August 4, 2010, 1:48 PM lands $6 million in new funding

The private sale e-retailer will invest in staff and marketing.

Lead Photo, a private-sale e-retailer selling children’s apparel and goods, announced today that it closed $6 million in Series B funding with August Capital, with Zulily’s existing investor Maveron also taking part in the new round. Darrell Cavens, Zulily’s CEO, says the company expects to double its current staff of 40 in the next six to nine months. The company also might expand sales into Canada.

“We are positioned for growth and will be going after the market with a war chest behind us,” Cavens says.

Zulily launched in January and offers 25 private sales per week. Each sale lasts 72 hours and offers limited quantities of products with discounts that range between 50% to 70%. Cavens declines to give membership, sales and web traffic numbers.

The company will use the funding to increase the number of buyers working with vendors to select items sold on the site. The company works with about 400 vendors.

The company also will focus on building brand awareness and strengthening its referral program among existing members. “We see a strong opportunity to build awareness. The children’s market in the United States is massive, but there aren’t a lot of offerings away from big-box retailers,” Cavens  says. “When you talk to consumers, a surprising amount don’t know about the private-sale model yet.”

To build deeper customer engagement with site members, Zulily will focus on shopping’s social aspects.

“We are looking at a stronger way for the brands to participate with the members,” he says. That could include having vendors answer directly on the site questions from members about products, and doing so while a sale is in progress.

Cavens says the short sales window spurs members to visit the site shortly after receiving the daily e-mail sales notification. “It’s difficult to engage over a long period of time, but this model has a short time window and lessens the time commitment for vendors to take on,” he says. “We can use that window to marry the brand and the members so both can benefit.”

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