Chinese online retail behemoth Alibaba is in talks to invest about $80 million in Boxed Wholesale, a Costco-like grocery shopping app. Sources familiar with the matter told Bloomberg that the actual investment amount could come in a bit above or below that figure. It indicates that Alibaba is eager to expand its presence in Amazon’s home market.
Alibaba betting on startups that can challenge Amazon
Alibaba founder Jack Ma has said on several occasions that the Hangzhou-based company was not interested in taking on Amazon and eBay on their home turf anytime soon. But Alibaba has been funding promising startups that can rival Amazon. Earlier this year, the company made a strategic investment in Jet.com, seen as the most promising challenger to Amazon in years. Jet.com promises customers lowest price, and aims to reach a GMV of $20 billion by 2020.
If the deal goes through, Boxed will be Alibaba’s second investment in an American e-commerce startup. So far, Boxed has raised $30 million from investors including GGV Capital and First Round Capital. It was founded in 2013 by Chieh Huang, who sold his gaming studio Astro Ape to Zynga in 2011. The startup offers free delivery within three days on bulk groceries and household goods that you would typically find at a warehouse club like Costco.
Alibaba expanding in overseas markets
Boxed doesn’t charge membership fees, differentiating itself from Amazon’s $99 Prime membership. In the past few years, Alibaba has invested in a variety of American startups including messaging app Tango, Snapchat, and the taxi-hailing service Lyft. Alibaba has been looking to expand in international markets to boost its revenue as the Chinese economy cools further.
However, Alibaba’s first attempt the enter the U.S. market failed miserably. In June, the Chinese company announced that it would sell its US subsidiary 11 Main to OpenSky. Many of the 11 Main top executives had already left the company. Alibaba has also opened a data center in the United States.