China's Alibaba backs Amazon rival ShopRunner

ShopRunner uses a free two-day shipping business model and competes with Amazon's Prime program

Alibaba Group is targeting the U.S. market with a US$200 million investment in ShopRunner, an online retailer that competes with Amazon.com, a source familiar with the deal said Friday.

The investment in ShopRunner comes at a time when the Chinese e-commerce giant has been actively investing in promising technology ventures in the U.S. and in its home market, according to the source.

Started in 2010, ShopRunner is an online retailer that offers free two-day shipping on goods for a $79 annual membership fee. The service rivals Amazon's own Prime membership program, which also offers free two-day shipping at the same price.

ShopRunner could not immediately be reached for comment on the deal.

Alibaba, best known for its popular Taobao and Tmall retail sites in China, has long had ambitions to expand internationally. It already has its wholesale supplier sites Alibaba.com and AliExpress that offer goods to buyers across the world, including the U.S.

In addition, the company has been making headlines recently over its plans for an initial public offering, which could happen on a U.S. stock exchange. News reports have estimated the IPO value to be over $100 billion.

Some of the other investments Alibaba has made in recent months include buying an 18 percent stake in Chinese Twitter-like service, Sina Weibo. Alibaba spent $586 million on the deal, and has formed a partnership with Sina for greater access to one of the country's most popular social networking platforms.

In the U.S., Alibaba earlier this month invested in Quixey, a search engine for apps.

ShopRunner is led by Scott Thompson, who was previously CEO of Yahoo, before leaving last year over a controversy about his academic credentials. During his time at Yahoo, the company was negotiating to return some of its stake in Alibaba to the Chinese company. This resulted in a $7.1 billion deal announced in May 2012, shortly after Thompson left his position.

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