How a $1B E-Commerce Site Found Its Market on a Trip to Babies “R” Us

They had a small inkling of what they wanted to do. At the time, flash-sale startups like Gilt were just beginning to make some noise, and Cavens and Vadon seriously considered aping the model for the home and beauty space (a la One Kings Lane) before scrapping the idea. “What we came to realize in the health and beauty space, there’s a lot of vendor concentration,” Cavens says. “Many of the top 50 brands are owned by three large companies. If you don’t have the supply there, it’s hard to go after.” They ruled out fashion as well because they deemed it too unwieldy. “What we felt like there is you couldn’t control the supplier dynamics if you’re going after high fashion,” he says, especially “if you were trying to get new freshness every day.”

As they tell it, they decided to focus on boutique products for young moms shortly after Vadon and his wife, who at the time was five months pregnant, made their first trip to Babies “R” Us. Overwhelmed by the mountain of crap that young parents never knew they needed, they made one loop through the store and headed for the exit to get lunch.

The experience would prove to not so much be a moment of clarity as a conversation starter. Vadon brought the ovum of his mom-driven business to Cavens, and they soon realized that the total addressable market for new mothers was both underserved and enormous: Some 4.5 million kids are born in the U.S. every year, and the only discount retailers in the space were, like, T.J. Maxx. If they could subvert a legacy diamond seller like Tiffany & Co., they could do something here. In mid-2009 they chose the name “Zulily” with the help of a branding agency because it was easy to say and just as important, it wouldn’t limit what they could sell. (Some of the too-cute runner’s-up included: ItsyBtsy, Tumble Up, Tip Toe, Katroo, Toodle, and Pitter-Patter.)

And so, two new dads began building an online retail store for new mothers.

Chris Gayomali writing about the e-commerce company Zulily for Fast Company.

 

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