[OPINION] QVC’s Acquisition of Zulily: The Shape of Things To Come

by Peter Koeppel on Aug 27, 2015 8:00:00 PM DRTV, e-Commerce

Zulily_2-417406-editedEditorial Disclaimer: The statements, opinions, and advertisements expressed on the ERA Blog and other online entities owned by the Electronic Retailing Association are those of individual authors and companies and do not necessarily reflect the views of the Electronic Retailing Association.

The news earlier this month that QVC bought flash-sale site Zulily should come as no surprise. It foreshadows what will undoubtedly become an era of merger-and-acquisition activity, given the recovering economy and need for retailers to scale their portfolios. For marketers, such movement will create both opportunities and challenges that they will need to be prepared for.

If one examines QVC and Zulily’s business models, there is significant complementary overlap. Zulily, based in Seattle, Wash., specializes in selling discounted clothing, toys, and home products aimed at millennials. Meanwhile, Westchester, Pa.-headquartered QVC, which appeals to a slightly older female demographic, continues to dominate the home shopping airwaves. It is worth noting that about half of its revenue is now generated online.

Zulily-442288-editedBoth brands leverage the same critical consumer purchase levers: scarcity mentality—that is the idea that goods may be limited and unavailable if the consumer doesn’t act, a limited window of time to take advantage of the deal, and the ceaseless desire for a bargain. QVC’s parent, Liberty Interactive, has a portfolio that includes interests in HSN and Expedia, Evite, LendingTree and FTD, as well as Time Warner, Inc., and Time Warner Cable. In other words, brands that fit on any size screen and that offer both traditional broadcasting selling opportunities, e-commerce, and even the delivery pipeline that brings them into homes and onto devices.

Combining this kind of marketplace clout may be the only way that the likes of QVC and Zulily can compete with behemoths Walmart and Amazon that continue to shave retail prices to the nub. As these conglomerates continue to expand market share, marketers will benefit from their unparalleled ability to sell enormous volumes. What's more, the challenges that marketers face, which include more and more white label goods, will become even more acute and threaten to shrink margins and shelf space. Savvy marketers will have to work even harder to ensure their manufacturing costs allow for sufficient margin as these mass discounters take a bigger bite out of overall sales. All the more reason why brands need to be meaningful and relevant, and why they will need to have smart, robust advertising campaigns. Those omnichannel campaigns need to communicate superiority and incite desire. Given the landscape, that may be the only way they can withstand the chafing caused by relentless discounting at the hands of the retail titans.

Photos by: Zulily.com

Peter Koeppel is president of Koeppel Direct, a full-service media buying agency based in Dallas. He can be reached at (972) 732-6110 or online at pkoeppel@koeppeldirect.com or twitter.com/DRTVBUYER.

Peter Koeppel's blog
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Editorial Disclaimer

The statements, opinions, and advertisements expressed on the ERA Blog and other online entities owned by the Electronic Retailing Association are those of individual authors and companies and do not necessarily reflect the views of the Electronic Retailing Association.