Zulily (ZU) is a website that aims to change the way people shop online. Most online sites solve the problem of searching for a particular product, unlike other sites ZU is tailored for browsing and discovering similar to most offline shopping. ZU displays 6,000 new products a day. To put that into context your average Costco typically displays around 4,000 products. ZU is one of the top ten web only retailers in the US.
Discover not search based
Each site is personalised for each user depending on their demographics. Customers browse the site with no intent to purchase so it is up to ZU to display products interesting to the customer. What a mother with young kids sees is totally different to a single woman. Its products are at a very affordable price point of $18. This discovery niche means it largely does not compete with Amazon.
Discover not search based
Each site is personalised for each user depending on their demographics. Customers browse the site with no intent to purchase so it is up to ZU to display products interesting to the customer. What a mother with young kids sees is totally different to a single woman. Its products are at a very affordable price point of $18. This discovery niche means it largely does not compete with Amazon.
Being a site for moms they attracted a lot of word of mouth with customers growing 93% during the last quarter. While moms are still their base customer its no longer just about kids clothes which are now 39% of sales down from 55% in 2012. It is becoming more about what mom can buy for herself and her home as they make the majority of purchase decisions. ZU is also very mobile friendly with 47% of sales coming from mobile devices a much higher percentage than Amazon and Ebay which are both around 28%. For ZU its all about low prices. ZU doesn't pay for expensive models but gets parents to bring in kids to model for free in exchange they get to keep the photos. They have nearly 50 photo studios.
ZU still has many more initiatives that it could implement such as private label brands as well as having exclusive products from vendors which would help increase margins and customer retention. They also seem to score well with suppliers. 75% of vendors featured since 2011 have returned to the site suggesting that unlike Groupon vendors are gaining long term value. No single brand is more than 3% of sales.
Cheap prices long shipping times
The main customer complaint is shipping. The cheap prices come at a trade off for customers. Last year ZU took on average 11.5 days to ship a product after customers ordered them. ZU orders items from vendors after the sale ends it doesn't buy in advance. This has lead to poor customer service in some instances when suppliers cannot keep up with demand.
Good product and management a winning combination
The company was founded by the same executives that founded online jewelry retailer Blue Nile. The CEO and Chairman created Blue Nile after getting engaged and created ZU after becoming dads. I'm looking forward to seeing what they will come up with next! ZU was backed early on by Maveron Capital which is Howard Schultz's of Starbucks venture capital firm. The most amazing thing about ZU is its only 4.5 years old they are just getting started. Daily sales is a tough business but ZU has managed to execute and unlike other sites average revenue per customer is increasing, that is users are buying more unlike Groupon. This helps to explain the valuation which is expensive but somewhat reasonable given it is a scalable e-commerce business, this is one business we're keeping on our daily buy list.Jason
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