QVC's owner, Liberty Interactive, will pay a 49 percent premium to take over ''flash'' sale website Zulily. One of its key shareholders is Chinese e-commerce giant Alibaba. Bobbi Rebell reports.
Zulily shareholders got a major news flash Monday morning. QVC owner, Liberty Interactive, paying an almost 50 percent premium for the flash sales retailer, even though it has recently been struggling with slower growth. Forrester's Sucharita Mulpuru is skeptical about the price and the deal. SOUNDBITE: SUCHARITA MULPURU, VICE PRESIDENT, PRINCIPAL ANALYST, FORRESTER (ENGLISH) SAYING: "I don't know how much Zulily has that is sustainable long term. I think, that it is not a very profitable business, which seems to suggest that it's a hard busienss to get the economics right and on to of that the key metric that they were so proud of for so long, which is the young customer retention, I think, that that is exhibited vulnerability." It is being hurt by increasing competition from other flash sales sites, like Rue La LA, and retail giants, like Amazon. But QVC's CEO says, both companies target similar customers, who have above average income, but QVC and Zulily have little overlap. They also want to capitalize on mobile. Last quarter the majority of Zulily's orders - 56 percent - were placed from a mobile device. While the price at $18.75 a share is below Zulily's 2013 IPO price of $22, it still will put money in a lot of happy shareholder's pockets, including Chinese e-commerce company Alibaba. It owns more than nine percent of Zulily, some of which it bought in May when the stock hit rock bottom prices.