Alibaba Secretly Invested In Amazon Challenger Jet.com

Chinese e-commerce powerhouse Alibaba Group recently invested in Jet.com, a soon-to-launch online retailer that hopes to challenge Amazon.com, multiple sources confirmed to FORBES.

Alibaba’s previously undisclosed investment came as part of Jet’s $140 million round in February, which was led by Bain Capital Ventures and joined by the likes of Accel Partners, New Enterprise Associates and others. The Montclair, N.J.-based company also raised about $5 million last month in a filing disclosed with the Securities and Exchange Commission.

With promises that his company will offer cheaper prices than Amazon for products ranging from sporting goods to toilet paper, Jet’s founder Marc Lore has raised more than $225 million, a stunning amount given that his company has not yet unveiled its e-commerce website. Lore previously created Quidsi, the operator of online commerce sites like Diapers.com, before selling it to Amazon for $550 million in 2010.

Lore declined to comment on Alibaba’s investment in his company. Alibaba also declined to comment.

Alibaba’s investment in Jet gives it a piece of perhaps the most ambitious challenger to Amazon in years. Alibaba has a track record of investing in U.S.-based startups–among them ride-hailing service Lyft, online-shopping service ShopRunner and photo-messaging app Snapchat. It also launched online marketplace 11 Main in June, though that site has since received a tepid reception among American consumers.

Those familiar with Alibaba’s investment strategy, which is led in the U.S. by former Liberty Media executive Michael Zeisser, said that its backing of American companies gives it a direct window to Silicon Valley trends. Investments also allow it to develop easier partnerships with U.S. startups, among them a relationship with ShopRunner that allows American brands to sell directly to Chinese consumers.

Following it’s $140 million round in February, Lore told FORBES that he didn’t “have any more plans to raise more capital.”

“We’re using this money to invest in the value proposition to the customer,” he said in February. “It’s more dollars to invest across the board from product to market to infrastructure and operations.”

In the past, Lore was quoted as saying that Jet would have to raise up to $600 million to develop a worthy challenge to Amazon, though he said more recently that those figures were taken out of context.

“In order to build a really big business in e-commerce you’re going to need a lot of capital, but there’s no set amount of money,” said Lore. “If you think about it, Amazon early on in its existence raised $1 billion.”

Jet is valued at around $600 million and is hoping to reach $20 billion in annual gross merchandise volume, or the value of goods transacted on its site, by 2020 according to reports. A Jet executive was also cited as saying that the company is gunning for one million paying customers by the end of 2015, and 15 million customers within five years.

Lore has said in the past that his company will not make any profit from selling goods to consumers. By selling goods at cost, Jet will break even on goods, but will make money from the $50 memberships that consumers pay to get access to its sellers. The goal, Lore said, was to save customers as much money as they shop for products from partners including electronics retailer TigerDirect.com and the Sony Store. Lore compared his company to Costco.

“[Costco has] created a $60 billion (market cap) company with a little over 55 million members in the U.S.,” he said in February. “They have almost 3% operating margins, so they do about $100 billion in revenue and earn about $3 billion or so in operating profit. Our operating margins will be similar to 3 to 3.5% range.”