'As Seen On TV' Rings the Till For Retailers

BOSTON ( TheStreet) -- "As Seen On TV" is no longer just a catchphrase for the gizmos pitched on late-night commercials. It has become a thriving retail category.

Products once sold by mail as "cash on delivery" are now point-of-sale. Retailers such as Target ( TGT), CVS ( CVS) and Walgreens ( WAG) are devoting prime real estate to TV-hawked wares, often positioning them by checkout lanes for maximum exposure.
Infomercial products are increasingly making the leap from late-night ads to store shelves.

"It's been a long time in the making," says A.J. Khubani, founder and CEO of TeleBrands, explaining that his company first put a product on Wal-Mart ( WMT) shelves nearly 23 years ago. "It really has started to grow at a more rapid pace in recent years."

Founded in 1983, New Jersey-based Telebrands is one of the nation's top direct television marketing companies. A pioneer of the TV "infomercial," its deep roster of products includes AmberVision sunglasses, the PedEgg foot file, Bake Pop, Bark Off, Heel-Tastic, PastaBoat, First Alert Alarm and Doggy Steps.

TeleBrands saw sales increase by 20% from 2010 to last year. Much of that growth was fueled by in-store sales.

According to Khubani, his company's growth during the past few years was in large part "triggered by the recession."

"Retailers were looking for categories that were growing versus categories that were declining," he says. "During the recession, one of the few categories that were growing was the 'as seen on TV' category in terms of same-store dollar sales. Our existing retailers noticed that and decided to expand the amount of shelf space. Their competitors noticed this and said, 'Well if this drug chain doubled their shelf space from four linear feet to eight linear feet, there must be something there, and perhaps we should too."

"Then, of course, the big player, the monster in the retail business, decided they were going to dramatically increase their space," Khubani adds. "Wal-Mart decided to be a leader in this category, as they are in many others, and dominate the space. I have to give them credit. They really put a lot of effort behind it. They put permanent space for 'as seen on TV' items right in front of the store and dedicated flexible space, their palette promotions, to many more. As a result, sales have really boomed. They have been big part of our own company's growth."

Khubani says Wal-Mart was actually one of TeleBrand's earliest retail customers, nearly 23 years ago.

"They are aggressive, they are innovative and they jumped in early," he says. "But they really decided to step up their game around 2009 and really get behind the category."

Khubani says it is mutually beneficial when a retailer displays "as seen on TV" products near cash registers.

"You are not intending to go in and make a purchase of an Aluma Wallet, for example, but when you do see it you remember the TV commercial and it encourages an impulse purchase," he says.

Opportunity does present challenges, however. TeleBrands has found that increased attention on "as seen on TV" products has meant greater competition.

"One of the side effects of our success is that people think the 'as seen on TV' logo is like magic," he says. "They think that if they put the logo on anything it will, in and of itself, cause the product to sell," he says.

"We are very regimented about our approach," he adds. "In an average year, we will consider 1,000 products. Out those, we will test market 100 by putting on TV commercials and seeing what the consumer response is; only 10 will actually get a full rollout. For each product put on TV, we will spend millions of dollars in advertising to support it, and that's what causes our success at retail. People from the outside trying to get in -- who don't really understand the business -- will find one product, shoot one commercial, spend a few thousand dollars to broadcast it and slap on the 'as seen on TV' logo. Some of the retailers, because they are so successful in this category, will take a chance on that product, but of course it doesn't sell. It looks very easy from the outside, when in fact, like anything else that someone is successful at, it takes a lot of hard work."

In 2005, according to the Electronic Retailing Association, infomercials represented a $256 billion-per-year industry (a broad tally that includes home shopping networks on cable TV and advertising revenue). Of that, the association estimated that consumers spent $91 billion on products they saw advertised.

The association estimates that overall marketplace as having now surpassed $300 billion, with more than $100 billion of direct consumer spending. Another trade group, the Direct Marketing Association, thinks those sales could reach $174 billion by 2014.

A breakdown of in-store sales isn't included in those estimates, but industry sales leader TeleBrands draws about 90% of its revenue from bricks-and-mortar retailers, and it's not the only such company infiltrating the aisles of big name stores.

IdeaVillage -- maker of the Handy Stitch handheld sewing machine, the Fushigi contact juggling ball, the Yoshi Blade ceramic knife, Micro Touch men's groomer and the Strap Perfect "bra strap solution" -- has brought its lineup to Wal-Mart, Target, Bed, Bath & Beyond ( BBBY), J.C. Penney ( JCP), Kohl's ( KSS) and Kmart ( SHLD)

Allstar Products Group's Snuggie ("the blanket with sleeves") has seen retail sales jump from about half of all its product purchases to 80% since its debut in 2009. Its other products offered in malls and department stores include Topsy Turvy planters, Bendaroos building sticks, Perfect Brownie and Perfect Meatloaf pan sets and the Emery Cat scratching board.

Other top direct-to-consumer companies include Guthy-Renker (maker of Proactiv Solution and distributor of classic television DVDs) and legendary inventor Ron Popeil's Ronco, which sells its Showtime Rotisserie alongside the classic Pocket Fisherman (once an only-on-TV item) in stores.

Khubani says he and his competitors have to deal with copycat products that look to coattail on the popularity of a brand.

"The problem has shifted," he says. "Years ago, the retailers themselves would buy imitator products that are very similar, but don't infringe any rights, and sell them at lower price points. Retailers have learned over the years that the imitator products don't sell anywhere near as well as the one that's actually on TV. An imitator PedEgg won't sell nearly as well as the original. Even major companies have tried imitator approaches. Revlon ( REV), Sally Hansen and Dr. Scholl's all came out with imitator PedEggs on the heels of ours. But all three combined probably didn't do even 10% of what we did in sales, because the PedEgg had so much advertising and brand recognition behind it."

Among TeleBrands' recent success stories have been the OrGreenic line of ceramic cookware, Sticky Buddy, a lint roller targeted at pet owners, and Lint Lizard, a vacuum cleaner attachment that sucks debris from a dryer's lint catcher and vent.

"The Lint Lizard is way beyond our wildest expectations in terms of sales," Khubani says. "We never imagined we'd get these kinds of sales. It is selling at a pace to be one of the best sellers of all time in the 30-year history of the company."

The best-selling product the company has ever marketed, for now, is the PedEgg, with 45 million sold.

Khubani is optimistic the growing demand for 'as seen on TV' products among retailers will continue.

"These products have relatively short lifecycles," he says. "It's a constant job to find the next item and have the next stream of items coming in. The pipeline is very important. The minute the pipeline slows down, our business will follow."

To keep the products coming, solicits inventors through Facebook, Twitter and an email address for pitches, BigIdeas@Telebrands.com. The company also sponsors a regular "Inventor's Day" throughout the country, described as an "open casting call for those with the dream of creating the next 'must have' infomercial product." Each inventor has five minutes to demonstrate their creation before Khubani and TV pitchman Anthony "Sully" Sullivan.

-- Written by Joe Mont in Boston.

>To contact the writer of this article, click here: Joe Mont.

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