Zulily announced to compete with Amazon in delivering services to clients last year. (Photo : www.geekwire.com)
China e-commerce giant Alibaba Group Holding Ltd. has purchased a stake of more than 9 percent in U.S. online retailer Zulily, Inc., raising questions about the company’s future plans in the American market.
According to an article published in Technology News China, Alibaba bought the stake, worth more than $150 million, as Zulily stocks dropped in recent days.
The article said that the Seattle-based website sells mostly clothing apparel and other merchandise with married women as target clients, offering big discounts at limited time.
Zulily CEO Darrell Cavens welcomed the developed and said that his company has great respect for Alibaba, the report added.
Alibaba has made small investments in a bid to learn more about the American market. It invested $15 million in New York-based luxury e-commerce site 1stdibs and launched its own U.S. shopping website, 11 Main, last year. In 2013, it also invested $206 million in ShopRunner.
"The key issue is whether we are going to have something in the U.S. market that will really target U.S. consumers," Alibaba Executive Vice Chairman Joe Tsai told The Wall Street Journal last year. "We think in the long run that's an interesting market to us. But today, our focus is very much on cross-border activities."
Zulily started in Nov. 2013 and offered its share at $22. Its stocks soared above $70 in 2014 as it reported quick sales growth and sales reached $1 billion last year, making it one of the fastest retailers to make that record.
Alibaba expressed confidence in the company, according to a statement, and said that Zulily has "compelling vision for the future."
Zulily's shares closed at $13.30 on May 8, Friday, down 43 percent this year, but a record low of $9.09 touched this past week. The company's market capitalization is now close to $1.5 billion.
