A former Amazon exec believes not everyone needs one-day shipping
Jeff Yurcisin, a former Amazon executive who now runs the discount shopping site Zulily, is trying to grow the 10-year-old business with a better shopping experience. And one-day shipping isn’t on the list.
“If you forgot to shop for Christmas and it's December 24th, Amazon is a wonderful solution to solve that problem,” Yurcisin, who became Zulilly’s president last year, told Yahoo Finance. “But for most other problems where you have a bit more patience, where you can plan for an event, there is a significant amount of savings that customers can have.”
Zulily (QRTEA) launched a “Best Price Promise” program on Wednesday, which displays prices from Amazon and Walmart on its own product page. It pledges to beat the two major competitors’ prices through the program, which tracks prices based on the item’s Universal Product Code (UPC).
While price match programs and tools to help customers track prices across sites are not uncommon, it’s rare for a retailer to show a competitor's price directly it on its page. Zulily’s business model and shipping strategy enable it to transfer bigger savings to consumers, Yurcisin said on YFi AM.
“We really believe it's not just a majority but almost all the time we will have the lowest price,” Yurcisin said. “So we believe by being transparent with customers and sharing this information, it is the first step.”
3 to 5 days is “sufficient”
Yurcisin, who used to be Amazon VP of Softline Private Brands and CEO of Shopbop, is confident that Zulily can offer a competitive price, thanks to its business model. Unlike Amazon or Walmart, it doesn’t stock much inventory. Instead, when a consumer places an order, vendors and brands ship products in pallets to Zulily.
This helps the Seattle-based retailer to eliminate costs tied to overstock and liquidations. But it also means customers need to wait longer for Zulily to receive products and ship individual items out. Now it takes about two weeks for customers to receive their Zulily order.
Yurcisin says while the company has made investments to shorten the wait, he learned from customers that not everyone needs one-day shipping.
“We see millions of households have been willing to trade one and two-day shipping for more value and an opportunity,” Yurcisin said.
Started by Amazon and followed soon by Walmart, one-day shipping promises have become a new standard smaller e-commerce players try to match. Even startups are investing to ship products faster. Verishop, an e-commerce site co-founded by a former Amazon executive Cate Khan, offered free one-day shipping two months after its launch in June.
Building the one-day shipping capability is not cheap. In the second quarter alone, Amazon invested over $800 million in the initiative. Yurcisin said many customers are not necessarily aware of the hidden cost tied to ultra-fast shipping.
Zulily has been under pressure this year for declining new users and lower average user spending. In the latest quarter, its revenue declined by 13% to $363 million. It has laid off an undisclosed number of employees as part of broader structural changes within the company, Geekwire reported in July.
In a call with analysts in August, Michael George, CEO of Curate Retail, Zulily’s parent company, said the company’s retail business hasn’t seen much impact from Amazon’s one-day shipping. He says sites like Zulily will work to expedite deliveries and it’s “sufficient” if the company ships the item in 3 to 5 days.
“I think broader retail is at a bit of an inflection point. Zulily really is not immune to that,” Yurcisin told Yahoo Finance. “What we are doing is doubling down on the things that matter most to our customer...for us it's creating a fun shopping experience, offering customers unique high-quality items that they can't find anywhere else, and then offering unbeatable prices and passing those savings along to customers.”
Share your thoughts on one-day shipping with Krystal Hu via [email protected] or follow her on Twitter. McKenzie DeGroot is a producer at Yahoo Finance. Follow her on Twitter.
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