Will the zulily deal bring QVC younger customers?

QVC, the home shopping channel and e-commerce retailer, announced that its parent company, Liberty Interactive Corporation, had reached an agreement to acquire zulily, the flash sales site, for $2.4 billion.

Under the proposed deal, zulily will continue to operate as a standalone company with its management team intact. The retailer, which focuses on products for young moms and their children, generated $1.2 billion in sales last year. The company runs hundreds of limited time sales on a daily basis and 56 percent of its orders are placed by consumers using mobile devices.

Based on an estimate put together by the two companies, only six percent of the flash sales site’s customers have shopped on QVC, which skews to an older, female audience. Through zulily, QVC will gain access to additional platforms to market its unique assortment of products and proprietary brands.

To expand its offers, zulily will be able to draw on QVC’s expertise in categories including apparel special sizes, beauty and home décor and Apparel Special Sizes. The deal will also open opportunities for the company to gain exposure to new customers through joint on-air promotions and online programming events.

zulily desktop

Source: zulily

"There are tremendous opportunities to accelerate the growth of the zulily brand for our customers, our employees, and our vendors with QVC’s partnership," said Darrell Cavens, president and CEO, zulily, in a statement. "Together, zulily and QVC have complementary philosophies about our approach to entertaining and engaging our customers and we’ll now have the ability to unlock synergies for growth and deliver new ways to innovate on the discovery commerce model and change the way people shop."

The two companies expect to generate roughly $10 billion in sales to 20 million customers in 85 countries this year. The deal is expected to close during the fourth quarter of 2015 pending regulatory approvals.

BrainTrust

"I like it! QVC has changed a lot, and I think zulily can benefit from the community that QVC has built around itself. Way more modern than a lot of folks realize, and definitely selling some interesting brands."

Paula Rosenblum

Co-founder, RSR Research


Discussion Questions

Will the acquisition of zulily by QVC’s parent company benefit the two retailers? Where do you see the greatest opportunities for the transaction to benefit QVC and zulily individually?

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Michelle Grant
Michelle Grant
8 years ago

I don’t think the acquisition will benefit either retailer. Liberty Interactive is trying to position itself for the future since home shopping is a dying channel and zulily is looking for a reasonable exit for its investors. Given their vastly different business models and customer bases, it’s not likely that the companies will realize the synergies expected.

I’ve seen something like this before in the travel industry where the global distribution systems (another fading business model) built or purchased online travel agencies (the wave of the future). By 2015, those online travel agencies had been divested for low prices after significant losses.

You can read more about my opinion here.

Lee Kent
Lee Kent
8 years ago

I’m not feelin’ this one at all. Maybe that is because I really never got the QVC brand. I’ve always thought of it as a bit cheesy and mostly brand-neutral. In other words, you don’t buy their items because of the labels.

Upon visiting the site this morning, I now see they do show a lot of labels but I would never have thought to shop there.

As for zulily? Very cool, fresh brand with adorable stuff for children.

For my 2 cents? Total disconnect!

Cathy Hotka
Cathy Hotka
8 years ago

The key here is that zulily keeps its management team intact. Under the careful stewardship of Darrell Cavens (formerly of Blue Nile) they’ve made smart choices and have executed well on strategy. While I wouldn’t have expected this news, I’ve got to think that it will be smart in the long run.

Paula Rosenblum
Paula Rosenblum
8 years ago

I like it! QVC has changed a lot, and I think zulily can benefit from the community that QVC has built around itself. Way more modern than a lot of folks realize, and definitely selling some interesting brands.

Gordon Arnold
Gordon Arnold
8 years ago

For the time being, the parent company will ease vendor relationships by increasing turns for some of the products. If logistics and distribution can be merged this too will increase profit by a retention method. But the problems of selling within declining media platforms still remain and will only slow the inevitable irrelevance of both holdings.