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When the flash-sale e-tailer Zulily launched in 2010, it had a firm fix on the demographics of its target customer: mothers with young children. That meant women in the roughly 20-40 age demographic.
Its success came early and fast. Selling products specifically for that demographic segment, it shot to $1 billion in sales by 2014, joining Amazon and Old Navy among the few retailers to hit that mark so quickly. Zulily caught the attention of then Liberty Media, owner of QVC and now Qurate Retail Group, which acquired it for $2.4 billion in 2015.
Zulily’s 72-hour online flash-sale model suggested synergies with QVC’s daily television programming backed up by a vibrant online presence, not to mention both are highly addictive to their largely female customer base.
Addictive is just the word to describe Zulily where 92% of its customers are repeat buyers. With net revenues of $1.8 billion in 2018, up 13% from fiscal 2017, Zulily claims 6.6 million active customers, 5.1 million likes on Facebook, 371,000 followers on Pinterest and 178,000 on Instagram, which it has only recently started to optimize with daily stories and Instagram Live behind-the-scenes videos.
Admittedly, Zulily hasn’t completely done away with demographic thinking. It continues to target women, but traditional demographic segmentation by age and income has gone by the wayside.
“I have worked for 20 years in marketing and have not seen a company as broad in appeal and user base as Zulily,” Naama Bloom, Zulily’s vice president of marketing, told me.
The company’s customer distribution is basically a flat line across age and income. “We think about our customer more in how she shops and why she shops than by age or income band. Zulily is unique in that we approach her mindset more than her wallet size or age,” she continues.
Meet Zulily’s SOBO customers
Bloom describes the quintessential Zulily customer by the acronym SOBO–Seizes Opportunity, Buys Often. In more traditional marketing speak, she is a “heavy user,” shopping about once a week and spending thousand of dollars a year there.
SOBOs average 17 items purchased per month, as compared with four by non-SOBOs. SOBOS are also distinct in their buying behavior, which includes many gift selections as well as self-purchases. “In this digital age, the SOBO customers have an extreme need to connect in the physical world, and one way they do that is through gifting to friends and family,” Bloom describes.
Among the younger SOBOs, the definition of family is widening beyond the traditional scope of the nuclear and extended biological family.
“Millennials are creating different family groups they belong to. For example, they have work families and school families. And their ‘fur babies’ are also part of the family. Gifting has become a way to connect with all those family members they care about.”
Creating a new store every day
Zulily is designed to satisfy the SOBO’s passion to find things she may need or want for herself or as a gift at great prices. “The way Zulily works is we encourage her to come back to the site every day for a fun shopping experience where she can check what is new and exciting and get inspired everyday,” she says.
The model is to conduct multiple 72-hour sales featuring products from its 15,000+ vendors, both big brands and small. In effect, Zulily creates a “new store every day,” as fellow Forbes.com contributor Deborah Sweeney describes it.
Thus Zulily presents its customers many thousand of new buying opportunities daily in fashion for herself, her children, the love interest in her life and for their home, as well as beauty and wellness. The customers’ job is to seize the opportunity.
At first blush, it may appear the sense of urgency created by a limited window of opportunity is driving her to click and buy, but Bloom tells me that is not the motivator.
“The reason she can pull the trigger so quickly is she has done the research and knows what she is looking for. When she sees that product at the right price, she is going to take it,” Bloom says.
“That is why we call them opportunistic shoppers. She has a shopping list in the back of her mind that she is always looking out for like a beacon across the internet,” she continues.
Just as TJ Maxx creates hunter-gatherer excitement in store, Zulily has mastered that experience online. “TJ Maxx is a company I admire,” Bloom shares. “Like TJ Maxx we have a large merchandizing team and we have constantly changing inventory the way they do. But what sets us apart is people can shop Zulily from the convenience of home or wherever she is at the moment.”
Mobile puts Zulily’s store in the customers’ hand
While shopping at home is convenient, shoppers increasingly crave access to the many Zulily opportunities on the go. Nearly three-fourths (73%) of its fourth quarter orders came from mobile devices. Its mobile app gives customers early access and sales previews along with pertinent text messages to keep them in the loop of what’s happening at Zulily daily.
The need to better support its mobile customers drove a recent effort to update the look and feel of its logo and mobile site. “Our previous logo had petals around it that we couldn’t shrink to be legible on mobile,” Bloom explains. “We needed a logo and color palette that would pop from the screen of the many customers that access us on mobile.”
With Zulily’s newly enhanced mobile access, along with a large technology team that is using machine learning to customize each customers’ experience online based upon what she has clicked on in the past, Bloom believes it has the stuff that continued growth is made of.
“We are constantly working on ways to optimize our shopping experience,” she says. “We are launching small tweaks on a regular basis to improve that.”
Zulily has tailwinds behind it in 2019
Since acquiring Zulily, Qurate has been challenged by slower growth after its early explosive rate, but that is to be expected from any company going from zero to $1 billion in four+ years.
And in this day of near instant gratification from online vendors like Amazon, customers became increasingly aggravated by its delays in shipments as orders were fulfilled by its product partners, not from company-held inventory. It has since adapted Amazon’s model of housing some of its third-party vendors’ merchandise in its three U.S. fulfillment centers to speed delivery to customers.
It also reversed its no-returns policy on some items as well, taking the risk off the customer for items that don’t fit or aren’t quite what was expected.
These changes, along with the mobile enhancements, are credited to newly-named president Jeff Yurcisin, who in the second half of 2018 replaced the company’s founder Darrel Cavens, after he moved over to lead new ventures for Qurate Retail Group. Yurcisin joined Zulily after 14 years with Amazon, heading up Amazon Fashion’s Private Brand business and before that Amazon’s Shopbop subsidiary.
But the continued driver of success for Zulily will be its laser focus on satisfying the evolving needs of its well-researched, opportunistic, quick-draw customers who are not thought of in buckets defined by age or income, but by the many facets of her lifestyle.
