China’s No. 2 e-commerce company has quietly backed an emerging player in the online retail battle going on outside of its home borders.
Multiple sources tell Re/code that JD.com invested somewhere between $45 million and $55 million in the fast-growing San Francisco-based shopping app startup Wish last year. The investment was part of a giant $500 million investment round that Wish raised from a host of its existing investors. The deal valued Wish at $3.5 billion.
A JD.com spokesman declined to comment. Wish CEO Peter Szulczewski didn’t immediately respond to requests for comment.
For JD, the investment is believed to be the company’s first in a U.S. e-commerce company. Unlike its Chinese rival Alibaba, which makes investments in a wide array of industries outside of its own focus areas, JD typically only invests in companies that could potentially have a strategic benefit to its own business. Wish’s Szulczewski told Re/code recently that he believes his startup will be the second or third marketplace to reach $1 trillion in sales, after Alibaba and maybe Amazon.
JD has its roots in the online sale of electronics, but has expanded into many other categories, including clothing, since then. It has a hybrid model like Amazon, whereby it sells some goods directly to consumers as the merchant of record and also runs a marketplace on which other merchants sell to JD shoppers. The company has a market cap of $39 billion, larger than that of eBay.
In Wish, JD likely sees a company that has quickly become a leader in the sale of low-priced goods to people all over the Western world, almost exclusively on mobile devices. Wish has taken off thanks to a potent combination of personalization, borderline-insane discounting strategies and aggressive Facebook marketing. While Alibaba’s AliExpress app sells similar goods to Wish and has a similar target audience of Western value shoppers, JD doesn’t have such an offering. Additionally, the vast majority of merchants selling on Wish are based in China, where JD has strong relationships.
This article originally appeared on Recode.net.