I am always on the look out for new and emerging brands that have unique stories. I also keep my eyes open for brands that also have the potential to be good investments. A couple of nights ago I was watching Jim Cramer on CNBC’s “Mad Money” and he did a comparison of the investment potential of two recent Initial Public Offerings, The Container Store (tcs) http://wp.me/p2zj1x-D9 and Zulily (zu). I was intrigued by his comments on Zulily and thought that I would do some of my own research to better understand their story and value proposition.
Zulily was founded in 2009 by Darrell Cavens and Mark Vadon. It is headquartered in Seattle and has offices in London, Columbus, Ohio and Reno, Nevada. Zulily is an online shopping destination for moms. Zulily offers daily deals for moms, babies and kids. Each morning Zulily offers a fresh selection of hand-picked quality children’s apparel, women’s apparel, toys, infant gear and home décor—all at an average savings of 50%. The flash sales include over 4,500 items and typically last 72 hours. It creates an impulse-driven shopping experience while helping move excess inventory sourced from a variety of vendors.
Moms are a highly lucrative market. According to the U.S. Census Bureau, 39 million U.S. households have children under the age of 18. Women manage most household spending and account for almost two-thirds of all online shopping. Zulily has over 2.6 million active customers who have purchased at least once in the last 12 months. There is tremendous potential for future growth. 83% of orders were placed by repeat customers
Zulily has created a proprietary system that delivers 10 million daily emails to consumers who have opted in to receive notices of 72-hour sales.
Zulily went public on November 15th at an initial offering price of $22. On Friday the stock closed at $41.02 up 86% in less than two months. For investors it is a very unique and fast growing company.
In the first nine months of this year, sales more than doubled to $438.7 million from $202.8 million. Another unique aspect of their business model is that Zulily doesn’t purchase a product from a supplier until a customer places the order. This help boost cash flow. Everything in its warehouse has been paid for. There is little inventory risk.
It has stocked its flash-sales with product from “smaller boutique vendors” and “emerging” companies—12,000 different sources in all. This allows Zulily to offer unique merchandise not featured at “Big Box” retailers. Zulily has also focused on creating an enjoyable online shopping experience.
Do you think Zulily will continue to grow at a fast pace?