Dive Brief:
- E-commerce retailer Zulily sued Amazon on Monday. Zulily’s lawsuit, filed in federal court in Seattle, alleges that Amazon engaged in price fixing, monopolized the online superstore market and engaged in “bullying” behavior so merchants would leave Zulily. The lawsuit also alleges that the larger rival retailer worked to “destroy” Zulily and eliminate horizontal retail competition.
- Zulily’s suit also accuses Amazon of price-fixing schemes with wholesale suppliers and third-party retailers. As a result, nearly half of the suppliers who sold to both Amazon and Zulily ended their relationship with Zulily in about one year, Zulily claims.
- This week’s lawsuit comes just days after Zulily’s decision to lay off more than 800 people starting in February became public through mandatory notices filed with employment officials in three states. The retailer has also signaled through its website and social media that it intends to go out of business. However, as of Thursday, it hadn’t made any statements about its future.
Dive Insight:
According to Zulily’s 58-page lawsuit, Amazon coerced third-party retailers and wholesale suppliers to artificially raise Zulily prices to match Amazon’s pricing. The company punished any sellers that didn’t comply, according to the suit.
Amazon was able to do this because it “abused its monopoly power as an online superstore to immunize itself from competition from all other online retailers,” the lawsuit says. “After only a few months of being targeted by Amazon’s exclusionary conduct, Zulily was forced to discard the “Best Price Promise” it made to consumers and to remove all Amazon price comparisons from its website — effectively abandoning its strategy to gain scale through discount pricing,” the company said in its suit. Zulily previously pledged to price match if a shopper found a lower price for an item on Amazon or Walmart.
Starting in 2019, Zulily alleged in its lawsuit that Amazon’s actions caused Zulily substantial revenue losses, reduced website traffic and denied the retailer the necessary scale to compete in the market. Both companies are Seattle based.
“The allegations made in this lawsuit are false,” Amazon spokesperson Tim Doyle said in a statement to Retail Dive. “The retail industry is dynamic and strong with many retailers succeeding, including small and medium-size businesses who are thriving, growing and innovating. That includes many in our store, and they now make up more than 60% of sales on Amazon.”
Los Angeles-based global private equity firm Regent bought Zulily from Qurate Retail Group in May. Zulily, the attorneys listed in court documents who filed suit on the company’s behalf and Regent did not respond to emailed requests for comment from Retail Dive seeking more information about the lawsuit, the impending layoffs, or if the company is going out of business.
The Federal Trade Commission has also filed suits against Amazon. One of the FTC’s lawsuits claims the company violated federal and state antitrust laws, while another claims that Amazon tricked consumers into signing up for Prime or maintaining their membership. Amazon has denied wrongdoing and asked the court to dismiss both FTC lawsuits.
Technology news site GeekWire reported last week that Zulily’s website briefly published a message over the weekend stating “All sales are final during Zulily’s going-out-of-business sale.” That statement was removed and replaced with a new message that was still up as of midday Wednesday: “Final Sale. All items must go.” Recent posts on Zulily’s Facebook page also encouraged customers to shop for the company’s remaining Lego sets and Muk Luks shoes. “All sales are final,” both posts noted.
