to break into the U.S. So make sure you subscribe to The Verge so that you don't miss that episode right when it comes out. All right, I'll see you later. Bye.