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Zulily Q1 Sales Up 87% Despite Sluggish Ship Times

While customers make fast, impulse purchases; Zulily makes slow, thought out deliveries and is known as one of the Internet’s slowest shippers. The discount site targeted toward moms, reported that its first quarter sales have grown 87 percent in one year; making it one of the fastest growing Internet retailers to date. The four year old Seattle-based company excels at getting women to routinely browse and spend on deals. Average Zulily consumers purchase $219 worth of goods per year.

Online consumers have been conditioned to expect deliveries in one to two business days at most, but an average Zulily shipment takes two to three weeks before reaching a consumer’s doorstep.  Typically, the slow delivery time is not a problem, because few people visit their site in search of a specific item, and therefore don’t have urgent needs for their purchases. Zulily accounts for the delay by advertising clothing items ahead of the seasonal schedule. Currently, the site is featuring summer apparel.

The shipping lag time is owed to Zulily’s bare-boned business model, which facilitates selling a wide variety of merchandise from more than 10,000 vendors at a low rate. One time consuming but cost saving step Zulily takes is to wait until an online sale ends to place bulk orders with vendors. This saves employees’ time, lowers the cost of shipment charges and eliminates the threat of overstock.  Additionally, the limited purchase window encourages shoppers to race toward impulse decisions. This concept works for regular Zulily shopper Beverly Wilson of Annapolis Maryland, who browses the site because, “The deals they offer are daily so everything is always fresh and new.” Zulily also keeps pricing down by waiting to have every item an individual orders before shipping a package out, meaning if there is a delay on a single item, the entire shipment is postponed. Another cost-saver is Zulily’s ‘no return’ policy.

This timely, efficient system allows Zulily to be profitable (2014 net-sales are expected to be between $1.15 and $1.2 billion) but is sometimes a source of complaints. In February, there was a warehouse backlog with Toms shoes that led some customers to wait more than five weeks for their orders, and others to cancel completely. To speed up where they can, Zulily is making an effort to manage their warehouse more efficiently by investing in automation.