Digital retail was supposed to put brick-and-mortar chains out of business. Certainly, some physical retailers have struggled and gone under. Bed Bath & Beyond. Christmas Tree Shops, and Tuesday Morning all filed for bankruptcy and ultimately shut down in this year alone.
Selling online and not having to pay for stores allows for lower prices. It also causes problems, however, as consumers don't always like what they order and returns are very expensive. In addition, once a customer has to return an item, they have lost the convenience advantage that comes with shopping from a digital retailer.
Related: Amazon, Walmart, and Target have a secret returns policy
Online retailers were supposed to be disruptive. In reality, however, the total percentage of retail sales that have moved to digital has hovered around 15% for the past few years. The number climbed to 20% during the Covid lockdown period but went back to the 15% range area when things returned to normal.
Online-only retailers that were supposed to change the market — companies like Wayfair and Stich Fix — have actually struggled to survive. Now, another once-promising online retailer, Zulily, has suddenly shared with customers that it's closing for good.
Image source: Getty Images
Zulily is having a going-out-of-business sale
Consumers have shown a reluctance to buy clothing online. That's likely because people like to touch and try on clothes before buying them.
Zulily tried to overcome that reluctance by offering a unique business model. The company used a daily deals model. At first, it highlighted clothing for women and kids, but it later expanded to include men.
Unlike Amazon, Target, and most retailers who sell online, Zulily did not offer quick delivery. That was literally part of its business model.
"The secret to our deals is in our shipping. We wait and bundle items from multiple orders, using fewer boxes. Then, we pass the savings on to you. Sometimes, it takes a little longer, but our customers say it’s worth the wait," the company shared on its website.
That model clearly did not work as the company abruptly announced on Dec. 9 that the company was shutting down.
“All sales are final during Zulily’s going-out-of-business sale,” the website reads. “FINAL SALE. All items must go,” the company posted.
Zulily laid off 800 workers
Signs of the company's problems emerged on Dec. 7 when the Seattle-based online-only retailer abruptly laid off about 800 of its staff. Along with letting workers go, the digital retailer closed its Seattle headquarters and two warehouse locations, GeekWire reported.
The company has not shared its impending closure on its Facebook page, which includes this description of its business:
"Find affordable items from the brands you love, without the hassle of sifting through countless racks."
The company has not posted on X, the former Twitter, since May.
Zulily has not shared what its final day of operation will be.
GenUi, a software development consultant, sued Zulily earlier this month "alleging that Zulily breached contractual obligations and owes the company $191,776 for work completed earlier this year," GeekWire also reported. "GenUI has performed work for Zulily since 2017, but starting this past April, Zulily started to fall behind on monthly payments, according to the suit filed in King County Superior Court."
Zulily was launched in 2010 by Mark Vadon and Darrell Cavens, former executives with online jewelry retailer Blue Nile. It went public in 2013 in a well-received IPO. But the early success could not be sustained despite two ownership changes.
