Zulily Zips Out of Stealth and Raises $4.6M, Led by Maveron and Ex-Blue Nilers

I’m no expert in online retail, but this seems pretty interesting. Seattle-based Zulily has emerged from stealth mode and is announcing today a $4.6 million Series A funding round led by Maveron, the Seattle venture capital firm founded by Howard Schultz and Dan Levitan. Maveron is known for its investments in consumer and tech businesses like eBay, Drugstore.com, Pinkberry, Shutterfly, and Cranium.

Zulily is led by CEO Darrell Cavens and chairman Mark Vadon, former executives at Seattle online jeweler Blue Nile (NASDAQ: NILE). (Vadon remains executive chairman at Blue Nile.) When I talked with Dan Levitan last month, he mentioned that he had passed on investing in the Blue Nile team twice before, and wasn’t going to let that happen again.

The idea behind Zulily (pronounced Zoo-lily) is to create a “private sale” shopping site focused on children’s apparel, baby gear (car seats, strollers, toys), and maternity furnishings. The target consumers are busy moms. Private sale just means you have to sign up as a member of the site, and then you get access to special deals, like big discounts on a limited number of brand-name and designer items. The site will have its beta launch sometime in the first quarter of 2010. “We’re really excited to launch a new brand and new company around products for kids,” says Cavens, who most recently worked at Microsoft after spending nearly nine years at Blue Nile.

Private sale websites have been getting a lot of buzz lately, partly from the success of high-end fashion retailers like Rue La La from Boston and Gilt Groupe in New York. The business model—which involves buying overstocked items from brand-name designers and heavily discounting them in rush sales—was pioneered by Vente-Privee in France around 2001. (Vente-Privee has since become the dominant private-sale player in Europe.)

But Cavens says overstock is just one piece of the plan. Another is helping retailers “get out their message around their brand,” he says. Hundreds or even thousands of suppliers of baby and kid gear have trouble getting wide distribution. “We talk to manufacturers, and they can market their product on a site like this, out to our members,” Cavens says.

Zulily plans to start out doing one to two sales per day of five to 30 items each. Its revenue model is straightforward retail. “We buy products at a great price, and put a markup on … Next Page »

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