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Zlio: A $500K Virtual Investment

Zlio Screen Shot

Zlio is an interesting online service begun in France but seems to be making its way to the US and other countries. 

Business Model:
Users of Zlio can set up their own online store for Free in under five minutes even if they don’t have anything to sell by choosing products from a catalog of thousands of products.  The users earn commissions for every item sold within their store and Zlio takes responsibility for all fulfillment of the purchased items.  The core role of users is:

1)  Create an appealing ‘store front’
2)  Choose the right products that work with their store’s personality
3)  Promote the heck out of their own store among friends, search engines, blogs you name it.

Everything else is handled by Zlio.

Some Core Functionality:

  • Store Setup
  • Submission to search engines
  • RSS feed for each store
  • Inclusion in Zlio Directory
  • Unique store URL for promotional use

Likes:
There is a strong viral element to this business model which is driven by its ease of setup and use combined with the inherent need in the online community to create a personal presence.  As Zlio gets a ‘cut’ for every item sold, providing they have negotiated decent margins with the product providers then this should be a revenue heavy business. 

My guess is that Zlio has struck a number of deals with product fulfillment houses and therefore never actually ‘touch’ a product.  This is likely a pure order pass through business where the usual costs of marketing are not required – the marketing occurs virally through individuals creating their Zlio store and promoting the heck out of it within their own networks. A very efficient model!

Dislikes:
There’s a certain ‘pyramid’ flavor to this business but the realty is they are on to a winner and will make significant cash providing they have struck the right deals and have an efficient backend.  One slight challenge will come if the price points of the products offered are not competitive with alternative ‘stores’ online.  If no one actually sells product through their stores then the viral marketing will eventually dry up.

My Virtual Investment:
With my virtual $1M, I would jump over burning baguettes to invest $500K in Zlio.

http://www.zlio.com/

Andrew
Founder
http://www.AdvisorGarage.com