Amazon is in trouble again.
Zulily is back online, Amazon faces antitrust lawsuit
At the end of 2023, Zulily, a well-known maternal and infant e-commerce platform in the United States, was on the verge of bankruptcy. In Zulily's view, this situation was inseparable from Amazon's malicious competition, so she resolutely filed a lawsuit against it.
Zulily claimed in the lawsuit that Amazon illegally used contracts and other means to restrict third-party sellers from offering lower prices than Amazon on other e-commerce platforms, which caused Zulily's sales and traffic to decline, and consumers were forced to pay higher shopping costs.
However, a few days after the lawsuit was filed, Zulily went bankrupt. The outside world thought that with Zulily's exit, the case would be buried and come to nothing. But unexpectedly, Zulily was launched again in September this year. Shortly after its "rebirth", the case also made new progress.
On December 31, John Chun, a judge at the U.S. District Court for the Western District of Washington, ruled that Zulily claimed to be a victim of Amazon and had provided sufficient evidence to prove that it competed with Amazon in the online market, and therefore could file an antitrust lawsuit.
Zulily also sufficiently alleged that Amazon’s “anti-discounting” practices — such as penalizing third-party sellers that offer lower prices on Zulily’s platform — are anticompetitive under federal antitrust law, the judge wrote, giving Zulily until Jan. 31 to file an amended complaint.
This is not the first time Amazon has been accused of maintaining an illegal monopoly in e-commerce and stifling competition.
Months before Zulily filed its lawsuit, the Federal Trade Commission (FTC) filed an antitrust lawsuit against Amazon, alleging that Amazon illegally maintains its monopoly by punishing sellers who sell products at a discount outside of Amazon and requiring them to use Amazon's own logistics services in order to get favorable placement on the site.
Amazon tried to dismiss the lawsuit filed by the FTC, but was unsuccessful. In October this year, John Chun, who also oversees FTC cases, approved the FTC's request to file an antitrust lawsuit against Amazon. The case will go to trial in 2026.
In addition to the United States, Amazon has also faced similar charges in the European Union and India. For example, the European Commission accused Amazon of abusing its dual role as a sales platform for other merchants and a seller of its own products, using non-public data obtained from third-party sellers to find popular products, copy them and sell them at low prices, harming the interests of small merchants who rely on the company to reach customers.
It has also been accused of manipulating the buy box, giving priority to its own products and other sellers using Amazon’s logistics services, a practice that could lead to unfair competition.
India's accusations against Amazon include four aspects:
First, it favors certain sellers, such as Cloudtail and Appario, which receive platform fee concessions and higher visibility, undermining the fair competition environment;
Second, the practice of offering large discounts, which enables certain sellers to offer price discounts that small sellers cannot match through preferential conditions, thus impacting the business of small sellers and affecting the normal competitive order of the market;
The third is exclusive agreement restrictions. Signing exclusive trading agreements with manufacturers limits consumers’ choices, weakens market competition, and makes it difficult for other sellers to obtain relevant product resources.
The fourth is to promote private brands, using preferred sellers to promote private brand products, thereby weakening the competitiveness of independent brands and squeezing the development space of independent brands in the market.
24 years online, acquired 3 times
Zulily was founded in 2010 by Mark Vadon and Darrell Cavens, former CEOs of online diamond sales platform Blue Nile, and was once known for its flash sales as a destination for moms to shop for themselves and their families.
Three years after its launch, Zulily opened the door to the capital market with an initial valuation of $2.6 billion. The year after its listing, its performance experienced explosive growth. According to financial reports, in fiscal 2014, its revenue grew by more than 70% to $1.2 billion, and its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) also grew by a similar amount to $44 million. Its market value also rose accordingly, soaring to about $9 billion.
In August 2015, Liberty Interactive, which owns TV shopping channels QVCQVCA 0.0% and HSN, came forward to acquire Zulily in a transaction valued at $2.4 billion, but Zulily's flash sale business model did not match Qurate's TV shopping model.
After Qurate took over, its sales peaked at $1.8 billion in 2018, but then began to decline. In 2022, Zulily's sales fell to $906 million.
In May 2023, Qurate sold Zulily to investment firm Regent for an undisclosed amount, but it was apparently unable to turn Zulily around. Just seven months later, in December 2023, Zulily went out of business.
However, just when everyone thought Zulily was going to exit the market, someone else bought it back. In March 2024, online retailer Beyond Inc. acquired Zulily for $4.5 million. (Note: On June 28, 2023, Overstock acquired the well-known American home furnishing platform Bed Bath & Beyond for $21.5 million. On August 1, Overstock merged with Bed Bath & Beyond, and the website name was changed to "Bed Bath & Beyond". On November 6, the company name was officially changed to Beyond Inc.)
At the time, Zulily had 18 million customers, which was a considerable fortune for Beyond. The reason was that Beyond could directly access the inboxes of these customers, so it no longer had to pay high online customer acquisition costs. And Zulily's own files also carried detailed purchase histories, with which Beyond could activate more personalized digital marketing plans.
While it may seem risky to lump struggling or failing brands together in one place, Bed Bath & Beyond, Overstock, and Zulily could be a lucrative proposition for Beyond, which can combine the brands’ product portfolios, appeal to their respective loyal fans, and thus propel each brand forward and strengthen its overall retail footprint.
Moreover, similar product lines help Beyond to allocate products from one site to another based on their performance. That is, when a product is not selling well on one site, it can be transferred to another site for sale, whether it is a limited-time sale site like Zulily or a clearance site like Overstock.
From Zulily's perspective, it has faced many challenges, such as lack of guaranteed shipping speed, chaotic pricing, and lack of innovation. Now is obviously a great time to revive its business. An investment analyst said that under Beyond's model, these unfavorable factors should be largely alleviated, and the brand has the potential to increase Beyond's number of active customers and market share.
Based on the above analysis, Zulily has a great chance of taking off again, and Amazon is in danger! Amazon Zulily |
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