Social eCommerce Site Zlio Joins the Deadpool

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Zlio, a site which lets users create online shops where they sell goods from other e-commerce services, is joining the deadpool. The 6-year old outlet is going out of business, and will officially closing its doors on September 11th. The company blames Google’s algorithms for its demise, surprisingly, not Zlio’s concept or business model.

In an email to users to inform them of the service’s impending shutdown, fingers were pointed all around, not only at Google, but also at an undisclosed SEO company who failed to improve the site’s rankings in Google’s search results.

Oddly, Amazon’s aStore service, which lets Amazon’s Associates build their own webstores, was not mentioned as contributing to the the service’s downturn. Neither was Amazon’s more professional Web Storefront product. Or the dozens of DIY online shops filled with user-created content, like Cafepress, Zazzle or Spreadshirt, for example.

Oh no, it’s all Google’s fault.

The full email is below.

Six years after its launch, we regret to announce that we are going out of business.

The service will officially end on September 11!

Zlio had a fantastic start, receiving capital from one Europe’s largest venture capital funds, Mangrove Capital. In addition, we held advanced M&A talks with Google, which unfortunately fell through at the last minute.

Our strong initial growth was interrupted on September 27, 2007, when the majority of Zlio shops, which were generally very well ranked, saw their Google ranking drop dramatically, eliminating 65% of our traffic.

Despite our best efforts, and the opening of 380,000 stores to date, it has not been possible to regain our previous Google rankings, except in exceptional cases.

When we founded Zlio, we thought that you, members of Zlio, would successfully promote your shops among your circles. We did not believe that Google referencing would be so crucial. Unfortunately, it has proved to be indispensable.

Among the actions taken to improve our Google ranking, we approached an SEO company who claimed they were able to fix our problem.

In view of their poor performance, we assessed that this company had not fulfilled its obligations. Therefore, we entered into dispute with it, which resulted in a court case whose sentence was rendered on July 26, 2011. This ruling is available on the website of the Paris Commercial Court (Tribunal de Commerce de Paris).

This decision sentences us both to pay the whole of a service that we still believe have not been provided and to pay damages for publishing our opinion about Referencement on Twitter. The latter part of the sentence has already drawn much attention in the French media.

This sentence means we cannot go on. The service has been losing money for several years (which forced us to gradually reduce our staff), and the amounts to which we are sentenced to pay today no longer allow us to meet our obligations.