Fashion goes in and out of style, and so, it turns out, do fashion startups. Lyst — the high-end fashion marketplace with 160 million users that was once valued at $700 million — has been acquired for just $154 million in an all-cash deal. The buyer is Zozo, a Japan-based fashion and e-commerce business.

Zozo owns a number of fashion brands that include Wear by Zozo, along with several others with names like Zozotown and Zozosuit.

(But you might better know the name for another reason. Its founder Yusaku Maezawa once claimed the title of “most retweeted tweet“, when the platform was still Twitter, when he promised to give away 100 million yen in cash for retweeting it. Vague-hacking reminiscent of Elon Musk, who Maezawa was, coincidentally, also paying to shoot up in a SpaceX rocket.)

Zozo said it will continue to operate UK-based Lyst as a standalone business as part of that stable. Current Lyst CEO Emma McFerran will stay with the company.

The acquisition — at a massively reduced price compared to Lyst’s last valuation — is coming at a time of strong uncertainty in the world of e-commerce. Lyst specifically was facing headwinds from three different directions.

First, U.S. tariff hikes are raising questions around how global trade will look in the coming months and years, including the impact on smaller companies outside the U.S. selling goods to U.S. consumers but equally the ripple effect on trading between other countries and regions. Nearly one-third of London-based Lyst’s revenues currently come from sales in the U.S.

Second, even before those tariffs became an issue, Lyst was facing massive competition in online fashion not just from other specialist players but also behemoths like Amazon and Temu.

Third, technology investors today have over-indexed massively on anything and everything to do with artificial intelligence. That has put a lot of pressure on companies not in that space to show similar growth trajectories, plus growth stories that somehow incorporate AI anyway.

(Lyst and Zozo have gotten the memo. The pair will be “Transforming the Future of Fashion Discovery through AI and Technology,” they prominently note in their announcement. That phrasing is mentioned again in the release, but there are no specific details of what, exactly, that will mean.)

The deal gives Zozo a foothold in the U.K., but it also gives it an international business. Lyst said that it has customers in 190 markets, with 30% of its business coming from the U.S., 24% from the U.K., and 34% from Europe.

Lyst has leaned into the long tail of fashion brand aggregation in a marketplace model: it claims to offer products from 27,000 brands, including both designers and retailers. The list includes Prada, Gucci, Bottega Veneta, Valentino, Miu Miu; Coach, Michael Kors, Hugo Boss, Selfridges, Harvey Nichols and Harrods.

Lyst was one of the winners of the e-commerce boom during and just after the peak of the Covid-19. When it raised $85 million in May 2021 in a round led by Fidelity, it did so at a valuation of around $700 million. Other big-name investors in the company include Accel, Balderton, Molten (formerly Draper Esprit) and others. The company at the time described the funding as a pre-IPO round. However, not only did the IPO window slam shut, but a lot of the inflated gains e-commerce companies saw during the pandemic quickly lost air as consumers returned to their pre-pandemic spending habits. (And then investors moved on to the next big thing, AI.)

And in fashion e-commerce more specifically, the market has been tough for these brands individually and collectively.

A spokesperson explains that Lyst’s 160 million users are “annual unique users”. But that figure includes active shoppers as well as those just window shopping. It’s hard to know how successful the company has been in conversions, an important part of the e-commerce model. It has not been alone: Other big names in high-end fashion commerce like Farfetch have also nosedived in the post-Covid years.

In Lyst’s most recent financial filings in Companies House in December 2024, the company noted that its total revenues for the year that ended 31 March 2024 were £50.1 million ($64 million). That’s largely flat on its revenues from the year before, which were £50 million.

Lyst in that time remained unprofitable, but it did manage to cut its loss drastically over that year to £510,000 from £23.7 million a year before. (It also posted an operating profit before taxes of £443,000.)

“This is an exciting moment for Lyst, and a win-win for our fashion ecosystem of shoppers and partners as we move forward as part of ZOZO Group,” McFerran said in a statement.

Now the question will be whether getting better economies of scale with Zozo will give Lyft the lift it needs to turn this around.