According to the Euromonitor, the North American retail market was worth $3.1 trillion last year with online sales accounting for $183 billion of the retail sales. The researcher estimates that the North American online retail market will grow 14.5% annually to $360 billion by 2017. Within the online retail sales market, flash sales are an upcoming trend, but not all of them are as successful as the mom-focused site, Zulily.
Like other flash sales sites, Zulily offers sales on products for a limited period of time and discounts them up to 70%. The company sells products ranging from children's apparel, toys and accessories to maternity wear, shoes and even home appliances. Zulily's biggest differentiator is that it offers products that are focused on moms. According to an Advertising Age report, women control 73% of household spending decisions in the U.S. A comScore report also found that in 2010, women accounted for nearly half of the U.S. online population but accounted for more than 61% of online purchases.
Zulily is able to offer its products at deep discounts through tie-ups with vendors who are mostly emerging brands or smaller boutique vendors and are small and medium businesses owned by mom entrepreneurs. Most of these vendors do not have their own online storefronts, and Zulily is able to offer their products to the online population, helping to increase brand awareness and generate additional sales. It also maintains minimal inventory by sourcing products from the vendors only when the products are purchased through their site.
Since its launch in 2010, Zulily has grown phenomenally. Revenues in the first year of operations were at $18 million, which surpassed $300 million within two years of operations. As of June 2013, Zulily has more than 2.2 million active customers recording growth of 93.1% over the year. For the 12 months ended June this year, it earned $214 in revenue per active customer, which helped it to earn $331.2 million in revenues, an increase of 132.4% over the year. Adjusted EBITDA has improved from a loss of $8.9 million last year to a loss of $5.9 million in the 12-month period ending June 2013. Things have improved this year, when during the first nine months of the year, sales grew to $438.7 million and Zulily finally turned in profits of $155,000.
Till recently, Zulily was venture funded with $139 million in funding from investors, including Maveron, August Capital, Trinity Ventures, Meritech Capital Ventures and Andreessen Horowitz. Last month, it went public and listed on the Nasdaq under the symbol ZU at $22 per share. The stock has done well and is trading at $39.26 with a market capitalization of $4.79 billion. It touched a high of $41.32 earlier last month, soon after listing.
Disclosure: No positions