Dive Brief:
- Online retailer Zulily has ceased operations as of Friday. In a note on its now-defunct website, the company said it has entered an assignment for the benefit of creditors, or an ABC. Under that process, which is a bankruptcy alternative, Zulily’s assets will be liquidated over the next 12 to 18 months.
- Douglas Wilson Companies will execute the wind-down and liquidation through a special purpose entity, Zulily ABC. The California-based firm will distribute proceeds from the sale of its assets among the company’s creditors.
- According to a statement, recently processed Zulily orders are en route to customers. Orders that don’t arrive by Jan. 22 may have been canceled and refunded, and customers are then pointed to a claims agent to submit a proof of claim.
Dive Insight:
After only seven months under new ownership, Seattle-based online retailer Zulily is winding down its business.
“This decision was not easy nor was it entered into lightly,” Ryan Baker, vice president of Douglas Wilson Companies, said in an online statement. “However, given the challenging business environment in which Zulily operated, and the corresponding financial instability, Zulily decided to take immediate and swift action.”
Friday’s acknowledgment that Zulily is out of business was the first public confirmation regarding the company’s status. It was previously unclear if the company intended to go out of business or had already done so. Friday’s announcement came about a week after the website abruptly went offline. Visitors were redirected to a blank page with a message stating: “We are down for maintenance.” The message followed a brief time when "final sale" and "all items must go" language appeared on Zulily's homepage.
Zulily parent company Regent and Baker did not disclose any further details about the retailer’s financial situation. Neither party immediately responded to a request for comment.
“We have assembled an experienced team to assist in the management of claims and proactively address questions and concerns from Zulily’s customers and creditors,” Baker said in a separate statement. “We recognize the strain processes such as these place on parties of interest and are committed to responsiveness and reliability as we fulfill our fiduciary responsibilities as assignee.”
Earlier this month, as a result of mandatory notices provided to state employment officials, news emerged that Zulily planned to lay off more than 800 people in Washington, Nevada and Ohio. Then, just days after news of the mass layoffs broke, Zulily filed suit against Amazon, alleging the retail giant engaged in price fixing and coerced third-party sellers and wholesale suppliers to artificially inflate their prices on Zulily. The company further claimed in its suit that Amazon “abused its monopoly power” and took actions that denied Zulily the ability to compete in online retail. Amazon denies any wrongdoing.
In May, Regent acquired Zulily for an undisclosed sum from Qurate Retail, the parent company of QVC and HSN. Before the Regent acquisition, Zulily had soft financial performance, especially in the final year it was part of Qurate’s brand portfolio. Zulily’s revenue fell 17% in the first quarter to $192 million from $232 million a year ago and the business also reported a $43 million first-quarter operating loss.
Zulily’s Facebook page was still live as of press time but it had no statement regarding the company’s shutdown. Underneath its last post from Dec. 15 — a promotion for shoes — nearly 500 people had commented about their experience with Zulily during its final days.
One person, who identified themselves as a single mom and a teacher, said they ordered from Zulily the week of December 21 and didn’t have the leeway to make gift-buying mistakes this holiday season. “Christmas is already a stressful time for many,” they said. “Things like this make it even more stressful. Praying for miracles for a lot of us.”
