December 22, 2009, 12:00 AM

Blue Nile’s founder eyes the private sales market

Blue Nile founder Mark Vadon and venture capital firm Maveron have joined forces to invest $4.6 million in Zulily.com, a private-sale web site aimed at busy mothers with growing families.

Mark Vadon, who founded Blue Nile Inc. and built the online jewelry retailer into a $300 million-a-year business, is eyeing another new and emerging e-commerce market: private sales.

Vadon joined forces with venture capital firm Maveron LLC, to invest $4.6 million in Zulily.com, an Internet start-up company that will build a private-sale and e-commerce business focused on selling apparel and related merchandise to busy mothers with growing families. Vadon, founder and chairman of Blue Nile, No. 56 in the Internet Retailer Top 500 Guide (a PDF version of the company’s financial and operating profile can be order by clicking on its name), will serve as chairman of Zulily.com.

The company, which will launch a private-sale web site in the first quarter, has named former Blue Nile senior vice president of marketing and technology Darrell Cavens as CEO. Other Zulily.com executives include chief merchant Lori Twomey, former president of Charming Direct Inc. and Crosstown Traders Inc.; vice president of brand and design Bridgette Hartley, who previously worked as the lead Internet site designer at Nordstrom Inc.; and technology lead and system architect Tom Laramee, a former technology executive with Newsvine, a social media site now owned by MSNBC Interactive.

Since the company was formally launched in October, Zulily.com has been building staff and an e-commerce infrastructure to launch a free members-only web site that will sell baby clothes, toddler’s apparel and similar products through limited-time sales, usually two- or three-day events, says Cavens. “We will be driven by word-of-mouth and viral marketing,” he says.

Although the online retail market for baby and toddler-related merchandise already has a number of established niche retailers, including Diapers.com, which in October raised $30 million in new funding from New Enterprise Associates Inc., Accel Partners, Bessemer Venture Partners and MentorTech Ventures, Zulily.com sees an opportunity to develop a niche-oriented private sale site. “The private sale e-commerce model is different than conventional online retailing and it’s catching on with consumers,” says Cavens. “Zulily.com will be able to fill a new niche with strong brands and a clean and well-designed web site.”

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