Zulily was founded in January 2010 by two retail veterans, Darrell Cavens and Mark Vadon, both of whom at that time were at a point in their lives where discussions about kids — whether their own or their friends’ — dominated the conversation. So the two decided to create a unique online retail business that would better serve them and others like them. Cavens gave a keynote presentation this week at the Shop.org Annual Summit in Seattle detailing how the company has grown from online startup into one of the hottest brands in the retail industry — and how customers are driving that success.
Zulily offers daily merchandise deals geared towards moms and their kids. It's fairly different than any other e-commerce businesses in that the merchandise is totally new to the site each day. Roughly 9,000 new products are added to the site each day, the work of Zulily's 400-plus merchandising professionals on staff.
"I tell our staff to think of it like a newspaper — they're publishing an entirely new site every day," Cavens said. "They have a passion for storytelling and product curation, and are delivering something special every day."
Zulily's website experience is based on a browse-and-discover approach rather than a directed product search like shoppers get on sites such as Amazon.com. Customers get entertainment out of the freshness of the site, Cavens said, coming back over and over to see what products that day will bring. The site was designed for moms — at least initially. Zulily is expanding into additional product categories other than children's, including women's apparel, home, crafts, pets, etc.
The edge of the brand has been stretched further, and this expansion has been entirely customer led, Cavens said.
In addition to adding new product categories, Zulily's business is expanding into new sales channels. Mobile has become an integral part of the retailer's business, with nearly half (49 percent) of all purchases coming via mobile.
Tailored Shopping Experience Via Technology
In order to better serve its loyal customer base, Zulily has invested in segmentation and personalization technology. The retailer is trying to answer the question, "What matters to her?" It can usually answer that question within five clicks to six clicks on its website, Cavens said. What results is personalized content and product recommendations, which has led to more conversions.
"We don't want it [Zulily's website] to be one big online flea market," Cavens said. In addition to personalization, Zulily takes great pride in giving its 4 million-plus active customers a "boutique-like" shopping experience. Its efforts are paying off, as Zulily has a very high repeat purchase rate.
"The sign of a great retail business, in my opinion, is that you have repeat customers," Cavens said. "Anyone can get someone to buy from them once. Can you get them to come back?"
‘Like Jumping Off a Cliff’
This is how Cavens described his emotions upon deciding to bring Zulily's fulfillment and logistics in-house. After outsourcing its fulfillment for the first two years of operation, Zulily realized its provider couldn't keep up with the company's hypergrowth. So Zulily pulled out of its contract and decided to do it itself. The whole process, from initial idea to going live in a new warehouse with entirely new staff, was completed in a mere 10 weeks.
"It felt like I jumped off a cliff," Cavens recalled. "We didn't have the capital if this risk didn't pay off. We were betting on the growth of our company. It was really scary. But at the end of the day, nobody cares about your products and customer experience as much as you do."
The risk has paid off. Zulily became a public company in November 2013 — Cavens and Vadon had experience in this area after taking Blue Nile through the same process — and has posted three straight quarters of sales growth, its most recent quarter a 97 percent year-over-year increase. Not that that's changed the company's strategy.
"We've worked really hard at not letting being a public company change what got us here," Cavens said. "We keep a long-term view, not quarter to quarter."