Zulily Quietly Powers Past 5M Members in Mom-and-Kid Sales
There probably isn’t a startup in Seattle as intriguing as Zulily.
Founded by veterans of e-commerce jewel seller Blue Nile and backed by more than $50 million in venture capital, the company is often said to be the biggest success story among early stage Seattle companies, with supposedly remarkable revenue growth.
Not that you can get them to talk about it. For all the suggestions of its meteoric rise, Zulily is actually not big on hyping up its own results—and that makes the startup stand out among the new breed of e-commerce sites, which have risen to prominence by offering steep discounts for a limited time on goods and services.
There are a few things you can squeeze out to chart Zulily’s growth.
The company now says it has 5 million members—people who have signed up for its daily sale e-mails—which represents growth of 25 percent from a year ago. Zulily had such struggles with shipping contractors being able to handle its rush of orders that it set out to build a whole shipping division—and pulled it off in just two months. And after blowing through four headquarters buildings in about 18 months, Zuilly now says it has more than 300 employees at its base in the industrial SoDo district.
Among those folks are a couple of tech startup veterans who joined the company recently: Doug Aley, formerly of Off & Away and Lockerz, and Kevin Saliba, formerly of CafePress and Zapd. They’re only two hires out of many. But the additions say a lot about the kind of company Zulily appears to have become—a fast-growing startup that has real revenues and a shot to stick around for some time.
That’s notable in a city the size of Seattle, which is still developing the seedbed of its startup scene and has fewer strong and growing companies than you’d see in a bigger city like San Francisco or New York. Saliba, who had previously commuted to the San Francisco Bay Area after CafePress purchased his startup Imagekind, said Zulily seemed like the kind of company he’d expect to encounter in the startup mecca to the south.
“I don’t think I’ve seen growth like this since the days 10 years ago of Expedia or Amazon, the big stars that came out of the Seattle area,” he says.
Aley, who worked at Amazon.com between 2003 and 2007, said that experience also doesn’t compare. “I’ve never seen a company move this fast before—not only move this fast, but move this fast and make a lot of the right decisions,” he says. “It’s an amazing thing to be a part of.”
Zulily has captured that kind of growth in part by capitalizing on a new business model that has found a hungry audience in the U.S. Typically known as flash sales or private sales, companies that follow this playbook sell exclusive and discounted consumer goods to a list of members—you can’t just pop over to the site and buy things a la Amazon or eBay.
There’s also a get-it-while-it’s-hot angle to the sales. Flash sale services typically make their money by liquidating a certain amount of predetermined inventory from a supplier, which means that members have to jump on a sale before the items are gone. The latest crop of startups would probably resist the comparison as low-rent, but they employ the same kind of trick you see on home shopping TV channels where there’s a ticker of items remaining and a clock counting down the end of the sale.
The idea started in Europe and has spread across the U.S. in the past few years, mostly focusing on high-end goods that can withstand a decent markup even at sale prices. Gilt Groupe, ideeli, and Zulily competitor Totsy are all using this model too—and all based in New York, by the way, the center of the universe for consumer retail.
But Seattle has always been a fertile region for retailers, from traditional department store brand Nordstrom and warehouse club giant Costco to outdoor products leader REI, the ubiquitous Amazon, and Zulily’s SoDo neighbor, Starbucks.
There’s also some evidence that the flash-sales model with physical merchandise may be a stronger bet than online coupons or “daily deals,” the other e-commerce sensation of the past few years. Chicago-based Groupon was the leader of that pack, but its performance as a public company has been dismal lately—and investors are seeing a shift at Groupon, away from its profitable business of coupons for dining and services and toward a new category, physical retail.
Aley joined Zulily in March. He sold his previous startup, travel deals provider Off & Away, to the social networking commerce site Lockerz in late 2011. Aley had met Zulily CEO Darrell Cavens before the acquisition, and knew what he was working on when the phone rang one day.
“He called me back three or four months later and said, basically, `Are you bored yet?’” Aley recalls. “Lockerz is a decent company in its own right, but not a great fit for me. And I knew Darrell and the team here and loved what they were doing.”
Although his title is vice president of corporate development, Aley says the the fast growth of Zulily means … Next Page »