Zulily

What did it do?

Zulily was a Seattle-based e-commerce site selling children's and women's clothing, toys, baby products and home decor to young mothers looking for branded goods. It ran on flash sales announced by email early in the morning. Rather than holding stock, it bought most products from suppliers after customers had ordered them.

Why did it shut down?

The stockless model lengthened delivery times and led to quality problems such as wrong, damaged or incomplete shipments. The company struggled to retain customers, and when growth slowed in 2015 it cut its revenue forecast. Bought by QVC in 2015, Zulily saw its revenue fall sharply in 2022 and 2023, and there were three waves of layoffs in Seattle. In May 2023 Qurate Retail sold the company to Regent. In December 2023 hundreds of employees were laid off, a closing-down sale began and the company's assets were liquidated for the benefit of creditors.

The story

When Mark Vadon's wife became pregnant, Vadon was overwhelmed by the list of things the baby needed, products he had not even known existed. That experience led Vadon and Darrell Cavens, two former Blue Nile executives, to found Zulily in Seattle in 2009. The target audience was young mothers looking for branded products for their children.

Zulily's formula was daily flash sales announced by email early in the morning. Rather than stocking products in large warehouses, the company bought most of them from suppliers after customers had ordered. The model grew fast: in 2012 it passed 10 million members. At its IPO in November 2013 the company had 2.6 million active customers and $331 million in revenue; it was valued at $2.6 billion. In the third quarter of 2014 active customers exceeded 4.5 million.

But the model came at a cost. Because no stock was held, deliveries took longer, and there were quality problems such as wrong, damaged or incomplete shipments. The company struggled to retain customers and realised it may have worn buyers out with too many campaigns. When growth slowed in the first quarter of 2015, it cut its annual revenue forecast. In August that year QVC, a unit of Liberty Interactive, bought Zulily for $2.4 billion.

The acquisition did not save the company. Revenue fell sharply in 2022 and 2023, and there were three waves of layoffs in Seattle. In May 2023 Qurate Retail sold Zulily to Regent, L.P. In early December the company said it would lay off 292 people in Seattle and another 547 at warehouses in Nevada and Ohio, and launched a closing-down sale. On 18 December, according to customers, the site, the app and the customer service line were not working; the assets were liquidated for the benefit of creditors through an assignment arrangement used as an alternative to bankruptcy. The brand was bought by Beyond, Inc. in 2024 and relaunched in September 2024.

Zulily's story shows how fragile a model that grows fast on the appeal of discounts can be when the delivery experience and customer loyalty stay weak. Even a billion-dollar acquisition could not protect, in the long run, a business whose fundamental problems had not been solved.

Lessons for founders

• A stockless, order-then-source model saves capital but lengthens delivery times; do not scale it without measuring how long customers are willing to wait.
• Customers won through constant discounts leave when the discounts end; feed loyalty with value beyond price as well.
• Coming under the roof of a large company does not remove competitive pressure; keep running an independent growth plan after the acquisition too.

Sources

1. Zulily (Wikipedia)
2. After layoffs, once-hyped Seattle online retailer is shutting down (The Seattle Times, 2023-12-09)
3. Zulily transfers assets to professional liquidator as failed retailer unable to issue refunds (GeekWire, 2023-12-23)
4. zulily Is Lost Up the Amazon With Latest Deal (The Wall Street Journal, 2015-08-17)

This section is compiled from public sources (Wikidata, news archives and company announcements). Figures are given as they appear in those sources; unknown fields are left blank. If you spot a mistake in an entry, you can send us a correction.

Is something in this entry wrong? Request a correction → Method