NEW YORK — The service wars in the e-commerce space are heating up.
This story first appeared in the November 6, 2014 issue of WWD. Subscribe Today.
With the holiday shopping season closing in, members-only e-commerce service ShopRunner is substantially bulking up its retail partnerships. The four-year-old company has added 15 new brands — Bergdorf Goodman, Neiman Marcus Last Call, Narciso Rodriguez, Rebecca Taylor, Eddie Bauer, Tory Burch and The Limited among them — to the existing 150 partners it works with.
Call it an Amazon Prime for the rest of the Web. Brands can take advantage of ShopRunner’s benefits — like free two-day shipping, two-click checkout and free return shipping — and in turn, offer this to their customers. The hope is that a better customer-service experience will lure shoppers in and keep them coming back. Starting this month, ShopRunner’s two million members will have access to these services when shopping on Shoprunner.com, the corresponding mobile app or any of its partner sites. Retailers pay ShopRunner a revenue share for the orders that ShopRunner members make. That percentage varies depending on the category and partner.
Upon its launch in October 2010, there were already 15 partner sites, including Calvin Klein Underwear, Ecko, Bare Necessities, Toys ‘R’ Us. GNC and Sports Authority.
Scott Thompson, ShopRunner chief executive officer, said the service is proving to be a powerful customer-acquisition channel for brands that participate. He explained that before signing a contract, ShopRunner matches its member files with those of the potential partner to see if there is any overlap in active customers. Typically, there is less than 5 percent overlap, which means that there is ample opportunity — or a 95 percent chance — that the customer ShopRunner will introduce to one’s site is an entirely new one.
“That becomes interesting because then you know if we’re good at marketing to our members,” Thompson told WWD on Wednesday. “That baseline is very important for measuring the return on your investment here. It’s hard to measure ROI on marketing spend — and almost impossible on advertising.”
He explains the firm created this baseline because it establishes a more scientific way to measure results. “It’s a telling step for us because the proof is in the data,” Thompson said.
Ask Neiman Marcus, which is now adding its Web properties for Last Call and Bergdorf Goodman to ShopRunner’s list of leading retailers. John Koryl, president of Neiman Marcus stores and online, confirmed that in a little more than a year, ShopRunner not only surpassed aggressive customer acquisition goals, but these consumers came back multiple times — and purchased repeatedly.
At a time when everyone is fighting for the wallet share of an increasingly knowledgeable consumer online, ShopRunner is perhaps in a better position than most.
For one thing, the four-year-old venture has deep pockets: Alibaba pumped $200 million into ShopRunner last year, and other investors include American Express and Kynetic. In addition to banking on an elevated level of service to win consumers over, it’s also leveraged a deal with Alibaba-owned Alipay ePass to facilitate Chinese consumers buying from its partner e-commerce sites in the U.S.
Payment systems have been front and center in recent weeks — from the release of ApplePay to PayPal being spun off from eBay into a stand-alone entity — and ShopRunner’s relationship with ePass gives it access to Alibaba’s payment arm that has hundreds of millions of users.
Thompson confirmed that the company will use ePass’ core payment and logistics services, but also will continue to increase ShopRunner’s own marketing efforts — it maintains a team in Shanghai — on and off Alibaba’s platforms to grow larger customer bases in China.
“When someone comes [to an American Web site] from China — none of their personal information conforms to the U.S. checkout experience,” Thompson said, adding that ShopRunner takes the information about an individual, translates it, and allows the payment to happen where it wouldn’t be possible otherwise, down to translating currency and the exact, final cost.
Optimistic for the year to come, Thompson predicted that ShopRunner’s amount of partners will double, with another 15 being launched for the holidays.