August 8, 2014, 2:35 PM

No slowdown for flash-sale retailer zulily

Sales nearly doubled for the women and children’s apparel retailer during the second quarter, and half of its orders now come from mobile devices. A new fulfillment center on the East Coast is in the works.

Women and kids’ apparel retailer zulily Inc. is showing no signs of slowing growth, as the web-only merchant reported a 97% year-over-year increase in sales during the second quarter of 2014, in addition to strong growth in mobile sales and improvement in its bottom line. The merchant reported $7.8 million in net income during Q2, while in Q1 it posted a loss.

“Our discovery-based shopping model, strong brand relationships, and the constant innovation and attention to detail that we put into our daily experience is resonating with more and more customers,” CEO Darren Darrel Cavens told analysts on a conference call this week. Our continued innovation in mobile, personalization, and curated product and category offerings are helping to drive strong repeat engagements from our existing customers as well."

For the period ended June 29, 2014, zulily reported:

  • Net sales of $285.0 million, up 96.5% from $145.0 million in the second quarter of 2013.
  • Net income was $7.8 million, a 95.0% increase compared with $4.0 million.
  • Marketing expenses were $3.5 million, a 118.8% jump from $1.6 million.
  • The number of active customers grew to 4.1 million, an increase of 86% from 2.2 million at the end of the second quarter of 2013. Zulily defines an active customer as an individual who has purchased from zulily at least once in the last year.
  • Total orders placed increased nearly 93% to 5.4 million from 2.8 million.
  • Average order value was $53.85 for the quarter, an increase of just less than 1% from approximately $53.50.
  • For the 12 months ended June 29, 2014, 84% of North American orders were placed by repeat shoppers.

Zulily also reported that around 49% of North American orders were placed from a mobile device during the second quarter, up from approximately 47% in the first quarter, and approximately 42% in the second quarter of last year.

“Mobile is a huge opportunity for us and we'll continue our innovation in this area,” Cavens says. “We continue to focus on offering more brands and great product diversity that brings our customers back to us again and again."

Part of what separates zulily from e-commerce companies that rely on search engines and what Cavens calls “needs-based shopping,” are the steps it takes to replicate online the experience of shopping at local boutiques or shopping malls, and allow customers to discover products on a regular basis.

On a typical day, zulily launches more than 100 sale events and 9,000 products, Cavens says. “We’re able to maintain that freshness and newness by having one of the largest U.S. merchandising teams in retail,” he added. “We ended the second quarter with a merchandising team of over 400 people who are out there sourcing product at an incredible value to our customers. More and more vendors are coming to us with their newest and current inventory, all while maintaining an average discount of 50%.”

The merchant also credits its efforts with personalization for much of its success, as zulily is now producing millions of different versions of its site so that each shopping experience is tailored to the individual.

Zulily, No. 55 in the Internet Retailer Top 500 Guide, began trading as a public company in November 2013.

For the first six months of the year, zulily also reported:

  • Net sales of $522.9 million, a 92.2% increase compared with $272.0 million in the first half of 2013.
  • Net income of $4.8 million, up 100.0% from $2.4 million.
  • Marketing expenses of $47.4 million, up 68.7% from $28.1 million.

Zulily also announced plans to open a third fulfillment center, this one on the East Coast, in early 2015, though it did not disclose an exact location. The merchant expects its new 17-acre fulfillment center in Nevada to be operational in late September, and it installed more than six miles of automated conveyor belts in its Ohio facility during the quarter.

Given its strong performance in the first half of the year, zulily says it expects to increase its investment in its Nevada facility and to invest more in warehouse automation in the first part of 2015.



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