Zulily Closes First Day As A Public Company At $37.70 A Share, Marking A Win For Flash Sales

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Closing the day at $37.70 a share, Zulily is proving to be a success among flash and daily deals sites. Its first-day performance could give other companies confidence in the possibility of going public, despite doubts in the long-term potential of the model. As we noted earlier in the day, Gilt Groupe could have an IPO on the horizon.

Originally priced at $22, Zulily shares hit a high of $41.32 and a low of $36.36 before 12:30 Eastern before stabilizing at about $37 for the remainder of the day.

Among daily deals sites, Zulily was well positioned for the long haul for a few reasons, analysts from Euromonitor said. Zulily’s founders were unavailable for comment this afternoon — i.e. popping bottles of Veuve Clicquot, probably. Kidding. They were traveling back to Seattle.

As compared to other deals sites Living Social and Groupon that tend to surface a lot of spa or restaurant deals, Zulily is practical and time efficient. Growing children require a series of necessary expenses, along with non-essential but desirable purchases, like toys. There are only so many massages that you can squeeze in.

Mothers also tend to be short on time and don’t always have the opportunity to go out shopping, so an online retailer that brings everything they need for their children into one online environment is a big time save. And they’re doing this on the go: According to the company’s S-1 filing, 42 percent of Zulily’s sales came from mobile in the second quarter of 2013. That’s up from 39 percent in the first quarter and 31 percent in the fourth quarter of 2012.

In the 12 months that ended on June 30, Zulily had 2.2 million active customers generating $214 in revenue each, with 82.9 percent of all U.S. orders coming from repeat customers.

As Euromonitor analysts Virginia Lee and David McGoldrick told us, the Zulily founders’ experience at Blue Nile, which went public in 2005, should not be overlooked. Mark Vadon and Darrell Cavens were CEO/founder and CTO at Blue Nile, respectively, before launching Zulily.

“They knew what they were getting into in terms of what it takes to scale up a business. One of the things they said about Blue Nile — and the idea carries over to Zulily — is the fact that consumers want branded items but at discount prices. But they don’t want to feel like they’re shopping at a discount,” McGoldrick said.

Branding Blue Nile as a quality jewelry line convinced customers to buy engagement rings online and for a relatively low price — an impressive achievement at the time, given how weighty a purchase it is.

Zulily certainly showcases its deals more than Blue Nile, but the idea is still the same. People love nabbing a deal, but they’re also investing in a brand every time they hit “Buy.” Online native brands like Warby Parker and Everlane that effectively sell at a discounted price by cutting out wholesale-to-retail markup would say that consumers come to them for the brand, not the discount.

In bundling clothing for women with children’s items, Zulily does a few things. It gives mothers a chance to think of themselves while they’re shopping for their kids — thus increasing basket sizes in the moment — and also prolongs their consumer lifetime. Even after a kid has graduated from the Zulily age bracket, a mother might continue to visit the site for herself.

We’ll be looking to see what moves Zulily makes post-IPO, be that staffing up or building out new features. Flash sales: 1, Haters: 0. At least for today.

[Image via Zulily]