As the pace of digital transformation in the home shopping industry accelerates, the ways artificial intelligence (AI) is being integrated are becoming more diverse. People in the industry say AI is more effective for easily giving customers a sense of presence and convenience than for replacing people to cut labor costs.
According to related industries on the 19th, when home shopping companies recently air travel product programs, they are providing a sense of presence by rendering tourist destination backdrops with AI. AI also handles quick responses to customer inquiries. In fact, more than 90% of home shopping airtime is focused on the product, and screens featuring AI account for only a portion. That is why the effect of replacing personnel to reduce labor costs is said to be weak. Instead, they say it cuts set production expense and other costs and reduces waste, producing environmental, social, and governance (ESG) management benefits.
GS Shop introduced an "AI studio" in July last year by applying generative artificial intelligence (Gen. AI) to its home shopping broadcast studio. Currently, the AI studio adoption rate has expanded to about 62% of all broadcasts. It is also producing "SB (station break) ads" that run between programs with AI.
For example, when GS Shop produced a promotional ad video in August giving away travel vouchers, it used AI to create footage of customers traveling through various destinations, including Eastern Europe and Hokkaido, Japan. To actually shoot and produce that video, crews would have to visit overseas locations and film on-site, consuming significant expense and time. The account is that producing the video with AI cut production time by up to 80% and also reduced expense.
Lotte Home Shopping is actively using virtual show hosts and has introduced technology that automatically verifies, via AI, addresses spoken by customers through ARS (automatic response system) at the ordering stage. The company's virtual human "Lucy" wears products, introduces their features, and communicates with viewers in real time on the TV home shopping fashion program "Lucy Talk Live." Initially it was only in character form, but AI has advanced it into graphics closer to a real person, adding vibrancy. Since its launch in February last year, cumulative order value has reached about 20 billion won, logging an order value more than 50% higher than competing programs in the same time slot.
Lotte Home Shopping also runs a mobile app short-form content service, "Shortping," which compresses 60-minute popular home shopping programs into clips of around 30 seconds. AI produces this content instead of people. Monthly short-form output has increased more than 30-fold compared to human staff, and it produces more than 1,000 pieces of content per month on average.
Hyundai Home Shopping has introduced a system that automatically edits high-ratings segments of broadcasts with AI into short-form videos. On Hyundai H Mall, the official app, a short-deal area has been added for product introductions, where up to 100 videos of under one minute are being displayed.
CJ OnStyle formed the "AI Content Factory" project early this year to drive media content innovation and is pursuing a growth strategy that combines AI technology with live broadcasting. The first project was an "AI fashion showcase," conducted for the first time in the industry in February for the fashion spring/summer season. It enabled viewers to experience lively and diverse style curation by watching AI models walk a virtual runway set up in the heart of Paris and New York. In August, it also held a live broadcast packed with AI technologies for the underwear brand "Verysi," popular among women in their 20s and 30s, featuring ▲AI models ▲XR content ▲Generative AI drones.
CJ OnStyle is also using AI for personalized curation recommendation services in addition to its existing customer review summarization. AI analyzes product customer reviews, summarizes key features, and provides them as captions and narration. It is being credited with improving comprehension and trust compared with listing reviews written directly by customers.
The TV home shopping industry has long been hamstrung by transmission fee issues and a shrinking TV audience. It appears to be finding a breakthrough through digital transformation. By expanding channels such as mobile live broadcasts and YouTube and actively using short-form content, it is maximizing the effect of AI adoption.
An industry official said, "There are concerns that AI adoption will lead to workforce cuts, but that is not true," adding, "In the home shopping industry, where creativity is important, automating repetitive tasks through AI and having people focus on creative planning and other idea-driven work can improve efficiency." The official added, "By reducing filming sets and cutting expense such as travel to locations, there are also ESG management benefits like lower carbon emissions."
As the industry attempts broad changes, third-quarter results appear to have held up. Among the four leading TV home shopping companies, Hyundai Home Shopping, CJ OnStyle, and Lotte Home Shopping saw both sales and operating profit rise. Hyundai Home Shopping posted operating profit of 16.3 billion won in the third quarter, up 79.9% from a year earlier. Revenue rose 3.3% to 264.3 billion won. CJ OnStyle's third-quarter operating profit rose 37.5% year over year to 12.6 billion won. Revenue also increased 6.5% to 355.7 billion won. Lotte Home Shopping recorded operating profit of 10.3 billion won and revenue of 211.3 billion won in the third quarter, up 4.8% and 1.6%, respectively, from a year earlier.
However, GS Shop saw sales and operating profit decline due to a drop in TV viewership. GS Shop's third-quarter operating profit was 11.6 billion won and revenue 245.7 billion won, down 37.6% and 1.4%, respectively, from a year earlier.