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Chapter 1 The Importance of MIS
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2010 2011 2012 2013 2014
Number of active 157 791 1,580 3,200 4,900
customers (thousands)
Revenue (millions) $18 $143 $331 $696 $1,200
Figure 1-12 Sales per active $117 $180 $210 $218 $245
zulily Performance customer

rewarding shopping experience. And those low prices, some as devices. Further, zulily buyers use the Internet to find vendors
low as 70 percent off retail, are available for only 72 hours. So, and items to sell. But what else?
shop and buy now, ladies! In the prospectus for its initial public offering, zulily
Does it work? Apparently so. As shown in Figure 1-12, in stated, “Continual innovation through investment in technol-
17
4 years zulily increased the number of its active customers by ogy is core to our business.” It states that it developed a pro-
3,121 percent while increasing revenue per active customer prietary technology platform to manage the enormous spikes
by 209 percent. That combination resulted in revenue growth in Web processing demand that occur due to the nature of
from $18M to $1.2B; that’s a 185 percent annual growth rate! flash sales. Reflect on the challenges of such development: In
2010, zulily’s platform supported $18M in sales; 4 years later,
How zulily Did It it supported $1.2B in sales, a 66-fold increase in demand. You
will learn some of the ways that such enormous growth can be
The sales process begins when zulily buyers identify goods to accommodated in Chapter 6. For now, understand that such
be sold. Buyers negotiate with vendors to establish both whole- growth would be impossible in a world without information
sale and retail prices, terms, and maximum quantities by size. systems.
zulily then obtains sample merchandise and, if necessary, pho- But there’s more. In that same prospectus, zulily stated that
tographs it in-house. It also writes ad copy to be displayed along it has developed “extensive data collection and analytics capabil-
with the photos during the sale. By taking photos when needed ities” that enable it to anticipate its customers’ shopping prefer-
and writing its own ad copy, zulily ensures a consistent quality ences and to tailor the customers’ shopping experiences accord-
of presentation on its site. zulily also adds considerable value to ingly. So, as with any good salesperson, what you see and how it
smaller vendors who do not otherwise have access to such high- is shown to you depend on what you’ve purchased in the past.
quality expertise. That same data can also be analyzed to help buyers determine
Items are then grouped together into 3-day sales events. the items customers are most likely to purchase. You will learn
zulily accepts orders for items up to the maximum quantity about data analytics in Chapter 9.
negotiated with the vendor. At that point, the item (or a par-
ticular size of an item) is marked as no longer available, thus Growth-Management Problems
increasing pressure to buy remaining items now. After the
event closes, zulily orders the items from the vendor, receives Such spectacular growth does not come without problems.
them, packages them, and then ships the items to customers. According to its 2014 annual report (SEC Form 10-K), zulily
zulily thus maintains almost no inventory. Customers receive increased its headcount from 329 at the end of 2011 to 2,907
their items in zulily packaging, thus reinforcing the zulily at the end of 2014. That’s an 884 percent increase in zulily’s
brand. workforce in 3 years. That rate of growth is exceedingly difficult
zulily is subject to errors and mistakes from vendors. If, for to manage, a fact the company recognized:
example, the vendor promises to ship 1,000 pairs of shoes of a
particular size and zulily sells all 1,000 pairs, but later the ven- To support continued growth, we must effectively integrate, develop
dor delivers only, say, 900 pairs in that size, some customers will and motivate a large number of new employees, while maintain-
ing our corporate culture. In particular, we intend to continue to
be disappointed. And those customers will hold zulily, not the make substantial investments to expand our merchandising and
vendor, responsible for their disappointment. technology personnel. 18

Use of Technology Unfortunately, zulily is located just down the street from
Amazon and Nordstrom and just across a lake from Microsoft.
zulily’s business model would be infeasible without information Finding (and retaining) those merchandising and technology
systems. For one, it needs the Internet to reach customers, and personnel in Seattle will be difficult. In its annual report, zulily
it needs mobile technology to do so on phones and other mobile mentioned particularly the need to hire mid-level managers.