Is China’s e-commerce giant, Alibaba, making deeper inroads in the U.S. market? The company now owns more than a 9 percent stake in Seattle online clothing retailer, Zulily, which focuses mainly on apparel for women and children.
Zulily, however, had disappointing first quarter earnings, below what the company had targeted, causing its stock to drop by 20 percent. Alibaba’s purchase of the stock, which began May 6, when the stock was at an all-time low, helped the price rebound by Friday, May 8, with shares closing up 12.7 percent at $13.30.
Zulily’s troubles are attributed to its difficulty in holding on to customers, which could be due to its no-return policy.
The Seattle Times reported that Alibaba purchased 4.8 million Zulily class A shares, for about US$56 million. This brings Alibaba’s total ownership in Zulily to approximately 11.5 million shares, close to one-sixth of the company’s Class A stock, worth about $156 million. Alibaba already owned a stake of less than 5 percent in the company, which hadn’t been disclosed.
Alibaba continues to cozy up to Seattle. Earlier this year, it established a software engineering office in the city that is home to Amazon, and it has also struck a deal with Washington-based Costco to sell some of its merchandise on its site, as well as Seattle-based diamond retailer, Blue Nile.
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