Page 64 - Using MIS

32 Chapter 1 The Importance of MIS

2010 2012
Number of active customers 157,000 1,580,000

Sales per active customer $117 $210

Figure 1-9 Revenue $18 million $331 million
zulily Performance

enjoy the thrill of discovery while shopping. zulily thus pro- negotiated with the vendor. At that point, the item (or a
vides entertainment as well as well as a rewarding shopping particular size of an item) is marked as no longer available,
experience. And those low prices, some as low as 70 percent thus increasing pressure to buy remaining items now. After
off retail, are available for only 72 hours. So, shop and buy the event closes, zulily orders the items from the vendor,
now, ladies! receives them, packages them, and then ships the items to
Does it work? Apparently so. As shown in Figure 1-9, in customers. zulily thus maintains no inventory. Customers
2 years zulily increased the number of its active customers receive their items in zulily packaging, thus reinforcing the
tenfold while nearly doubling revenue per active customer. zulily brand.
That combination resulted in revenue growth from $18 million zulily is subject to errors and mistakes from vendors. If, for
to $331 million; that’s a 329 percent annual growth rate! example, the vendor promises to ship 1,000 pairs of shoes of a
The data in the table was published in its prospectus for the particular size and zulily sells all 1,000 pairs, but later the ven-
initial public offering. Since then, the company released 2013 dor delivers only, say, 900 pairs in that size, some customers
results: Revenue reached $695 million, more than doubling will be disappointed. And those customers will hold zulily, not
2012 revenue. the vendor, responsible for their disappointment.

How It Did It Use of Technology
The sales process begins when zulily buyers identify goods zulily’s business model would be infeasible without informa-
to be sold. Buyers negotiate with vendors to establish both tion systems. For one, it needs the Internet to reach customers,
wholesale and retail prices, terms, and maximum quantities by and it needs mobile technology to do so on phones and other
size. zulily then obtains sample merchandise and, if necessary, mobile devices. Further, zulily buyers use the Internet to find
photographs it in-house. It also writes ad copy to be displayed vendors and items to sell. But what else?
along with the photos during the sale. By taking photos when In the prospectus for its initial public offering, zulily stated,
needed and writing its own ad copy, zulily ensures a consistent “Continual innovation through investment in technology is core
12
quality of presentation on its site. zulily also adds considerable to our business.” It states that it developed a proprietary tech-
value to smaller vendors who do not otherwise have access to nology platform to manage the enormous spikes in Web process-
such high-quality expertise. ing demand that occur due to the nature of flash sales. Reflect
Items are then grouped together into 3-day sales events. on the challenges of such development: In 2010, zulily’s plat-
zulily accepts orders for items up to the maximum quantity form supported $18 million in sales; 3 years later, it supported

12 zulily Prospectus, www.sec.gov/Archives/edgar/data/1478484/000119312513443794/d552850d424b4.htm.