In December 2023, Zulily, a Seattle-based online retailer, announced its closure and liquidation of its assets. According to the company’s website, this decision was prompted by the “challenging business environment” and “financial instability.” Zulily commenced its shutdown process on December 22, 2023, initially appearing as routine website maintenance.
The closure involved shutting down its main office in Seattle, along with its warehouses in Ohio and Nevada, affecting approximately 850 employees. However, in a surprising development, Beyond Inc. acquired Zulily’s intellectual property assets for $4.5 million. Beyond Inc., which owns Overstock and Bed Bath & Beyond and was previously known as Overstock.com, plans to relaunch the retailer later in the year.
Key Takeaways
- Strategic Acquisition by Beyond Inc.: Beyond Inc., formerly Overstock.com, acquired Zulily’s intellectual property assets for $4.5 million, integrating it into its discount Overstock division. This strategic move aims to bolster Beyond’s presence in the discount retail market, offering multiple sales channels for vendors and expanding its customer base.
- Zulily’s Rise and Fall: Founded in 2009, Zulily quickly gained popularity for its flash sales, going public in 2013 with a valuation of $2.6 billion. However, its performance faltered over the years, leading to its acquisition by Qurate Retail in 2015. Despite efforts to revitalize under Qurate, Zulily faced revenue declines and layoffs, ultimately resulting in its closure in December 2023.
- Challenges and Lawsuit: Zulily attributed its decline to a challenging business environment and alleged anticompetitive practices by Amazon, leading to a lawsuit. However, Amazon defended its practices as consistent with industry standards, emphasizing low prices.
- New Beginnings with Beyond Inc.: Beyond Inc.’s acquisition of Zulily’s brand and website marks a new phase for the retailer. With access to Zulily’s customer base and synergies with Beyond’s existing products, the revamped website is expected to contribute to revenue targets without additional fixed expenses. However, the future presence of Zulily in Seattle remains uncertain as Beyond did not acquire its physical headquarters or former employees.
Acquisition of Zulily’s Intellectual Property by Beyond Inc.
The recently shuttered flash-sale website shows that the company appears to have finally found a suitable corporate home after unsuccessful attempts by TV-shopping conglomerate Qurate and investment firm Regent.
Beyond Inc., formerly known as Overstock.com, has reformed itself following the acquisition of Bed Bath & Beyond’s intellectual property assets. The company recently announced the purchase of Zulily’s intellectual property for $4.5 million in an all-cash transaction. This acquisition will integrate Zulily into Beyond’s discount Overstock division, which is also poised for a revival later this month. The strategic move aims to bolster Beyond’s presence in the discount retail market.
Marcus Lemonis, the executive chairman of Beyond, stated that this acquisition reaffirms its commitment to the off-price sector, highlighting its significance in expanding its business, enhancing profit margins, and increasing its customer base. By merging Zulily with its flagship brand, Overstock, it plans to offer its vendors multiple sales channels. These channels will not only cater to customers at various price levels but also provide vendors with an additional avenue to enhance inventory turnover and financial outcomes.
The Beginning of Zulily
Image source
Mark Vadon and Darrell Cavens, two former Blue Nile executives, founded Zulily in 2009 after Vadon was inspired by the challenges he faced while preparing for the arrival of his child, realizing the need for an easier way to obtain essential baby supplies. The company launched on January 27, 2010, initially focusing on children’s apparel, and quickly became renowned for its flash sales, enjoying rapid success.
The company went public in 2013, opening with a valuation of $2.6 billion. By the end of its first trading day, this valuation had nearly doubled. In 2014, Zulily’s revenue soared by more than 70% to $1.2 billion, and its adjusted EBITDA increased similarly to $44 million, pushing its market value to approximately $9 billion at its peak.
In August 2015, Liberty Interactive’s QVC division acquired Zulily in a stock transaction valued at $2.4 billion. Subsequently, Liberty Interactive rebranded as Qurate Retail, which also encompasses the Home Shopping Network (HSN). This acquisition occurred as Zulily’s stock had notably declined after consistently missing earnings targets and three months after Alibaba, the Chinese retail giant, revealed a 9.3% ownership in Zulily. The acquisition price by QVC represented a 49% premium to Zulily’s stock price just before the deal was announced.
Some viewed the acquisition as a rescue effort, considering Zulily’s previous high performance had faltered. That year, the company failed to meet its sales forecasts and investor expectations. Despite generating over $1 billion in net sales in 2014, the company was experiencing a deceleration in sales growth.
Zulily had shown promising growth, with a 23% increase in revenue YOY, reaching $366 million, up from $355 million in the first quarter. Additionally, its non-GAAP operating income increased substantially by 121% from the previous year, totaling $31 million.
Under Qurate’s guidance, Zulily became a prominent figure in Seattle’s tech landscape, sealing a multiyear sponsorship agreement with the Major League Soccer team Seattle Sounders in 2019 and intensifying its advertising efforts on social media platforms. However, by May 2023, due to significant revenue declines in 2022 and 2023 and subsequent workforce reductions in Seattle, Qurate Retail decided to sell Zulily to Regent. This sale was part of Qurate’s three-year plan to concentrate on its primary video commerce operations and refine its brand portfolio. Qurate’s CEO, David Rawlinson, indicated that this move would allow the company to better focus on its core assets, QVC and HSN, along with the Cornerstone Brands.
The situation deteriorated further after the sale.
In October, Zulily’s CEO, Terry Boyle, resigned, and the company announced multiple layoffs throughout the year. By December 2023, the online retailer declared it would liquidate its assets and cease operations. In a statement on its website, the company described this step as a difficult but necessary decision to wind down the business in an orderly manner to maximize value for its creditors.
In an online statement, Ryan Baker, Vice President of Douglas Wilson Companies, said the decision to shut down was challenging but necessary due to the difficult business climate and financial instability the company faced, prompting swift and decisive action.
Visitors to Zulily’s website were initially greeted with notices of an “all items must go” and “final sale” before being redirected to a maintenance page with no further information.
At the time, the company explained that the challenging business environment and financial instability compelled Zulily to take immediate and decisive action. Although the company was not entering bankruptcy, it had arranged with its creditors to sell off its assets.
Before its closure, Zulily filed a lawsuit against its e-commerce rival, Amazon. The company attributed its decline to Amazon’s policies that purportedly deterred merchants from working with competitors. It charged that Amazon engaged in anticompetitive business practices similar to those at the heart of the Federal Trade Commission’s antitrust lawsuit against Amazon from the previous year.
Amazon has countered these claims, asserting that its practices, which focus on emphasizing low prices on its website, are consistent with those used by other retailers.
In January 2024, the liquidation and restructuring company Gordon Brothers announced it was seeking buyers for Zulily’s remaining inventory and its two 775,000-square-foot fulfillment centers following the retailer’s closure in December 2023. The assets on sale, valued at $85 million, included a wide array of nationally recognized fashion brands, appealing to prospective buyers interested in a broad inventory range.
New Beginning
In March 2024, Zulily began its new phase.
Beyond revealed its acquisition of Zulily’s brand and website for $4.5 million, a modest sum compared to Zulily’s former valuation exceeding $9 billion.
The Utah-based Beyond has previously undertaken a similar venture. It acquired Bed Bath & Beyond in the previous June, shortly after the retailer declared Chapter 11 bankruptcy in April.
Beyond, Inc. has acquired several intellectual property assets linked to the Zulily brand as part of the deal. These assets include the website and domain names, trademarks, trade names, customer database, social media accounts, software for operating the website, and the goodwill associated with the brand. The acquisition does not include any of Zulily’s liabilities, liens, or debts. Under the terms of the asset purchase agreement, Beyond purchased these assets for $4.5 million, plus related acquisition costs, financed entirely through cash reserves.
Marcus Lemonis highlighted that this acquisition represents a strategic advancement in Beyond’s transformation and long-term growth. He expressed enthusiasm for the acquisition’s access to a global vendor pool, which is expected to generate additional revenue by reconnecting with Zulily’s 18 million customer base and taking advantage of synergies with Beyond’s existing customer base across various product categories.
The revamped company’s website is slated to be online by the end of the second quarter of 2024, and it is anticipated to contribute to Beyond’s revenue targets over the next 24 months without incurring extra fixed expenses.
The future presence of Zulily in Seattle remains uncertain. A spokesperson from Beyond stated that the acquisition encompassed Zulily’s intellectual property assets, such as its website, customer database, social media accounts, and software. However, it did not include Zulily’s former employees or its physical headquarters. Currently, Beyond does not maintain any offices in Seattle, according to the spokesperson.
About Zulily
Zulily, now a part of Beyond Inc., is a U.S.-based online retailer offering a wide range of family products, including clothing, toys, home decor, and gifts. Established in 2010 by Darrell Cavens and Mark Vadon, the company is headquartered in Seattle, Washington, with additional offices in Nevada and Ohio. The company primarily caters to young mothers seeking brand-name items for their children.
Zulily’s product selection includes burp cloths, bibs, bedding, backpacks, bodysuits, blankets, diaper bags, costumes, highchairs, hats, and jackets.
About Beyond Inc.
Beyond, Inc., formerly known as Overstock.com, Inc., is a leading online retailer of furniture and home furnishings in the United States and Canada. The company provides a broad range of products including bedding and bath items, furniture, patio and outdoor equipment, tabletop and cookware, area rugs, storage solutions, décor, home improvement items, small appliances, and more, all under the Bed Bath & Beyond brand.
Beyond, Inc. offers its products and services via its comprehensive e-commerce platform, accessible through its mobile app and websites such as bedbathandbeyond.ca, bedbathandbeyond.com, and overstockgovernment.com. It also engages in business advertising on its site and operates Marketplace, a feature allowing partners to sell their goods through third-party sites. Additionally, the company facilitates product sales to international customers through third-party logistics providers and runs Supplier Oasis, a unified platform where partners can manage their products, inventory, and sales channels, as well as access multi-channel fulfillment services via its distribution network.
Founded in 1997, Beyond, Inc. is headquartered in Midvale, Utah. The company rebranded from Overstock.com, Inc. to Beyond, Inc. in November 2023.
Conclusion
The company’s journey, from its meteoric rise to its unexpected closure and now to its acquisition by Beyond Inc., reflects the dynamic nature of the retail industry. Despite facing significant challenges and experiencing financial instability, Zulily’s brand and assets have found a new home with Beyond Inc. The strategic acquisition of Zulily’s intellectual property assets for $4.5 million underscores Beyond’s commitment to revitalizing the discount retail market and expanding its customer base.
By integrating Zulily into its operations, Beyond aims to offer vendors multiple sales channels and capitalize on synergies to enhance revenue growth. The relaunch of Zulily’s website marks a new chapter, promising to reconnect with its millions of customers and contribute to Beyond’s revenue targets in the coming years. While the future presence of Zulily in Seattle remains uncertain, its legacy as a pioneer in online flash sales continues under the stewardship of Beyond Inc.
