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Zulily plans to start selling more home decor products

In today’s world of instant gratification and rapid shipping, Zulily orders can practically take an eternity to show up at your doorstep. Average wait times: A few weeks, and sometimes longer.

I know this first-hand.

Last year, a maternity dress I bought missed two weddings that I planned to attend while pregnant. Finally, I canceled the order because customer service had no estimate for when it might arrive — and pregnancy only lasts so long. In a second case, which occurred years earlier, I ordered a pair of shoes via Zulily, which were so delayed, I had completely forgotten I had bought them.

More than ever, speed is being viewed as a competitive advantage among e-commerce companies. Google, Amazon, eBay, and even traditional retailers, like Nordstrom, are investing heavily in ways to make deliveries show up on the same day you ordered them.

zulilyAnd then there’s Zulily, the fast-growing flash sales site that features an ever-changing selection of items for moms and kids. Zulily seems to be operating on the better-late-than-never theory for shipping.

In recent months, the Seattle-based company said orders have taken an average of 12 or 13 days to leave its warehouse. Tack on another three-to-five days to get to your house, and customers don’t see their maternity clothes or cute newborn swaddles for weeks — which if you don’t know, is long enough for a pregnant woman to gain 10 pounds, or a baby to grow out of a sleep sack.

A post on a forum on BabyCenter, the go-to place for mommies to vent about anything relating to children, sums up the shopping experience on Zulily: “Great prices. Terrible shipping…long wait.”

And then there’s the shipping charge.

An average order on Zulily can cost around $8 — a surprising amount when most sites routinely cover the cost of shipping, especially on orders over $50.

Still, the 4-year-old company has seen unprecedented growth in selling clothing, toys and home goods to moms. In fact, if the deals site surpasses $1 billion in sales this year, which it is expected to do, it will join Amazon and Old Navy as the fastest retailers to reach this key milestone.

Zulily celebrates its 2013 IPO.
Zulily celebrates its 2013 IPO.

Shipping has been a frequent topic on the company’s conference calls since Zulily went public last year. The company is quick to admit that it still has a long way to go before it gets the formula right on shipping, and it says things are improving, especially since I bought the dress last year. It also plans to open a third distribution center next year to relieve additional pressure on its systems.

But because of the way Zulily operates, it is unlikely that same-day shipping will ever be a goal.

That’s because Zulily doesn’t order most of the products it offers in advance.

Instead, it orders the items from vendors after the sales end. Vendors then ship the merchandise in bulk to one of Zulily’s warehouses, where the products are sent to the consumer. In order to speed up the process, it would have to buy inventory from vendors in advance. Any unsold inventory would then be a liability, and collect dust on warehouse shelves until it could unload it through another sale.

Other flash sales sites that are focused on selling clothes at a discount, experience faster shipping times because they do tend to keep items in stock. For instance, Gilt ships in 2.9 days; Rue La La in 2.3 days; Hautelook in 2.1 days and Ideeli in 1.4 days, according to StellaService, which evaluated shipping times of the major sites.

When it focused on inventoried items at Zulily, StellaService said shipping times dramatically improved to 3.7 days, even though it was still slower than all of its competitors.

zulily unlimited shipping One way to quantify how much inventory is coming and going from Zulily is something it tracks called “inventory turn,” which is the number of times it completely sells through everything in stock over a year. Zulily reports that it shuffles the deck 45 times on an annualized basis, whereas an average retailer may accomplish the same thing four times a year.

But all of its shipping woes aside, it doesn’t seem to be affecting sales, at least not in the way one might think.

On each product page, Zulily provides an estimate for how long the item will take to ship, so customers know what they are signing up for (if they’re paying attention, and not shopping on their phone while rocking a newborn to sleep). The company has also experimented with various shipping programs, such as charging $49 a year for unlimited purchases, much like Amazon’s Prime program — although I’m told that deal was only offered to only a small number of customers.

During the company’s last earnings call, in which analysts raved over Father’s Day deals and drooled over Under Armour discounts, Zulily President and CEO Darrell Cavens said it has a “ready to ship” category on its site, but interestingly, it’s not as popular as you might expect.

“What we’ve found is our customer doesn’t come to us for that. And if you’re coming in to look for a particular item for tomorrow, our customers generally don’t think of us that way, and so we see good volume out of that, but it’s still tiny,” he said.

Zulily CEO Darrell Cavens
Zulily CEO Darrell Cavens

It appears that Zulily has been able to train mothers to expect to pay for shipping, much how they can manage to live off very limited sleep after awhile. In the meantime, customers continue to return for the selection and prices.

According to analysts at William Blair & Company, Zulily is special because of its daily assortment of items, which recreates the window-shopping experience online.

“Zulily has more than 300 buyers today and plans to have 500 by the end of 2014,” it reported. “This already exceeds that of Amazon, to our understanding, and it is far greater than large established retailers, such as Home Depot (with roughly 150 buyers).”

In the same report, William Blair & Company analyzed 300 items for sale on Zulily and found that 60 percent of them were available on other sites — and half on Amazon. In the instances where the exact same item was sold elsewhere, Zulily’s prices were more than a “midteens” percentage cheaper.

zulily55Those prices factor in the cost of shipping, but another consideration that savvy online shoppers weigh is the returns policy — most items on Zulily’s site don’t qualify.

Not all flash sales sites have been able to achieve this rapport with its customers. While Zulily was able to raise $253 million in a public offering, its counterparts have struggled.

For example, in February,, the home decor company co-founded by former Jobster CEO Jason Goldberg, dropped the flash sales model in favor of improving shipping quality and speeds. Stealing a page from Amazon, it often elected to ship items as fast as six hours, but now it’s in sale discussions with several suitors.

In the case of my dress that took an eternity to ship, Zulily was kind enough to refund me the cost of shipping when it appeared that it was going to be tied up in customs for an unspecified period of time.

Personally, I’ve elected to shop elsewhere when I need something for a special occasion. However, I admit I return regularly to browse. Since then, I did end up purchasing a favorite item that I couldn’t get anywhere else for anywhere near as cheap, and was mentally prepared for the wait.

In that way, Zulily has trained me, too.

Editor’s note: Zulily co-founder and chairman Mark Vadon will be one of the featured speakers at the GeekWire Summit on Oct. 2 in Seattle. 

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