Gems TV Closed Down in 2010: Reasons Behind Their Business Failure
There are many factors that can affect how successful a business is. If the business centers on delivering goods to an end user, there must be a legitimate need for the product, and there must be a consumer base willing to purchase the product. Another factor is how well the business markets to their end users. Do they make the product attractive to the end user? Does the advertising make the end user feel as though the product is something they can’t live without?
Still another factor that contributes to success in business is the raw materials used to make the product. The business must find reliable resources to supply the materials they need. When the business plan is put together, one of the things they take into consideration is the cost of the raw materials and how much it will cost to manufacture the product. However if the price of the raw material needed to manufacture the product becomes way beyond what the business estimated as the cost, it could place the business in a very precarious position. This was the dilemma of jewelry manufacturer, GemsTV.
GemsTV was a jewelry manufacturer and TV shopping network established in 2004 in theUK; it was launched in 2006 in theUS. Originally it was set up as an auction game called “Snatch-it”, but when Thaigem Limited took it over in 2004, it was renamed GemsTV. It was wildly successful in theUKand once launched in theUS, became a channel exclusive to cable-service provider, DirecTV. In later years, it was picked up by other cable providers and TV affiliates such as Clear Channel and Dish Network.
During its run GemsTV saw success at every turn and at one time, had employed approximately 1000+ people all across the world – a majority of whom worked in the call center taking product orders. This all changed when the recession hit in 2008/2009. Sales began dropping off for the shopping network giant. In fact, by the end of June 2009, revenues for GemsTV had decreased 31% from the previous year.
On April 5, 2010, GemsTV filed for Chapter 11 bankruptcy and 10 days later, they ceased their broadcast. In addition to the recession, they cited the skyrocketing cost of gold as a contributing factor to their financial decline. The raw material – gold – that they manufactured their products became unreachable. It was impossible for them to turn a decent profit. Several weeks after their last broadcast, on May 6th, GemsTV released their entire employee base.