Zulily Instagram post

Zulily To Return After Being Acquired For $4.5 Million By Beyond

The recently defunct flash-sale site Zulily may finally have found a fitting corporate home after two unsuccessful tries by TV-shopping giant Qurate and investment firm Regent.

Beyond Inc., the old Overstock.com reborn after the acquisition of Bed Bath and Beyond’s IP assets, just announced it acquired the intellectual property assets of online retailer Zulily for $4.5 million in an all cash deal. It will be folded into Beyond’s off-price Overstock division, which just came back from the dead too.

No date was announced when Zulily will be restored online, but if history repeats itself, it will get up and running fast. Beyond only took three months to revive Bed Bath and Beyond online.

“This acquisition doubles down on our belief in the off-price market, and its importance to building our business, improving our margin profile and growing our customer profile,” said Beyond executive chairman Marcus Lemonis in a statement.

Zulily will add 18 million customers to Beyond’s already mammoth house file, which included some 250 million names added through the Bed Bath and Beyond acquisition.

In the direct-to-consumer world, names are the gold standard, giving direct access to customers’ inboxes without paying high online customer acquisition costs. The house file also provides detail purchase histories, enabling a brand to activate more personalized digital marketing programs.

Beyond still has an uphill battle to re-engage those customers across its brands, but Zulily has only been offline since Christmas, so it might not be as hard as it’s been for Bed Bath and Beyond, which went through a high-profile bankruptcy and was known primarily as a brick-and-mortar retailer. In the fourth quarter, Beyond reported some 5.6 million active customers with a last twelve months (LTM) value of nearly $300.

“This acquisition marks a strategic step forward in the transformation and long-term growth of Beyond,” Lemonis added, as he called out “significant synergies” across product categories.

Zulily’s fashion focus complements Overstock’s home furnishings’ profile, though it is expanding into other categories, like jewelry.

Zulily’s Rocky Road

Zulily was an early online pioneer, launched in 2010 as a destination for moms to shop for herself and her family with deep discounts offered in a limited-time, flash-sale format. It’s Achilles Heel was it sold products to customers before placing merchandise orders with vendors, so deliveries could be delayed weeks before customers got their not-so-instant gratification.

Zulily went public in 2013, initially valued at $2.6 billion, but peaked at about $9 billion after reporting in fiscal 2014 that revenues advanced over 70% to reach $1.2 billion and adjusted EBITDA up about the same, reaching $44 million. Then things began to falter.

In August 2015, Liberty Interactive, which would become Qurate Retail with TV-shopping channels QVC and HSN, stepped forward to acquire Zulily in a deal valued at $2.4 billion, but Zulily’s flash-sale business model didn’t fit comfortably with Qurate’s TV-shopping one.

Under Qurate ownership, it peaked at $1.8 billion in 2018, but then started to slide. In 2022, Zulily sales dropped to $906 million and it called time.

Qurate offloaded Zulily in May 2023 to investment firm Regent for an undisclosed sum, but it apparently didn’t have the wherewithal to turn Zulily around and closed it at the end of December 2023 after only seven months.

Now Zulily has found a new home under Beyond and its Overstock group headed by CEO Dave Nielson. It feels like a good fit.

“The ramp with Zulily is simple, as the website and mobile app are already built and available in the Shopify environment,” he said. “We will be able to integrate it seamlessly into our back-end systems for order fulfillment, logistics and operations to by handled by our existing teams.”

Bright New Day

Jefferies investment analyst Jonathan Matuszewski believes that Zulily has finally landed in a good place to revive its business. He notes that Zulily’s misfortunes were caused by “unreliable shipping speeds, confusing pricing and a failure to innovate.” But it was always a stepchild in the broader Qurate business and didn’t get the attention required.

“Theoretically, under the Beyond model, those headwinds should be largely alleviated,” he wrote in a research note. “We believe Beyond is a natural acquirer for this asset and a significant return on investment could be achieved with a fraction of LTM sales.”

Zulily still has hurdles to overcome. In 2023, it had 2.5 million active customers, so the site had lost more than 80% of its existing customer base, leaving questions whether Beyond has a good understanding of the current Zulily customer, how much overlap there is between its existing files and whether the customer lists will meld together well.

All in all, Matuszewski sees strong upside for Beyond in this acquisition. “This introduces an incremental lever for management to bolster Beyond’s active customer file and wallet share.” At the same time, Jefferies is still rating the Beyond stock a Hold, waiting to see whether CEO Marcus Lemonis has the magic touch with the company undergoing so many changes over the past two years.

As for loyal Zulily customers and past ones who got lost in the shuffle through two corporate owners, maybe the third time is the charm.