zulily Inc.
There are so many joys of motherhood that it’s hard to fit them all into one day. If a new time-saving process leads to money savings, as well – all the better.
“Our core customer is mom,” explains Kristin Smith, vice president of supply chain at the fast-growing online retailer zulily. “One of the very common traits of mom is that she doesn’t have much time but she has a ton of pride in her children and in taking care of her family. Whether she’s working or not, limited time is common amongst all moms.”
Zulily answered that challenge with an online store featuring sales events of quality and affordable children’s clothing, eventually branching into apparel for mom and décor for the home. Every day, zulily launches three-day sales events from select brands. Parents can shop by brand, category or age and members enjoy savings that can reach up to 90 percent. As the site has grown popular with consumers, it’s also caught the attention of vendors vying for a spot on the site.
For the consumer, it’s all very simple. An easy login process followed by clicking and buying results in a bundled package at the customer’s doorstep. But the process it takes to actually get to that point is far from simple.
Fulfilling a Need
zulily doesn’t operate traditional warehouses with a stock of styles, colors and sizes. Instead, it operates from two fulfillment centers, one in Columbus, Ohio, and another in Reno, Nev., where it receives and quickly ships out new products, based on customer purchases. It’s a buy-to-order, no-inventory model.
“We are dealing with a tremendous amount of variation,” Smith stresses. “We don’t have an ABC inventory. The amount of product coming in that needs to go out and also the various types of products coming in and going out means that our process centers around graciously absorbing that variation. For us, it’s important to keep product flowing through.”
The customer’s purchase is the trigger that springs the dominos into motion, but there is a fair amount of pre-planning to make sure those dominos are in the right order. zulily adopts a transparent relationship with its vendors to make sure both entities are successful and the customer ends up happy.
“The effort really starts before we launch an event,” Smith explains. “We try to figure out what mechanics we can put in place, such as information sharing, to prepare vendors, whether that’s telling them what to expect in terms of sell-through, or asking if they have any staffing issues or shipping issues that would cause us to adjust the timing of the launch event. Is there a dock where we can send our truck and they can simply back up into it? We ask these things to understand as much as we can upfront so when it’s time to execute, everything as far as the what, how and when is in place. It also gives them the chance to adjust and absorb the temporary spike in business.”
Smith says the key is to take out as many touch points as possible, and through tightening each process, the company can inch its way into substantial time savings. For instance, although its Reno and Columbus locations are 300,000 and 700,000 square feet, respectively, Smith says the supply chain team operates within the smallest footprint possible. That cuts down on time to pack orders and gives it room to absorb demand spikes and the larger home goods.
“We look for ways to take out touches,” she says. “For instance, if a customer ordered one item or all items from the same brand, we try to bypass putting it away and picking it again; we can ship it straight from the receiving dock.”
As the company continues to grow, Smith says key investments will focus on building flexibility and automation. She explains that the Reno center, which was built in November 2011, was built very quickly. Previously, it worked with 3PL’s and although its newly launched U.K. branch still does, its U.S. division quickly grew too large for this model and needed its own facilities. From the time that it decided to own a fulfillment center to the time it shipped its first product took all of 10 weeks. A few months later in January 2012, it opened its Columbus facility.
Because of the hurried start, the company sought easy-to-install equipment. Now that the facilities are up and running, Smith says it is prepared to invest in flexible and automated equipment and information technology geared specifically to zulily’s process.
“We are looking for technology that will allow decisions to be made further upstream and that will make our business model more consistent,” Smith says. “The good thing about zulily is that when we do projects like this, it won’t take us a couple of years. Every day we work with a sense of rapid innovation.”