QVC, the television shopping channel, has bought the mom-focused online retailer Zulily for $2.4bn.
Zulily is a “flash-sale” retailer that sells toys, onesies, lotions and women’s apparel at a steep discount from traditional retail pricing for a brief time, then it’s gone. A Fast Company profile of the company from earlier this year described the appearance of its offices as looking “like the world’s nicest Crate & Barrel swallowed a pediatrician’s office”.
QVC, part of John Malone’s Liberty Interactive, is so often the target of parody that it’s easy to forget how profitable the shop-from-your-couch network is: it made $8.8bn last year and its airtime is coveted real estate for eager retailers. The six-minute segments (simulcast on YouTube), during which interested viewers call in to buy the items being displayed, can generate tens of thousands of dollars in sales and generate exposure to the huge daytime TV audience in the US for a wannabe mogul’s jewelry or fashion designs.
Zulily has been something of a distressed asset in recent months: the stock was downgraded by Goldman Sachs in July from “buy” to “neutral” on fears that the company’s user base was getting tired of the service and leaving it behind at rates that couldn’t sustain the company’s growth. Still, Goldman estimated that the company has some 2.8 million active customers.
The company started off very strong, with four rounds of funding including a series D of $85bn led by blue-chip Silicon Valley investor Andreessen Horowitz. Founded in 2010, Zulily went public in November 2013 and its stock surged 71% on the first day of trading and reached a peak market cap of $7bn the following February. Since then it’s been inexorably downhill for Zulily’s shares, and Liberty clearly sees value in the acquisition. It’s not bad news for Alibaba, either, whose 9.3% stake in Zulily is worth some $223m at the purchase price (shares of Zulily also rose sharply and stayed high on the news of its acquisition).
Liberty issued a statement on the deal, saying that the company would be incorporated into Liberty’s QVC tracking stock, suggesting strong collaboration between the organizations. “Combined under Liberty, we have an incredible opportunity to delight shoppers from the TV to the internet,” said Greg Maffei, Liberty’s CEO.
