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Zulily Blames Restructuring and Layoffs on Lackluster Marketing

Zulily is reportedly restructuring, and the effort will spur significant layoffs.

In an email on Wednesday reported by Business Insider, the discount online marketplace’s CEO Jeff Yurcisin informed employees of the impending changes, which will impact jobs at the company’s Columbus, Ohio and Seattle, Washington offices.

Yurcisin told employees that the company’s new strategy involves an “investment in technology, the user experience, and other areas to help support speed and agility” as the brand attempts to build upon its “fun and addictive” shopping experience.

In an effort to streamline its merchandising and studio operations and make room for these new investments, Zulily will lay off an undisclosed number of employees. As of January, Zulily employed 3,500 people globally.

Zulily’s studio team manages marketing for the company, including the site’s interface, graphics and product copy, while the merchandising team is responsible for managing the e-tailer’s product offerings, which change nearly daily. The e-tailer is known for its discounted selection of apparel, footwear, accessories and home decor.

“We are at a critical inflection point in our business,” Yurcisin wrote, explaining that the company’s restructuring would ensure Zulily’s “strength and longevity” moving forward.

The CEO promised to continue to facilitate an “open dialogue” about the state of Zulily’s business, and pledged to support the company’s “impacted team members” as they transition out of the organization.

In a May press release, Qurate, owner of Zulily (as well as QVC International and HSN) announced an overall 4 percent revenue decrease to $3.1 billion across all its brands in the first quarter of 2019. Zulily’s earnings decreased by 5 percent to $397 million.

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“Our first quarter performance was disappointing amidst a changing retail and media landscape,” said Qurate Retail CEO Mike George. He explained that the recent overall decline in profits likely stemmed from difficulties navigating the evolution of the company’s business model, and the integration of HSN into the QVC business—a process that began with HSN’s acquisition last fall.

As for Zulily, the release stated that revenue decreased due to “lower unit volume driven by a decrease in new customers and lower frequency of purchases from existing customers, as well as lower average selling price.” The statement said that kids’ and women’s apparel, along with home goods, were the categories that saw the greatest decline.

The statement places the bulk of the restructuring blame squarely on marketing efforts, calling out “less efficient customer acquisition spend on certain digital marketing channels.”

The collection of sales tax in additional states also played a role, Qurate said.

“We are taking a disciplined approach, investing in initiatives to drive high-quality customer growth and engagement, broaden and deliver our assortments, particularly across new digital platforms, and optimize our fulfillment network,” said George.