Diving overview:
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Online retailer Zulily ceased operations as of Friday. The company said in a note on its now-closed website that it had entered into the assignment for the benefit of its creditors, namely ABC. Under this alternative process to bankruptcy, Zulily's assets will be liquidated over the next 12 to 18 months.
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Douglas Wilson Companies will carry out the wind-down and liquidation through a special purpose vehicle, Zulily ABC. The California-based company plans to distribute proceeds from the asset sale to creditors.
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The statement said recently fulfilled Zulily orders are on their way to customers. Orders not received by January 22nd may be canceled and refunded, and customers will be directed to submit proof of claim to their billing representative.
Dive Insight:
Seattle-based online retailer Zulily is shutting down its operations after just seven months under new ownership.
“This decision was not easy, nor was it made lightly,” Ryan Baker, vice president of Douglas Wilson Companies, said in an online statement. “However, given the difficult business environment in which Zulily was operating and the resulting financial instability, Zulily has decided to take immediate and swift action.”
Zulily's admission Friday that it is going out of business was the first public confirmation of the company's status. It was previously unclear whether the company intended to go out of business or whether it had already gone out of business. Friday's announcement comes about a week after the website suddenly went offline. Visitors were redirected to a blank page with the message “Down for maintenance.” The message followed a brief period when Zulily's home page displayed the words “Final sale” and “All items must be shipped.”
Zulily's parent company, Regent and Baker, did not provide further details about the retailer's financial situation. Neither party immediately responded to requests for comment.
“We have assembled an experienced team to assist with claims management and proactively address questions and concerns from Zulily's customers and creditors,” Baker said in a separate statement. “We recognize the burden that such a process places on our stakeholders, and we value responsiveness and reliability in fulfilling our fiduciary responsibility as a transferee.”
Earlier this month, news broke that Zulily was planning to lay off more than 800 people in Washington, Nevada and Ohio as a result of enforcement notices to state employment authorities. And just days after news of the mass layoffs broke, Zulily filed a lawsuit against Amazon, accusing the retail giant of engaging in price-fixing and artificially inflating Zulily's prices for third-party sellers and wholesalers. He claimed that he was forced to do so. The company also alleged in the lawsuit that Amazon “abused its monopoly power” and took actions that denied Zulily the ability to compete in online retail. Amazon denies wrongdoing.
In May, Regent acquired Zulily from Qurate Retail, the parent company of QVC and HSN, for an undisclosed sum. Prior to the Regent acquisition, Zulily's financial performance was poor, especially in its final year as part of Curate's brand portfolio. Zulily's first quarter revenue was $192 million, down 17% from $232 million a year ago, and the company also reported a first quarter operating loss of $43 million.
Zulily's Facebook page was still live Tuesday morning, but there was no statement regarding the company's closure. Under the last post (shoe promotion) on December 15, nearly 500 people commented on their experiences on Zulily's final day.
One person, who identified herself as a single mother and teacher, said she ordered from Zulily about a week ago, but couldn't afford to make a gift-buying mistake this holiday season. “Christmas is already a stressful time for many people,” they said. “Things like this just add to the stress. I pray for a miracle for many of us.”
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