Alibaba has made a big move in the United States yet again with plans to invest $80 million in the popular grocery shopping app Boxed Wholesale.
For those who are not familiar with the app, Boxed Wholesale is one of the main competitors to Jet.com, so it is quite interesting to see Alibaba make a play like this.
Boxed Wholesale is a 2-year-old company that was founded by CEO Chieh Huang. The company's business model is similar to that of Costco and Amazon. At the moment, the company offers three-day delivery to any customer with an order priced $50 or over, according to a report.
The interesting thing about Boxed Wholesale is the fact that it comes with a zero-dollar membership fee, unlike Amazon where users must join the $99 per year Amazon Prime service to benefit from free delivery.
Alibaba funding into Boxed Wholesale came after the company gained a $25 million fund from its Series B round, which was led by GGV Capital in January of this year.
This new investment will intensify competition in a market controlled by Amazon, and in some ways, Jet.com. Furthermore, we should point out that Alibaba also invested in Jet.com, so we find it fascinating that the company would also invest in a competitor as well.
The grocery delivery market is expected to grow by 9.6 percent on a yearly basis up until 2019. At the moment, this a nearly $11 billion business, so it is clear why Alibaba is pulling out all the right cards to get a foot in.
Another possible reason why Alibaba has invested in both Boxed Wholesale and Jet.com could be due to the fact that its own online marketplace, 11 Main, is viewed as a failure.
While Alibaba is looking to become a household name similar to Amazon with all these investments, it is clear that this is going to be a tough battle. Already, several competitors of Jet.com and Boxed Wholesale offers faster and less expensive delivery.
Photo: Clive Darra | Flickr
