Alibaba’s “global ambitions right now are connecting brands and sellers in the U.S. with Chinese consumers,” said Porter Erisman, a former Alibaba executive who just published a memoir about his eight years with the company.
Alibaba Group’s unexpected purchase of a big stake in zulily heartened investors in the challenged moms-oriented, flash-sales site, and prompted speculation of growing Western ambitions for the Chinese online retail behemoth.
But Alibaba’s three-day zulily shopping spree, unveiled in securities filings Friday, probably does not herald an all-out invasion of the Seattle tech scene or a change of its China-first policy, experts say.
Alibaba’s “global ambitions right now are connecting brands and sellers in the U.S. with Chinese consumers,” a market where it reigns supreme, said Porter Erisman, a former Alibaba executive who this month published “Alibaba’s World,” a book about his eight years with the company.
While retaining that approach, “they’ll keep making small investments in U.S. e-commerce companies,” he predicted.
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The move follows the company’s established pattern of noteworthy but minority investments in U.S. tech firms, either to get access to branded products or a piece of promising ventures in consumer-oriented startups.
Other high-profile investments made by Alibaba include stakes in Lyft, the car-service company, and Snapchat, according to Bloomberg.
That doesn’t mean Alibaba won’t eventually clash with America’s most famous e-commerce giant, as both battle for Asia’s riches.
“Amazon and Alibaba are going to be bumping into each other a lot more,” Erisman said.
On Friday, after its zulily stake became public for the first time, Alibaba said it is focused on “forward-thinking, innovative entrepreneurs that are developing leading products and technologies,” in order to learn “from these types of partners.”
Alibaba spokesman Robert Christie on Monday declined to comment further on the zulily stake but added that Alibaba would “continue to look for select minority investments.”
In addition to stakes in U.S. tech companies, Alibaba has a few hundred employees scattered in a few U.S. tech hubs, including the Seattle area.
Here it has a technology office dedicated to diverse activities that include cloud computing — an office that has a “very small staff” of about a dozen people, Christie said. “We have a few engineers.”
That’s not to say it hasn’t been fishing in these waters for developer talent.
A quick browse through LinkedIn showed about 12 people joining Alibaba here in the past couple of years — most of them in the last year and mostly coming from Microsoft, although there was one hire from Amazon, according to their profiles.
Alibaba, which has 350 million customers and is loved by Wall Street, has a powerful halo — which in the short term has benefitted zulily.
The timing is fortunate for the Seattle retailer, helping remove some of the sting from several months of struggle with lengthy shipment times, slowing growth and a segment of buyers that’s eroding more quickly than expected.
News of Alibaba’s purchase sent zulily shares up 5.15 percent to $13.98 on Monday. They had dipped below the $10 per share mark when zulily CEO Darrell Cavens announced last Tuesday that the company was lowering its guidance for the year.
Alibaba, which had been a quiet investor in the company, swooped in amid the fire sale of zulily shares that followed the grim report.
A three-day spurt of buying left it with about 9 percent of zulily, in a stake now valued at $161 million.
That makes Alibaba the largest single outside shareholder in zulily, but it comes with relatively little control. It’s entirely made up of Class A stock, whose voting power is one tenth of the Class B stock mainly controlled by the company’s founders.