Updated with Amazon statement.
Less than a week after cutting hundreds of jobs and signaling its intent to go out of business, online retailer Zulily filed suit against Amazon on Monday — alleging that the e-commerce giant’s tactics made it impossible to compete on price without jeopardizing its relationships with key suppliers.
The lawsuit, filed in U.S. District Court in Seattle, is based in part on allegations in the Federal Trade Commission’s separate antitrust lawsuit against Amazon.
An unredacted version of the FTC complaint, made public last month, includes a section that details what the FTC describes as Amazon’s anticompetitive tactics against Zulily and its suppliers.
Zulily, which is also based in Seattle, does not explicitly connect Amazon’s alleged tactics to the specific turmoil it has experienced over the past week.
However, the suit says Amazon’s conduct “has caused Zulily substantial revenue losses and reduced traffic to Zulily’s website,” and “denies Zulily the scale necessary to compete in the market” by discouraging price competition.
The suit, quoting in part from the earlier FTC complaint, says Amazon’s specific campaign against Zulily began around 2019, when Zulily started displaying Amazon’s prices next to its own to show shoppers than its prices were lower.
“But rather than compete on the merits, Amazon set out to ‘destroy’ Zulily instead, by coercing third-party retailers and wholesale suppliers to agree to ‘price parity,’ i.e., to artificially raise Zulily prices at or above Amazon’s, and to punish any sellers who cheated,” the Zulily suit says.
According to the suit, those punishments “ranged from disqualifying a seller from the ‘Buy Box’— the mechanism most consumers use to buy an item or add it to their cart — to ‘total banishment from Amazon’s Marketplace.’ “
Update, Tuesday Dec. 12: Amazon issued this statement from spokesperson Tim Doyle.
“The allegations made in this lawsuit are false. 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. We’re proud of the substantial investments we make to provide entrepreneurs with tools and resources to establish and build their brands, connect with more customers, and create jobs in their communities.”
Zulily last week filed notices indicating that it’s shutting down three offices, including its Seattle headquarters, and laying off more than 800 people. The company referenced a “going-out-of-business” sale on an FAQ page this weekend but removed the language after GeekWire published a report about it.
GeekWire has contacted Zulily’s parent company, Regent, a Los Angeles-based private equity firm, for comment. Regent is not mentioned in the lawsuit.
In its motion to dismiss the FTC case, filed Friday, Amazon described its efforts to offer low prices as good for competition and consumers, asserting that the FTC’s suit “implausibly, and illogically, assumes that Amazon’s efforts to keep featured prices low on Amazon somehow raised consumer prices across the whole economy.”
Amazon added in the filing, “At most, the Complaint contains vague allegations that a handful of sellers have responded, not by lowering their prices in Amazon’s store, but by raising them elsewhere. But anecdotes are insufficient to plead a claim under antitrust law’s rule of reason.”
Founded in 2009 in Seattle by former Blue Nile executives Mark Vadon and Darrell Cavens, Zulily initially specialized in items for moms and kids before expanding to other product categories. Zulily was sold for $2.4 billion in 2014 to QVC parent Qurate (then known as Liberty Interactive), and acquired by Regent in May.
Read Zulily’s complaint against Amazon, and Amazon’s response to the FTC suit.
