Online retailer Zulily announces it's suing Amazon, claiming anti-competitive practices

This week, Seattle-based online retailer Zulily announced it’s going out of business. The news comes after the company’s owners said last week that there would be massive layoffs.

In a new lawsuit, Zulily says part of the reason for its downfall is Amazon.

Zulily was founded in 2010 by two executives from an online jewelry store named "Blue Nile," and from the beginning, the company showed promise.

It sold a variety of products, from home goods to beauty supplies, and partnered with wholesale retailers for resale on their online marketplace. It was considered a "unicorn," a tech startup with a valuation of over a billion dollars, and its early years coasted on the success of its IPO.

However, the company struggled to maintain that success.

After a change in ownership, a few rounds of job cuts, and a downsizing, the company officially announced it's closing after a sale to Regent, a private equity firm in Los Angeles. Along with that announcement, the company is suing its one-time competitor, Amazon, accusing the company of using anti-competitive practices and forcing Zulily out of the market.

"It's saying that Amazon took away some of the sellers that were using Zulily's platform and that it prevented Zulily from offering these discounted prices to customers that it had been using as its whole marketing pitch," said Lauren Rosenblatt, who reported on the lawsuit for The Seattle Times.

"And it says that Amazon did this because it has strict standards for the third-party sellers on Amazon's platform, where it basically prevents them from offering a lower price anywhere that's not Amazon."

Zulily cited five different sellers who said that Amazon was their reason for increasing prices or ceasing to sell on Zulily.

The company's lawsuit also quotes a recent complaint from the Federal Trade Commission filed against Amazon. The FTC's antitrust filing includes a list of allegations, including punishing third-party sellers who sell for lower prices on other platforms, coercing third-party sellers into using Amazon's fulfillment and shipping services, and burying third-party listings in favor of Amazon's own products.

Amazon declined to comment on Zulily's lawsuit, and company executives have maintained Amazon's business practices are no different from other online retailers.

"[Amazon says] the practices that the FTC is targeting are actually helping consumers by keeping prices low, leading to more innovation, leading to more competition," said Rosenblatt. "Amazon is saying that if the FTC were to prevail, customers would end up paying more and that it would actually harm customers."

You can read Lauren Rosenblatt's full story for The Seattle Times here.

Listen to the full Soundside interview by clicking "play" on the audio icon above.