November 16, 2012, 3:35 PM

Flash-sale retailer zulily raises $85 million

The web retailer, which caters to  moms, also released an iPad app today.

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Zulily, a members-only flash-sale retailer of products for women with children, has raised $85 million in a Series D funding round, the company announced today. It also released a mobile commerce iPad app.

The funding will go towards growth and improving member experiences, zulily says. “The vast majority of purchases come from repeat customers and we need to continue to surprise and delight them,” says CEO Darrell Cavens. “Additional funding will allow us to expand more quickly and continue to enhance the experience for today’s busy mom.”

With 30% of purchases coming from mobile devices, the company’s launch of the iPad app is part of its strategy to make shopping more convenient, zulily says. The layout, navigation and social sharing features are based on feedback from hundreds of zulily customers surveyed over the last few months about how they use their mobile devices for shopping, the company says.

"Zulily is one of the fastest-growing businesses we’ve ever encountered, which really shouldn’t be a surprise given the founders' previous success at the pioneering online diamond retailer Blue Nile," says Jeff Jordan, partner at Andreessen Horowitz, which led the investment round.

Cavens, the former senior vice president of marketing and technology at Blue Nile, and Mark Vadon, the chairman and founder of Blue Nile, co-founded zulily in 2010. In a blog post about the deal, Jordan adds that, like Fab.com, which also offers products for a limited time, zulily is successful in e-commerce in part because it avoids competing directly with Amazon.com Inc. by selling designer products that are typically not nationally distributed, he says.

At least one analyst expressed surprise at the size of the investment in a flash-sale e-retailer. “That's a huge funding round in a space that has peaked,” says Sucharita Mulpuru-Kodali, vice president and principal analyst at Forrester Research Inc. She says it is one of the largest retail investments this year in e-retailing, and a large venture capital round in general.

“I suspect they've raised it to acquire some competitors and consolidate some purchasing power from the merchandising side,” Mulpuru-Kodali says. Zulily would not comment on any plans to buy competitors.

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