In a filing with the Securities and Exchange Commission late Friday, Alibaba said it had bought up about 4.8 million Zulily Class A shares at a cost of around $56 million.
Added to the shares it already owned, Alibaba now has about a sixth of Zulily's Class A stock, representing a 9.3-percent stake in the company, the Wall Street Journal reported.
Zulily's share price closed up 12.67 percent at $13.30 on Friday.
The Seattle-based retailer primarily sells clothing, toys and other items for kids and is mainly marketed towards mothers.
It went public in November 2013 at $22 a share. Within months, the price had soared to about $70, but then fell quickly back down again as growth slowed.
Alibaba operates China's most popular online shopping platform, Taobao, which is estimated to hold more than 90 percent of the country's online market for consumer-to-consumer transactions.
It made its debut on Wall Street in September last year, raising $25.02 billion and breaking the record for the largest initial public offering in history.
Alibaba's shares were up 1.23 percent to close at $87.06 on Friday.
Last week, Alibaba was said to be in talks with Micromax Informatics to buy an about 20 percent stake in the smartphone maker, helping the Chinese e-commerce giant expand in one of the world's fastest growing markets for the devices, as per several people with direct knowledge of the matter.
The deal, if completed, would see Alibaba investing as much as $1.2 billion (roughly Rs. 7,700 crores) in Micromax, the second-largest smartphone brand in India by sales, at up to $6 billion (roughly Rs. Rs. 38,501 crores), two of the people said.
Edited by NDTV staff from original story by Reuters.