Zulily, the Internet retailer that is in the midst of turnaround effort, saw its sales growth slow in the second quarter.
As noted by The Wall Street Journal Wednesday (Aug. 5), the company’s slowdown points to the limitations of what the financial publication termed the “unusual business model” that is marked by long delivery turnarounds, accompanied by a “no returns” policy for merchandise for items running the gamut from toys to clothing.
In the second quarter, Zulily showed sales up a relatively meager 4 percent, measured year over year, to $298 million. That marks a steep drop from previous rates that had topped double digits for top line growth.
At the same time, the reported “ship to order” time – which tracks how long it takes before merchandise actually leaves the company’s warehouses — came in at more than 11 days. Lead times are long because, as The Journal noted, the deep discounter gets the items from merchandisers only after they themselves receive orders – and Zulily repackages and houses and then sends the items from its own warehouses.
Looking at the bottom line, net income for the second quarter was $3.5 million, down from $7.7 million last year.
As The Journal noted Wednesday, Zulily CEO Darrell Cavens said the company’s goal of capturing rapid growth showed some weakness in the overall go-to-market strategy.
“We were overly focused on rapidly growing our customer base,” Cavens said, while heavy spending on marketing and advertising garnered only one-off buys from customers.
Nowadays, the company is embarking on a new marketing tactic, which looks to grab repeat purchases. In the latest quarter, the number of customers who shopped at least once using the site over the past 12 months was up 19 percent to just fewer than 5 million, and the total number of orders they placed was up 7 percent to 5.8 million.