Seattle’s Zulily will ‘wind down’ its business and liquidate its assets

Once an e-commerce star, online retailer Zulily will liquidate its inventory to pay its creditors as it winds down.

The company, based in Seattle, started to shut down its operations earlier this month after a 13-year run that briefly dazzled the tech industry before fizzling in the face of stiff competition from Amazon and other e-commerce platforms.

Days before announcing a “FINAL SALE,” Zulily laid off more than 800 employees, including 292 in the Seattle area.

On Friday, Zulily agreed to “conduct an orderly wind-down of the business,” according to a note that now fills the company’s website.

Zulily entered into an Assignment for the Benefit of Creditors, or ABC, which means a third-party fiduciary will complete the liquidation and work to maximize value for Zulily’s creditors.

Douglas Wilson Cos., a San Diego-based business services firm, will act as the assignee, manage the wind down and liquidate Zulily’s assets.

“This decision was not easy nor was it entered into lightly,” wrote Ryan Baker, vice president of Douglas Wilson Cos. “However, given the challenging business environment in which Zulily operated, and the corresponding financial instability, Zulily decided to take immediate and swift action.”

The ABC is an alternative to filing for bankruptcy but can be cheaper and more streamlined, said Douglas Wilson, the CEO and chairperson of the eponymous company.

In Zulily’s case, “it’s happening because there’s nothing left,” he said.

Zulily placed the blame for its slide on its e-commerce rival and neighbor Amazon, according to a lawsuit filed against the tech and retail giant days after it started its final sale.

Zulily accused Amazon of using anti-competitive tactics to stifle its business by pushing merchants off Zulily’s platform and preventing Zulily from offering consumers prices lower than those on Amazon.com.

The allegations mirror those made by the Federal Trade Commission in a sweeping antitrust lawsuit filed against Amazon in September.

Amazon has disputed the allegations by both Zulily and the FTC.

In an interview Wednesday, Wilson said his firm is evaluating the lawsuit and is prepared to take the necessary steps to “make sure it is still alive and active.”

Dropping the lawsuit has not come up as an option, he said.

Wilson said his firm plans to keep 75 Zulily employees on to help with inventory and keep the warehouses running.

Zulily, which initially focused on children’s apparel, evolved into an online platform marketing vendors’ products through thousands of flash sales each year.

Launched in 2010 by two former executives with online jewelry retailer Blue Nile, Zulily impressed the tech world with a multibillion-dollar IPO in 2013.

The next year, it had about $1 billion in annual sales and a market valuation around $7 billion.

But it couldn’t sustain its early growth and went through rounds of job cuts, moved its headquarters and changed ownership.

In May, Los Angeles-based private equity firm Regent bought Zulily for an undisclosed sum.

Now, Zulily faces allegations from vendors that the company has not paid invoices or responded to sellers looking for information.

One Washington-based seller, who asked to remain anonymous to protect their business and avoid retaliation from Zulily, said the company owes them about $45,000.

At one point, representatives from Zulily told the seller they would need to explain exactly why they needed the money – like telling the team at Zulily that they couldn’t make payroll or afford materials to create the product they were selling – in order to get paid, the seller said. Essentially, the seller said, they had to “escalate it to a priority.”

“It was the most wonderful relationship for years. They paid the bills, they asked us to collaborate, they promoted the product, it was selling well,” the seller said. “I mean above and beyond, it was wonderful. And maybe that’s why it feels so crushing now.”

Wilson did not comment on the allegations from sellers.

His firm is compiling a list of “current payables,” which would include payments to sellers. The list is extensive and hasn’t been completed yet, he said.

For customers waiting for an item, Zulily said it has attempted to fulfill all pending orders and expects to fulfill most in the next two weeks, according to the updated note on its website.

For those orders that it cannot fulfill, Zulily said it worked to cancel the order and issue a refund.

It set a Jan. 22 deadline for itself, directing customers to reach out to its claims agent if they hadn’t received an order or a refund by then.