Startup Cemetery

A big resource for entrepreneurs and startup owners, in which we have collected and analyzed why +100 big companies have failed. Learn from mistakes, and avoid being part of the 90% of businesses that fail.

Zulily

Online retailer that offered daily deals

General Information
Category
e-Commerce
Country
United States
Started
In 2009
Business Failure
Business Outcome
Shut Down
Closed
Active
Cause of Failure
Bad Marketing
Founders & Employees
Number of Founders
Two
Name of Founders
Darrell Cavens, Mark Vadon
Number of Employees
Between 1001 And 5000
Funding
Number of Funding Rounds
5
Total Funding Amount
$194.6M
Number of Investors
7
Description

Zulily was an online store dedicated to moms and children clothing and products. The site offered heavily discounted invite only flash sales to its customers and gained huge popularity and rave reviews in its first operational months. Most products were initially from little-known brands and included prenatal care products, baby gear, travel accessories, bedding and bath, children's clothing, toys, DVDs, and educational materials. The site also promised to be an eco-friendly site that would plant a tree for each new purchase on the site in the name of the buyer’s child.

Cause of Failure

The main culprit for the downfall of the popularity of Zulily is poor marketing and user-attention strategies. Most notably, in order to access the search engine and databases of Zulily’s shopping items, the platform required from new visitors to give their email address prior to even seeing what the online store had to offer. This marketing trick met with a lot of criticism since it violated some basic marketing principles. Zulily initially achieved a record success with the number of new subscribers who registered on the site, but Zulily team soon noticed that sales began rapidly to decline. People gave their mail only to peek at the site and registered users couldn’t necessarily be considered loyal or even willing customers. Zulily inadequate marketing strategy and front-page email request discouraged thousands of potential new customers to sign up, while their existing users often bought only once or anyway not enough to sustain the financial stability of the company. Users also stated that they felt overwhelmed by the number of merchandise and flash sales invitation the e-shop offered so the company complied by diminishing them, and a decrease in revenue also followed.

Moreover, although Zulily sometimes offered brand names for ridiculously small prices, there would often be longer than expected delivery times to customers which also earned them poor reviews.

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