Home Shopping Network 2012 Annual Report Download - page 9

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Cornerstone also operates websites for each of its featured brands, such as Frontgate.com, BallardDesigns.com, Chasing-Fireflies.com,
GarnetHill.com, GrandinRoad.com, TravelSmith.com and Improvementscatalog.com and Wish-Works.com. These websites serve as additional,
alternative storefronts for products featured in related print catalogs, as well as provide customers with additional content to support and enhance
their shopping experience. Additional content provided by these websites, which differs across the various websites, includes decorating tips,
measuring information, online design centers, gift registries and travel centers, as well as a feature that allows customers to browse the related
catalog online.
Supply
HSN and Cornerstone purchase products by way of short- and long-term contracts and purchase orders, including products made to their
respective specifications, as well as name brand merchandise and lines from third party partners, typically under certain exclusive rights. The
terms of these contracts and purchase orders vary depending upon the underlying products, the retail channel in which the products will
ultimately be sold and the method of sale. In some cases, these contracts provide for the payment of additional amounts to partners in the form of
commissions, the amount of which is based upon the achievement of agreed upon sales targets, among other milestones. In addition, in the case
of some purchases, HSNi may have certain return, extended payment and/or termination rights. The mix and source of products generally
depends upon a variety of factors, including price and availability, and HSNi manages inventory levels through periodic, ongoing analyses of
anticipated and current sales. No single vendor accounted for more than 10% of HSNi’s consolidated net sales in 2012, 2011 or 2010.
Marketing and Merchandising
We offer our customers a broad assortment of differentiated products in a compelling, informative and entertaining format that will inspire
them to regularly engage and shop with us. For example, HSN frequently collaborates with experts in a variety of fields to present special events
on the HSN television network featuring HSN products and relevant expert content. HSN has also begun producing live entertainment as a way
to engage with our customers. These events are staged at HSN’s television studios or elsewhere. Online versions of certain special events are
also featured on HSN.com for a limited period of time following their broadcast on the HSN television network. Also featured on HSN.com are
over 60,000 video demonstrations of products available for sale.
In an effort to promote its own differentiated brand, HSN seeks to provide its customers with unique products that can only be purchased
through HSN. HSN frequently partners with leading personalities and brands to develop product lines exclusive to HSN and believes that these
affiliations enhance the awareness of the HSN brand among consumers, as well as increase the extent to which HSN and/or products sold
through HSN are featured in the media. In some cases, vendors have agreed to market their HSN affiliation to their existing customers (e .g. ,
notifying customers when their products will be featured on the HSN television network).
HSN engages in co-promotional partnerships with major media companies. These are done primarily because they offer us editorial
authority while they also secure print advertising in national fashion, style and/or lifestyle publications to market HSN to prospective customers
in its target demographic. HSN also engages in search engine marketing and targeted offline advertising. As part of HSN's entertainment
strategy, it participates in innovative joint marketing and promotional partnerships with major motion picture companies as well as well-known
recording artists. HSN also creates strategic alliances with world-class, consumer brands in an effort to reach new prospects through relevant
brand integrations and occasion-based event marketing. These promotions are designed to not only generate additional revenue and create brand
awareness, but to also provide unique experiences for our customers in our continued effort to drive customer engagement as well as position
HSN as a proven and powerful marketing vehicle.
The Cornerstone brands differentiate themselves by offering customers an assortment of innovative proprietary and branded apparel and
home products. In many cases, Cornerstone seeks to secure exclusive distribution rights for certain products. Cornerstone employs in-house
designers and partners with leading manufacturers and designers to aid in the development of its unique, exclusive product assortment. The
Cornerstone brands use their respective websites and e-mail marketing to promote special offers, including cross-promotions for other
Cornerstone brands. In addition, Cornerstone partners with third parties to offer promotional events such as sweepstakes and/or other advertising
agreements. HSNi believes that these affiliations enhance the awareness of the Cornerstone brands among consumers as well as strengthen its
various brands overall.
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