It’s never been Zulily’s goal to ship products to customers as quickly as Amazon.
In response to a question about shipping times at the GeekWire Summit last year Zulily’s Chairman Mark Vadon said, “No, I don’t view it as a problem. Our value proposition is different.”
But Zulily appears to be changing its tune.
Going forward, in order to shorten shipping times and reduce errors, it will start stocking some inventory in its warehouse before selling it online, reports The Wall Street Journal.
For the past five years, the Seattle-based retailer has been operating under a completely different model, where that hasn’t been the case. In order to offer big discounts, it has asked vendors ship the merchandise in bulk to one of its warehouses once a sale was completed on its website. Then, Zulily distributes the products to customers.
Because of the two-step process, packages can take up to two weeks to leave the warehouse, and more to get to a customer’s house, which can feel like an eternity in the fast-paced world of online retail.
It’s been a well-known and well-documented problem for Zulily.
I wrote about the issue last year when a maternity dress I bought from Zulily missed two weddings that I planned to attend while I was pregnant. I finally canceled my order, knowing I wouldn’t be pregnant for too much longer.
As recently as January, Zulily CFO Marc Stolzman acknowledged the contrarian approach shouldn’t work in a world fueled by instant gratification.
“We are constantly compared against Amazon, and in an Amazon-defined world our model shouldn’t work,” said Stolzman.
In February, the company announced Stolzman was stepping down after reporting disappointing fourth quarter and 2014 financial results. In addition, analysts have cut their growth forecasts, noting that the company is seeing fewer new customers turning into frequent buyers.
UPDATE: A Zulily spokeswoman provided a few more details about the new program via email, adding that the long-term goal is to get ship times down to seven days. “If we are able to shorten ship times we will open ourselves up to an even wider market of customers and expand our repeat business,” she said.
Zulily’s shares are trading well below its IPO price of $22 a share. Today, shares are down 17 cents, or 1.3 percent, to $13.05 a share. Last year, it shares soared to more than $70 a share.
In the interview, CEO Darrell Cavens told The Wall Street Journal Zulily has been testing a new model with suppliers for the past year, which is similar to Amazon’s third-party fulfillment program. Just like Amazon, Zulily will store and ship merchandise from its warehouses, but the goods won’t be on Zulily’s balance sheet. Vendors will own the merchandise until it is sold, and pay Zulily fees to participate in the program.
“We need improved processes that can be scaled,” Cavens said. “We don’t want to grow ahead of our capacity.”
