Zulily has historically been a standout among young online retail companies. The flash deal company’s IPO in 2013 was called a “watershed moment” for e-commerce, as one investor put it at the time. 

 

It didn’t take long for the tables to turn. And the business model that propelled Zulily forward may be what eventually dragged it down, forcing the company to sell to QVC for a fraction of what it was valued at its peak last year.

CEO Darrell Cavens tells Inc. in a written statement that he views Zulily and television shopping network QVC as "complementary in nature." He says the two companies can share each other's networks to help their suppliers grow and gain supply chain efficiencies. 

Cavens told Inc. in 2013 before the company went public that its aim was to “fill the white space between the big box and boutique stores.”

“When I dropped off my daughter at daycare, she had the same character on her t-shirt as some of the other kids. The shirt just was not special. I could go to a boutique store, and spend $50 for a pair of pants for my son, but an hour and a half later there would be grass stains and holes all over them,” he explained. A request for comment from the company was not returned at the time of publishing.

Zulily’s parent-centric business selling items like baby gear and women’s apparel at steep discounts grew in popularity and it became a bit of an e-commerce juggernaut.

Shares opened the morning of Zulily’s 2013 public offering at $39, 88 percent higher than the IPO price of $22, Venture Beat reported, making it the most successful public offering for an e-commerce site in years.

But the company has always been “a bit of an oddity,” GeekWire reported when its share price was plummeting earlier this year. Zulily put little stress on fast delivery or holiday sales. The company’s chairman Mark Vadon was quoted as saying Wall Street didn’t understand what motivated the customers.

“They think it has to be low-priced, and a commodity, and that you have to get it to them fast--two-day is good, one day is better and same-day is best,” he said.

The company’s model had relied on offering items at steep discounts and then having suppliers ship the items to Zulily to sort and deliver, rather than keeping the items warehoused ahead of time, according to the Wall Street Journal. The process could mean customers would have to wait longer than two weeks to receive items. 

The company's share price in January fell to $18.53, having peaked in 2014 at $70. Cavens discussed plans to close the company’s U.K. office.

The company in March was trying to shift towards a faster delivery model by storing more items in its warehouses before putting them up for sale online, something Amazon has done for a while. But it looks like the effort was too late. QVC scooped up the company for $18.75 a share. 

The silver lining for the e-commerce site is that some parts of the company are to remain static. Cavens will stay on as CEO and headquarters will remain in Seattle, according to the Associated Press

"We’ll drive the business forward as distinct brands so everything we’re working on remains the same. We will work together with both teams to find the places that we believe make sense to integrate and determine where it makes sense to operate separately," says Cavens. 

 

Published on: Aug 17, 2015