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Seattle-based online retailer Zulily (ZU), which recently announced its closure, has filed a lawsuit against Amazon (AMZN), accusing the e-commerce giant of “anticompetitive business practices” that contributed to its downfall. The lawsuit, filed in Seattle on Monday, alleges that Amazon's policies deterred merchants from using platforms other than Amazon.com, directly impacting Zulily's business operations.
In the complaint, Zulily claims that Amazon's tactics led to a significant loss of sellers on its platform, media reports said. Over one year, Zulily lost half of its merchants who also sold products on Amazon. The company alleges that Amazon penalized sellers who used both platforms by forcing them to raise prices on Zulily, remove products, or cease selling on Zulily entirely, according to a report in Seattle Times. This move by Amazon, as per Zulily, caused a substantial decline in its vendor base and business.
Amazon has refuted these allegations, defending its business practices. In a statement on Tuesday, Amazon responded to Zulily's claims, having previously addressed similar accusations in a motion to dismiss a Federal Trade Commission (FTC) lawsuit filed earlier this year. In that case, the FTC accuses Amazon of employing several tactics to prevent rival retailers from competing effectively in the industry. Amazon disputes these allegations, asserting that its strategies are aimed at highlighting low prices and benefiting customers.
Zulily, initially a children’s apparel retailer, expanded its offerings to include a wide range of products marketed through thousands of flash sales annually. However, the company recently announced the layoff of hundreds of employees and the closure of its Seattle headquarters. This legal action against Amazon comes as Zulily navigates its final business stages.
In its defense, Amazon has emphasized its commitment to competition and innovation, stating that it competes with thousands of online and brick-and-mortar retailers. Amazon's attorneys argue that the company's business practices have pushed the industry forward, benefiting consumers and challenging competitors to improve their offerings. They assert that it is unreasonable to suggest that Amazon has marginalized major competitors such as Walmart (WMT), Target (TGT), United Parcel Service, Inc. (UPS), and FedEx (FDX).
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