Zulily announced yesterday it was selling to QVC, the home shopping network, for $2.4 billion in cash and stock. Today, employees and investors are still digesting what it means for the five-year-old Seattle retailer.
We caught up with Zulily’s CEO Darrell Cavens today to talk about deal, including the primary concerns of the company’s 3,000 employees, and what he sees as the drivers of growth for the flash sales site, which to date has been focused on selling apparel and accessories to moms.
Here is an edited transcript of our conversation:
Is the sale of Zulily to QVC any more real today?
Cavens: You know, it’s interesting. We are a daily business that publishes a new site every day. As I got up this morning, I was doing the normal routine, looking at the site to see what’s there and sending a note to the tech team on a few things. Yesterday, there was a lot going on from the beginning to end, but things are settling back to normal. I’m spending a lot of time with employees this week and this morning and answering a lot of questions. It’s a little dull and back to business as usual.
What are the primary concerns of the employees?
Cavens: It’s around change and what does it mean. As I outlined yesterday, it’s business as usual and the reasons why it makes sense. It will allow us to drive more growth, and a lot of folks here are signed up for that. That’s the reason — it’s not a cost-cutting approach. It’s very much focused on driving growth.
Could you have achieved growth on your own as an independent public company?
Cavens: I think we certainly feel like the business is a great business, and there’s no doubt we could have stayed a public company. I think as I look at the opportunity here to bring together the uniqueness of Zulily has and the incredible business QVC has, the sum of the parts are greater than the individual pieces. We believe we’ll have gains having them together. It wasn’t a matter of a fact that we couldn’t.
One of your main messages to employees yesterday was about driving additional growth. Where will it be coming from?
Cavens: It really comes with an obsession and focus on the core of what we are doing, and the three initiatives we outlined earlier this year. It’s about driving customer innovation, and what we call ‘The Perfect Order,” and making sure the customer experience is incredibly strong. The average customer buys from us many times a year, so we have an opportunity to increase the frequency. And then, I think with this partnership with QVC, it allows us to go after brands and categories that we weren’t deep in, like health, beauty and jewelry. They are categories we dabbled in, but haven’t done big business in. And, on the brand side, QVC has proprietary brands and exclusive relationships. We can bring a set of emerging brands that really have phenomenal product but not great distribution and expose that to QVC to keep the freshness and newness there.
Together, we have 1,000 buyers, and I don’t know if I can confirm this, but I don’t know of any other buying organization that is larger than ours on the merchandising side. Our customers love that our offering is fresh and new every day.
And, when will Zulily be on TV?
Cavens: We haven’t closed the transaction, so we need to go through that, which we expect to happen in the Q4 timeframe. And then, I think the teams can work together on integration plans. Certainly, we think there’s an opportunity to bring brands to the QVC team. We are eager to experiment and try.
An analyst recently said he thought Zulily was going to become a modern-day QVC, but said you had a hard time with the learning curve. Do you think this solves that?
Cavens: I think building any entrepreneurial business is incredibly hard work and when I step back, it’s probably a little bit like the stock market, where any given say things move around. Every day you have some incredible wins and ou stub your toe. In five and a half years, we’ve achieved $1 billion sales and built a profitable business. I think it’s pretty unique and special. I remain pretty pleased about what we’ve built. I think that often times people are looking at a snapshot and paint a story. I very much feel like we have a lot more road ahead and many more milestones to achieve.
At the time of the IPO, people asked me, ‘Are you done now? What does this mean?’ I feel like that the same questions are coming up. I’m committed. I love the business. I feel like we have a lot of road ahead, and that we are driving the business forward.