Zulily, the online retailer originally touting a “Best Price Promise” on fashion and other products for moms and their families, has officially shut down. This unhappy holiday surprise comes only seven months after investment firm Regent acquired the company from Qurate.
Zulily is now in receivership under an agreement with Douglas Wilson Companies to “complete an orderly wind-down of the business” so that it can pay off creditors who’ve hit the company with lawsuits for unpaid invoices.
Just as it started laying off 800 employees mid-December – ZoomInfo reports the company had about 1,900 employees at its peak – it hired the lawyers at the La Jolla, CA Bona Law firm to file suit against Amazon
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Undone By Amazon
The company claimed Amazon “set out to destroy Zulily” by forcing third-party suppliers that do business with both companies to maintain “price parity” for both retailers, effectively forcing Zulily to raise prices artificially and to pull its “Best Price Promise” with price comparisons off its website.
The suit also claimed that vendors that didn’t comply with Amazon’s “price-fixing” scheme were punished, ranging from being disqualified from Amazon’s “Buy Box” to being pulled from the Amazon Marketplace.
“Zulily’s suppliers, who could not afford to lose Amazon sales, had no choice but to abide by Amazon’s price-fixing terms,” the suit asserted. Vendors were required to instruct Zulily to increase its prices to match those on Amazon or to leave Zulily altogether.
“In just one year’s time, Amazon’s conduct resulted in nearly half of the suppliers who sold to both Amazon and Zulily to end their relationships with Zulily,” it added.
Zulily claims it follows a standard wholesale to retail business model with no associated charges, while Amazon operates a third-party marketplace where retailers pay fees to use its platform to sell goods direct-to-consumers. Amazon also buys products wholesale but charges slotting and marketing fees to those suppliers too.
Fall From Grace
Officially launched in 2010, Zulily filed an IPO in 2013 at a price of $22 per share that promptly went to $39. At the time, it was a flash sale site, offering deep discounts on products during a limited selling period with strict return policies.
However, Zulily’s flash sales weren’t matched by flash deliveries. Customers’ instant gratification was often delayed up to two weeks as suppliers shipped products to Zulily for sorting and delivery after orders were placed.
As a stand-alone company, it never lived up to its early promise. It was acquired only two years after its IPO by QVC
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Zulily initially prospered under its new owner, with 2016 revenues up 14% to $1.5 billion. Revenues peaked in 2018 at $1.8 billion, then started to slide. By 2022, its sales were only $906 million, 50% off its high.
Qurate called it quits in May 2023 and sold the ailing company off for an undisclosed sum to Los Angeles investment firm Regent, which also owns Intermix, Club Monaco, Escada, Sassoon, Lillian Vernon among others.
Inherited Problems, No Solutions
Regent’s mission is “building great companies by challenging the status quo.” It looks to lean into investments across industries by identifying “patterns, anomalies and disruptions” where it can invest to have “an immediate impact restoring value.”
It had high hopes at the outset. “We are excited to partner with the Zulily team to help the company return to its entrepreneurial roots as an independent business,” Regent chairman Michael Reinstein said in a statement.
He went on to explain the company’s appeal: “Zulily has been a trailblazer in using technology to create a compelling online customer experience. Their revolutionary logistics and fulfillment network has also set a new industry standard, and we are excited to leverage its immense potential to grow the Zulily business in new markets.”
Immediately after the acquisition, Regent took steps to right the company, going through two rounds of layoffs and moving the company’s Seattle headquarters to smaller digs.
Then another round of layoffs was announced in early December and the website went down shortly thereafter, with the final closure announcement coming December 22.
While Regent claims it has a deep respect for acquisition risk in order “to understand the downside and take on assets others won’t,” something must have gone wrong in its Zulily due diligence. It’s been almost seven months from the day of its Zulily acquisition to its final shutdown.
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