Alibaba builds up $150 million stake in Zulily

The Chinese online retailer in recent years has also taken stakes in US retail firms ShopRunner and 1stdibs and opened its own US online shop, 11 Main.

Ben Fox Rubin Former senior reporter
Ben Fox Rubin was a senior reporter for CNET News in Manhattan, reporting on Amazon, e-commerce and mobile payments. He previously worked as a reporter for The Wall Street Journal and got his start at newspapers in New York, Connecticut and Massachusetts.
Ben Fox Rubin
2 min read

Zulily shares have taken a dive this year, but Alibaba's deep pockets are giving them a boost. Getty Images

Alibaba, already the biggest e-commerce company in China, keeps dabbling in the US.

The company has taken a roughly 10 percent stake -- worth about $150 million -- in Zulily, a Seattle-based online retailer focused on women's and kids' merchandise, according to a regulatory filing posted Friday. Alibaba disclosed that it already held millions of Zulily shares before this week. It snapped up millions more over the past few days, just after Zulily's stock dropped following a disappointing quarterly report. Zulily's shares are down 43 percent so far this year.

"We have great respect for the team at Alibaba and all that they have built," Zulily CEO Darrell Cavens said in a statement. "We are honored to welcome them as shareholders of our company."

While Alibaba has little exposure to the US market, its massive size and cash stockpiles could make it a formidable competitor against just about any major e-commerce player in the US. The company gained huge attention in the states last year when it launched the world's biggest initial public offering ever, raising $25 billion on the New York Stock Exchange. But, so far the Chinese retailer has taken just a few tentative steps in the country, opening the retail site 11 Main and investing $15 million in US interior-design firm 1stdibs last year. It's also put down larger bets on US-based shipper ShopRunner and messaging service Tango.

Alibaba is buying, though, while many other investors are fleeing from Zulily, which went public in late 2013. Shares are down sharply from its height of about $70 last February, when Zulily was reporting much stronger growth. Zulily on Tuesday reported weaker-than-expected quarterly sales -- driving shares lower -- as it's struggled to generate repeat customers for its short-term "flash sales" and mom-centric wares. Zulily shares jumped back up 13 percent Friday to $13.30.

"We support innovation and entrepreneurship and believe we can share and learn from these types of partners," an Alibaba spokesperson said in a statement Saturday. "The Zulily team has a compelling vision for the future that is consistent with our investment philosophy."

Zulily battles directly against other flash-sale sites, including Rue La La, One Kings Lane and Gilt, but it also sees its competition including Alibaba. Zulily's market value is about $1.5 billion, while Alibaba's is just under $214 billion.

Despite the recent purchases, Alibaba isn't planning to acquire Zulily, The Wall Street Journal reported Saturday, citing an anonymous source.

Updated, 6:38 p.m. PT: Added Alibaba spokesperson statement.