Can Philly's QVC, Seattle's Zulily grow again?

QVC boss Mike George packed the Pennsylania Convention Center's Terrace Ballroom at today's National Retail Federation Shop.org digital-retail conference, and shed a little more light on his TV shopping network's $2.4 billion purchase of Seattle-based smartphone shopping network Zulily.com (see "Seeking Younger Women" here) 

Culture clash much? "We're getting all our developers under one roof," George said. "We have to get all our people comfortable with the idea (media-based shopping has to) complete reinvent ourselves..." It's not TV vs. smartphones; it's both, plus...From isolated strategies and creative groups, the firms are joining "those consumed by tomorrow's sales, and those free to strategize the future.

"We spent a lot of time getting our business and technology teams together" at QVC, even before the merger was vetted, George added. "One platform supports TV, digital, phone, tablet, Web." Mobile is now a quarter of the business, Web/laptop another quarter, and TV is still half (pre-Zulily.) New shopping campaigns are now about "how to target a market," which tech to lead with.

Why Zulily? QVC long avoided mergers because "we never found businesses we loved as much as our own. But with Zulily we fell in love with the leadership, the brand, what they represent." Though Zulily's rapid early growth was fast decelerating, "not many e-commerce companies have ever made it to $1.5 billion in (yearly) revenues before." The "discovery-based" sales approaches targeting "sticky" return customers were a "cultural fit," he added. Zulily focused better on "small proprietary vendors." The two firms' customers are "similar," but Zulily's are younger.

Doesn't YouTube with its multiple replays make QVC's live-sales approach redundant? "The TV ecosystem was stable for a long time," and it's alive today, though migrating onto new platforms, said George. (Overall QVC sales have grown in the low single digits each year since 2011; the company says mobile/online sales are more than making up for flat/declining TV sales.) "We want to be wherever customer is consuming live TV or has cut the cord," cancelling their cable to rely on Internet video -- an "evolution which has not hurt us. Til now, people want live sports, and live shopping."

After his onstage Q&A, I asked how West Chester is getting along with Seattle. "Last Thursday I broadcast to 20,000 people at both companies," he bragged. "What I love about Zulily: we're different on all these dimensions, East Coast and West Coast," TV-based and smartphone-based. "But at the heart we are similar:  two cultures passionate about servicing customers. We are very data-driven. Always pushing for what's next. Pushing to innovate."

Have these teams met? How are you jamming them together? "We have had a chance to put these teams together and think abou thow to create value in merchandising and marketing and digital. And to share ideas."

And the results? "The teams are on fire. No shortage of energy."

In particular...? "We have to harness that and protect the unique identity of each brand. You do worry in these deals, will the teams be standoff-ish?"

So, no specifics? "We're just getting started. The list of ideas is long. To take one example: We create these powerhouse items, like our 'Today's Special Value'. I tell them it's the original Flash Site item. Every day we make it a huge business. We may spend a year getting one ready.

"So now we are thinking of how to expose that to the Zulily customer. It's very different from how they merchandise.

"On the flip side the fact they are out there in every market looking for the small niche vendors that have no way to get to a national audience. Their whole mindset is, 'How do we help the customer discover something new and different? And add value? That's something we can benefit from enormously."

When will the shake-out happen? When will you cut duplicate efforts and combine operations under a single set of managers? "What's interesting fo us, our mindset has been, the two businesses continue their own destinies."

No tech consolidation? "We may converge on a tech platform. We may not. if it makes sense and is better for the customer and better for us, then we will.

"The value in this is more about the value of the new customer bases, the value of sharing product platforms," instead of consolidating or replacing them.

So you're saying that (parent Liberty Media boss) John Malone has deep pockets and is giving you time to build. It's not like a bank merger when you fire one administration and half the bosses and go from there... "Right, this is sort of the opposite. When two slow-growing companies come together, they ferret out costs. This is two growth companies figuring out how to grow faster. It's much more fun." (As noted above, QVC overall is growing slowly, while Zulily, a once-hot younger company, is being taken out at less than its IPO price.)

You're not dividing the two tech groups into centers of excellence here and in Seattle? "That's way, way down the line to think about. We have value in two centers. They can both be working on concepts for both brands" in markets around the world, George concluded.