Zulily was founded with an interest in tapping the opportunity of the existing market gap in providing mothers and children merchandise. The target market was the mom demographic, and they offered to provide unique and non-branded products at a competitive price to bring value to moms. The company’s financial model was more of a leveraged buyout model. The primary source to acquire the company was debt from Maveron LLC and August Capital, contributing up to 90% of venture capital (Teixeira & Mcara, 2018).
The growth strategy of Zulily was setting a competitive price which propelled the company to offer fresh and unique products to moms. The company negotiated with its vendors to offer discounted prices, and as a result, Zulily was able to thrive in the market with the strategy of providing unique high-end products at affordable prices to many (Teixeira & Mcara, 2018). The strategy of entering into a new market with low prices and aesthetic products promoted the company’s growth.
The company operated in two models, which included the daily deal model and the just-in-time model. The daily deal model aims to provide fresh and unique merchandise to the customers seeking exciting and delighting mothers every day. The operation model resulted in pulling in new customers and a high repurchase rate that, in return, increased the number of vendors to serve the demand. Zulily incorporated the just-in-time model to deal with the issues of carrying inventory after buying, which would destroy the company’s promise to offer mothers fresh, unique, and valuable. The strategies are not appropriate for the company’s current situation because of the changing demands of consumers.
Analysis of the Current Issues
The focus is to improve the repurchase rate at Zulily, and the analysis of the issues related to slow growth and fewer repurchases will give the root cause. Zulily was conceived to offer fresh, unique, and value to mothers but the focus shifted to over-assortment with stale mix with boutique-like vendors to widen product category and keep the merchandise mix fresh. The shift to over-assortment and merchandise stale mix seems to have contributed to slow growth and a low repurchase rate. Delivery delays may force a buyer to pay a higher price to get the same product but with a shorter lead time. The new customers perhaps prefer fast delivery while the existing they do not need to experience the old tale of Zulily taking at least 20 days to make a delivery. The strategies existing in the company are inappropriate to handle the current issues. The failure to adjust action plans is a pivotal contributor to the downsizing of the company.
Recommendations
Zulily companies need to adapt to the changing needs of their customers. Meeting customer satisfaction is the key to improving the repurchase rate and keeping the pace of fast growth. The restructure of the strategies in place is the focal point to work the slowing growth. An effective strategy will outline areas that Zulily should emphasize to enhance the market growth. The company should consider sticking to its initial genre of business operations to avoid over-assortment, thus solving the issue of the stale merchandise mix. The approach will ensure the company has a reference point of her existence, thus attracting customers searching for its products. The key is to fulfill its promise of delivering fresh, unique, and valuable merchandise to mothers.
Reference
Teixeira,.T., & Mcara, S. (2018). Improving repurchase rates at Zulily. Pp. 1-19.