QVC is betting $US2.4 billion that it can do more with Zulily’s young customers than Zulily could alone.
The home shopping network’s parent company, Liberty Interactive, said on Monday it would acquire the flash sales website for that amount — nearly 50% more than Zulily was valued at on Friday.
Zulily is a flash-sales site targeting mothers of young children with daily deals. QVC’s shoppers are older — in their mid-50s, according to one researcher. (We reached out to QVC to find out what its average customer age is; we will update when we hear back.)
“This will meaningfully increase its ecommerce revenue as well as attracting a younger demographic than QVC’s customer base,” Moody’s Investors Service wrote in a report.It isn’t the only time QVC made a move that skews younger. The company will be the exclusive vendor of preppy retailer C. Wonder, which closed down its retail stores earlier this year.
QVC’s CEO Mike George touted the Zulily acquisition as a way to “further engage modern women who love to shop in new and compelling ways.”
Still, to make this purchase a success, QVC’s going to have to solve some problems at Zulily. Number one is that it has a hard time generating repeat traffic.
“Zulily’s problem is it’s not sticky. Clearly they weren’t getting a lot of return business,” Paula Rosenblum, managing partner at retail consultancy RSR Research said to CNN Money on Monday.”This is QVC’s core. This is what they do. They create community. If you don’t know why you aren’t getting repeat customers, you can leverage this community to help you figure out what you’re doing wrong.”
The deal is a timely bailout for Zulily’s investors, who’ve seen the shares battered this year. The $US18.75 sale price is still below its 2013 IPO price of $US22 a share, and where it started trading this year.
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