This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stock Under $10 that he thinks could potentially double or triple in the next 6 to 12-months. See what he's trading today with a 14-day FREE pass.

Laudani: Window-Shopping at Zulily

Stocks in this article: ZUAMZN

On Tuesday, during an episode of CNBC's "Mad Dash," Jim Cramer said Zulily (ZU) "is the first legitimate competitor to Amazon (AMZN) that I have ever seen." 

I read the company's prospectus a few months ago and it was a total page-turner. While I don't think it will make the New York Times Best Seller's List, I think Zulily has a very interesting take on e-commerce.

Zulily was founded just three years ago in Seattle. While people may think of Zulily as just another e-commerce retailer, the company has actually built a technology platform that aggressively sources unique items from as many as 4,500 vendors and showcases their products. The company photographs merchandise and features them on their mobile app and website for just 72 hours. Zulily handles the ordering and offers a fully integrated fulfillment infrastructure. By carrying small to medium lots that are sold out in 72 hours or less, the company greatly limits its inventory risk.

While the company offers a few nationally known brands, it focuses on emerging brands. The company specifically targets women and moms. The goal is to become a part of a mom's everyday routine and it is succeeding. Moms who are looking for unique items and children's clothes are flooding the site.

The company distinguishes itself by offering moms a fresh and affordable selection of merchandise. Zulily founders believe the retail experience has become uninspiring due to the concentration of sales among mass retailers and the commoditization of merchandise. By constantly refreshing the site with interesting merchandise that is available in limited supply, for only a short period of time, moms shop the site almost nonstop.

The superiority of its business model is clearly evident once you look at the company's financials. In 2010, Zulily had 157,000 active customers and total revenue of $18 million. On Tuesday, the company reported fourth-quarter sales of $257 million. For fiscal 2013, the company had sales of $695.7 million and 3.2 million active customers. (Yes, you read that right. They went from $18 million in revenue to almost $700 million in three years.)

Zulily went public on Nov. 15 at $22 per share. On Wednesday, the stock closed at $61.59, up almost 180% in three months.  With its dramatic stock performance, you can bet the investment banks have a bunch of these flash-sale, e-commerce initial public offerings (IPOs) queued up and ready to go.

Some investors fret about competition from Amazon, but I don't think that's much of a problem. Amazon is weighed down by its need to move huge volumes of commodity merchandise.  Amazon just can't move as quickly as Zulily. Zulily focuses on such a narrow niche, its just not enough to move the needle for Amazon. Amazon has bigger fish to fry.

Zulily has a market cap of $7.52 billion in three months, so I would wait for the stock to cool off. The company definitely has an interesting approach to e-commerce and it will be interesting to watch this space grow, but for now, I would rather window shop.

At the time of publication, Laudani had no positions in any of the stocks mentioned.

  Christopher Laudani is the founder and president of ShortIdeas.com, a short-only equity research firm.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Our Tweets

Brokerage Partners

Top Rated Stocks Top Rated Funds Top Rated ETFs