Flash sale retailer Zulily has changed its business model to include stocking inventory to speed up shipping times.
Although most retailers already use this approach, when Zulily began as a start-up five years ago, it wanted to save money—thereby offering shoppers big discounts—by eschewing a standing inventory and instead ordering from suppliers per customer demand, reported the Wall Street Journal.
Zulily became a public company at the end of 2013 and now brings in more than $1 billion in annual sales. Successful from the start, the company is one of the few fashion e-commerce sites that has not had to borrow money to stay afloat.
In the past, Zulily would send for a product from the vendor after an order was placed, and vendors would then ship the items in bulk to Zulily's warehouses for sorting and delivery. However, this method took 13.7 days, on average, to get merchandise from Zulily's warehouses to customers in the fourth quarter. That preparation time, along with delivery, meant most customers had to wait more than two weeks for an order.
Zulily is one of the fastest-growing retailers, with sales rising 73 percent last year to $1.2 billion.
"We need improved processes that can be scaled," Zulily's CEO Darrell Cavens told the Wall Street Journal. "We don't want to grow ahead of our capacity."
Although the retailer is looking to get an assortment of merchandise in the warehouses before selling it, vendors will own the merchandise until it is officially sold.
-See this Wall Street Journal article
Future success remains uncertain for Zulily's IPO
Nordstrom most engaged brand on Pinterest
Has social media run its course?
Walmart, Amazon, eBay top customer service
Fashion e-tailers borrowing to stay afloat