zoom into focusa case analysis for zulily

Ferris45 Consulting: Jordan Faralan, Louisa Meng, Rachel Burch, Coral Zekri, Yuki Seki

when we think zulily…

…we think

the modern family

refocus the target market

redefine the brand

match zulily’s technological innovation with customer evolution…

here is our agenda to bring this vision for

zulily into focusSWOT Analysis

Root Cause

Targeting Strategy

Implementation

Financials

SWOTstrengths weaknesses

mobile interface (47% of sales)in-house media contentlarge product selection daily

narrow target marketno return policyslow shippinghigh transaction costspoor customer service

opportunities threats

refocus the target marketthe modern familysmaller age gap - 26-36

merge w/ another companycustomer loyalty programs

competition from amazon.comflash sale site mergers

SWOT Analysis Root Cause Targeting Strategy Implementation Financials

root cause

SWOT Analysis Root Cause Targeting Strategy Implementation Financials

declining + unsustainable growth

poor macro- economic conditions

ineffective target marketing

consumer psychographics are evolving

advanced technology

more modern, unconventional householdsshopping behaviors

changingsocially conscious, feminism

parents are dual income providers

interchangeable roles btwn mom +

dad

single, same-sex, multiracial parents

increased household income

improved economy

decreased demand for flash sales

cross generational values (gen x and y)

decision matrixCriteria Priority Option A - Redefine target market Option B - Merge with William

Sonoma Inc.Option C - Expand global market

High ROI High + Comparatively low investment for high potential revenue

+ High initial merger costs but long term costs decreased and revenues increased

- Extremely high costs with uncertainty of profitability

Low cost Med + Marketing and content development sourced internally

0 depends on the merger agreement - Extremely expensive to expand globally

Easy Implementation/ integration

High + Will not change current product offerings or operations

- Complex and highly involved implementation and integration with merging two companies

- Complex and highly involved implementation to execute a global company expansion

Incr. market share/growth

Med + Significantly increase market share and create sustainable growth

+ Opp to capture William Sonoma’s market share and customer base

+ Potentially increase market share and growth significantly

Low Risk High + Low cost and easy implementation - Integrating company cultures, scale, customer base is high risk

- Very risky and many unpredictable variables involved

Employee morale Low + Challenging and exciting work for zulily team to refocus on marketing initiatives

- Could lead to layoffs and disrupt team dynamic

- Employees could be overworked, potentially high turnover

High shareholder value

Med 0 no significant impact - Conflict of interests, legal complications 0 unpredictable

Summary +6 -1 -4

a new target market

SWOT Analysis Root Cause Targeting Strategy Implementation Financials

54%

U.S. kids under 18 years old are not living in a home with two married heterosexual parents in their first marriage.

SWOT Analysis Root Cause Targeting Strategy Implementation Financials

34%

children today are living with an unmarried parent

SWOT Analysis Root Cause Targeting Strategy Implementation Financials

60%

Among married couples with children under 18, dual-income households are now the dominant arrangement.

SWOT Analysis Root Cause Targeting Strategy Implementation Financials

the modern family

SWOT Analysis Root Cause Targeting Strategy Implementation Financials

implementation

SWOT Analysis Root Cause Targeting Strategy Implementation Financials

PHASE 1 PHASE 2

zulily family vendor relationships dads campaign men’s line launch eval & expansion

phase 1:

for the family

months1-6SWOT Analysis Root Cause Targeting Strategy Implementation Financials

video campaign

months1-6SWOT Analysis Root Cause Targeting Strategy Implementation Financials

Different families. Same values.

phase 1: family centered marketing

They grow up fast. Good thing you shop faster. Download the app today!

months1-6SWOT Analysis Root Cause Targeting Strategy Implementation Financials

phase 1: family centered marketing drive awareness

bloggers, opinion leaders, build community

months1-6SWOT Analysis Root Cause Targeting Strategy Implementation Financials

phase 1: menswear merchandisinghire buying team

months1-6SWOT Analysis Root Cause Targeting Strategy Implementation Financials

curate men’s apparel

transition phase:

dads countdown

month 5SWOT Analysis Root Cause Targeting Strategy Implementation Financials

month 5

introducing zulily menswear in…

transition phase: adding merchandise

month 5SWOT Analysis Root Cause Targeting Strategy Implementation Financials

month 5

introducing zulily menswear in…

transition phase: website/mobile countdown

month 5SWOT Analysis Root Cause Targeting Strategy Implementation Financials

phase 2: menswear introduction

months 6-12SWOT Analysis Root Cause Targeting Strategy Implementation Financials

phase 2:

dads campaign

months 6-12SWOT Analysis Root Cause Targeting Strategy Implementation Financials

the numbers

SWOT Analysis Root Cause Targeting Strategy Implementation Financials

financials

SWOT Analysis Root Cause Targeting Strategy Implementation Financials

NPV Analysis 2015 2016 2017 2018 2019 2020 TV

Cash Out Flows $20,261.07 $21,294.39 $22,380.40 $23,521.80 $24,721.41 $25,982.21

Cash In Flows $-1,200.08 $10,079.46 $35,971.59 $79,252.53 $143,491.73 $233,249.26

Net Cash Flows $-21,461.15 $-11,214.92 $13,591.19 $55,730.73 $118,770.32 $207,267.06 $3,904,224.89

NPV $2,135,781.05

Discount Rate 0.105742284

Terminal Growth Rate 0.05

Cost of Sales $195,506.30

Profits $1,940,274.75

financials

SWOT Analysis Root Cause Targeting Strategy Implementation Financials

2015 2016 2017 2018 2019 20200%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Cash Flows

In FlowsOut Flows

financials

SWOT Analysis Root Cause Targeting Strategy Implementation Financials

2015 2016 2017 2018 2019 2020

$-100,000.00

$-50,000.00

$-

$50,000.00

$100,000.00

$150,000.00

$200,000.00

$250,000.00

NPV Analysis

refocus the target market

redefine the brand

match zulily’s technological innovation with customer evolution…

Q&A

appendix

appendix

appendix

appendixstrengths weaknesses

mobile interface (47% of sales)in-house media contentlarge product selection daily

narrow target marketno return policyslow shippinghigh transaction costspoor customer service

opportunities threats

refocus the target marketthe modern familysmaller age gap - 26-36

merge w/ another companycustomer loyalty programs

competition from amazon.comflash sale site mergers

appendix

declining + unsustainable growth

poor macro- economic conditions

ineffective target marketing

consumer psychographics are evolving

advanced technology

more modern, unconventional householdsshopping behaviors

changingsocially conscious, feminism

parents are dual income providers

interchangeable roles btwn mom +

dad

single, same-sex, multiracial parents

improved economy

decreased demand for flash sales

cross generational values (gen x and y)

appendixCriteria Priority Option A - Redefine target market Option B - Merge with William

Sonoma Inc.Option C - Expand global market

High ROI High + Comparatively low investment for high potential revenue

+ High initial merger costs but long term costs decreased and revenues increased

- Extremely high costs with uncertainty of profitability

Low cost Med + Marketing and content development sourced internally

0 depends on the merger agreement - Extremely expensive to expand globally

Easy Implementation/ integration

High + Will not change current product offerings or operations

- Complex and highly involved implementation and integration with merging two companies

- Complex and highly involved implementation to execute a global company expansion

Incr. market share/growth

Med + Significantly increase market share and create sustainable growth

+ Opp to capture William Sonoma’s market share and customer base

+ Potentially increase market share and growth significantly

Low Risk High + Low cost and easy implementation - Integrating company cultures, scale, customer base is high risk

- Very risky and many unpredictable variables involved

Employee morale Low + Challenging and exciting work for zulily team to refocus on marketing initiatives

- Could lead to layoffs and disrupt team dynamic

- Employees could be overworked, potentially high turnover

High shareholder value

Med 0 no significant impact - Conflict of interests, legal complications 0 unpredictable

Summary +6 -1 -4

appendixIndustry Research http://clients1.ibisworld.com.offcampus.lib.washington.edu/reports/us/industry/default.aspx?entid=5438http://www.gartner.com/technology/research/digital-marketing/digital-marketing-spend-report.jsphttp://www.fathomdelivers.com/blog/seo/how-much-does-online-marketing-cost-digital-marketing-roi/http://seekingalpha.com/article/3207016-zulily-targeted-customer-and-acquisition-shift-strategies-bring-riskhttp://www.marketingsherpa.com/article/chart/ecommerce-acquisition-cost-per-customerhttp://www.ibisworld.com/industry/online-fashion-sample-sales.html

Mobile Shopping Trendshttp://www.businessinsider.com/the-surprising-demographics-of-who-shops-online-and-on-mobile-2014-6http://www.smartinsights.com/mobile-marketing/mobile-marketing-analytics/mobile-marketing-statistics/http://searchenginewatch.com/sew/how-to/2389159/why-mobile-web-still-matters-in-2015http://www.statista.com/statistics/201182/forecast-of-smartphone-users-in-the-us/http://www.babycentersolutions.com/docs/BabyCenter_2014_US_Mobile_Powers_Moms_Life.pdf

Gen Y Shopping Habits in Digital Agehttp://uli.org/wp-content/uploads/ULI-Documents/Generation-Y-Shopping-and-Entertainment-in-the-Digital-Age.pdfhttps://medium.com/brian-honigman/how-millennials-are-shopping-20-interesting-statistics-figures-c76fb1231fbbhttp://www.forbes.com/sites/danschawbel/2015/01/20/10-new-findings-about-the-millennial-consumer/

Gen Y Parentshttp://www.millennialmarketing.com/2013/07/new-research-the-millennial-generation-becomes-parents/http://www.mediapost.com/publications/article/245600/dont-forget-about-dad-millennial-parents-on-mark.htmlhttp://researchindustryvoices.com/2014/11/18/millennial-dads-are-leading-the-digital-way/

Gen X Shopping Behaviorshttp://yourbusiness.azcentral.com/generation-x-consumer-behavior-9585.html

appendixCross Generation Online Shoppinghttp://www.businessinsider.com/the-age-demographics-of-who-shops-online-and-on-mobile-2015-4http://www.crwgraphics.com/blog/2012/02/09/generational-spending-an-indepth-look-at-major-three-generations/

Flash Sale Industry Trendshttp://www.businessnewsdaily.com/470-flash-sales-websites-help-shoppers-save.htmlhttp://www.retailtouchpoints.com/features/industry-insights/flash-sales-and-daily-deals-a-passing-fad

Traditional Familieshttp://www.pewresearch.org/fact-tank/2014/12/22/less-than-half-of-u-s-kids-today-live-in-a-traditional-family/ “Less than half (46%) of U.S. kids younger than 18 years of age are living in a home with two married heterosexual parents in their first marriage. This is a marked change from 1960, when 73% of children fit this description, and 1980, when 61% did, according to a Pew Research Center analysis of recently-released American Community Survey (ACS) and Decennial Census data.”“34% of children today are living with an unmarried parent”

Research on Dadshttp://www.pewresearch.org/fact-tank/2014/06/12/5-facts-about-todays-fathers/ “Among married couples with children under age 18, dual income households are now the dominant arrangement (60%). In 1960, only one-in-four of these households had two incomes; 70% had a father who worked and a mother who was at home with the kids.”As the share of dual income households has risen, the roles of mothers and fathers have begun to converge.In 1965, fathers’ time was heavily concentrated in paid work, while mothers spent more of their time on housework or childcare. Over the years, fathers have taken on more housework and childcare duties, and women have increased their time spent in paid work. Significant gaps remain, but there is clearly a more equal distribution of labor between mothers and fathers these days.American Momshttp://www.pewresearch.org/fact-tank/2014/05/09/5-questions-and-answers-about-american-moms-today/“85 million moms in the U.S."