Amazon Prime has a new competitor - ShopRunner from GSI Commerce
Amazon Prime has forever changed the landscape of e-commerce by giving consumers all-they-can-eat free 2-day shipping for a low annual price. Prime and 3P are the two catalysts that have given Amazon growth rates that are the envy of the rest of e-commerce. Several isolated companies have tried to counter the threat of Prime with little impact:
- eBay - has been pushing free shipping costs onto sellers by advantaging them in search. The result as just been the movement of S+H into the core price and an increase in eBay's effective take rate, but no (some would say negative) consumer benefit
- Wal-mart - Site-to-Store is a program where you get free shipping, but you have to pick up the item at a wal-mart store, which kind of defeats the whole purpose.
- Sears has shipvantage which is a prime clone, but only for the sears family of sites (sears+kmart+lands end)
Today GSI Commerce (full disclosure they are a large customer of ChannelAdvisor) has soft launched the first real contender to Prime's dominance in the form of a program called ShopRunner. In this post, we'll go on a tour of ShopRunner as it is today, speculate on where it could go and finally analyze how it compares to Amazon Prime (AP). But first a brief background on GSI Commerce.
Background: Who is GSI Commerce?
Founded by Michael Rubin, GSIC is a public company that provides e-commerce services for 40 large brands that are mostly in the sporting goods, toy and apparel categories such as Toys-R-Us, Dick's Sporting goods, Sport's authority, nfl.com, Radioshack, etc.
GSIC provides a soup to nuts offering that goes all the way from fulfillment and call-center through the e-commerce platform and marketing services on top of all that heavy lifting. Rubin started the company in 99 out of the ashes of a dot-com for sporting goods with the name Global Sports. They added more and more partners and re-branded as GSI (Global Sports Interactive) Commerce. One of the early employees, Mike Golden (they have a lot of Mike/Michaels at GSIC) left to run Home Decor, which was sold for a ton to a private equity firm. Golden is back at GSI and the CEO of the new ShopRunner program.
A Tour of ShopRunner
Unlike Amazon Prime, ShopRunner is a program that is available at a network of e-commerce sites, vs. centered on one site. This is an interesting twist that hasn't been tried before and is not an element of any of the other programs that have tried to compete with Prime (Sears/Wal-mart/eBay). The reason this makes sense in theory is that it dramatically expands the selection available to the consumer in the program.
The first time a consumer sees the program is when they go to checkout at a partner site (TRU in this example): (click to expand)
From that page you are taken to a free trial offer for ShopRunner that describes the program:
Of note on this screen:
- Like Prime, there's a 30-day trial, so if you are cagey, you can save the $6 one time and not have to pay the annual subscription by canceling the trial before your first billing period.
- Annual subscription - Like Amazon Prime, the cost is $79/yr and you can share with household members (Amazon says family so a little more broad)
- There's a list of participating stores (more on that in a sec)
Once you sign up, you can see that your item qualifies with the ShopRunner logo - here's the TRU example again, with the free 2 day shipping.
Some sites like SportsAuthority, have it integrated at the search and item page levels as well (I added the red circles): (click to enlarge)
That concludes our tour of ShopRunner. Before we dig into the analysis, let's look at the list of e-commerce sites in the network as that's a very important factor.
As of today (10/5), SportsAuthority seems the most integrated with the system and they list 15 live partners:
- Toys - TRU
- Sporting goods - Sportsauthority.com, nflshop.com, fogdog.com, shop.nhl.com, nascar.com, nbastore.com
- Apparel - rockport.com, calvinklein.com, shopecko.com, barenecessities.com
- Health and beauty - gnc.com
- Baby - Babiesrus.com,
- Luggage - Wilsonsleather.com
- Media - shoppbs.com
There are 27 'coming soon brands including:
- Media - Borders and Barnes and Noble (this will help them with the Amazon battle)
- Sporting Goods - Dick's, espn shop, eastern mountain sports,
- Apparel - Calvin Klein Jeans, Speedo, RueLala, Shoes.com
- Toys - FAO, eToys
- Pets - Petsmart
- Home - Organize.com
- Luggage - eBags
- Baby - babyuniverse.com
- Electronics - RadioSahck
- Health and beauty - Drugstore.com, beauty.com, swirl, AllergyGrocer
- Autos - Autozone.com
- Jewelry - ice.com, diamonds.com
- Misc - CSN Stores
ShopRunner in the near future...
Some of the most interesting aspects of ShopRunner are 'coming soon'. For example, over at shoprunner.com, there's a marketplace tab where in the future I suspect consumers will be able to come and shop the aggregation of all of the ShopRunner-eligible items out there across the network partners. Also, one of the member benefits seems to be exclusive coupons. There are some available today, but that's an area we'll be keeping an eye on. Here's a screen shot of what members see when logged in (reportedly over $300):
GSIC has a couple of different directions they can take ShopRunner to differentiate it from Prime while leveraging the strengths provided by a multi-store/network approach. Do they drive more value with exclusive coupons? Do they try and make it more of a marketplace/CSE? Do they leverage some of their in-store capabilities? Do they come out with a FBA-like offering for SMBs that leverages their fulfillment capabilities?
We'll keep you posted on the directions the program takes as it matures here on Amazon Strategies.
Amazon Prime vs. ShopRunner - the battlefield is set
We finally have a valid competitor to Amazon Prime and it's going to be an interesting battle. Here are some thoughts on ShopRunner's prospects as it battles it out with Amazon Prime:
- More stores than Amazon Prime
- Potentially more benefits to members in the form of exclusive offers/coupons/discounts
- Potential to tie in offline/store delivery
- Potential to leverage FBA
- The offering looks really solid at launch - only 2-3 companies in the e-commerce World could have pulled this off with as strong an entrance across 20-50 sites.
- There is no single sign on?
- Even with a large initial set of stores, the combined selection of all of these stores is less than that of the monster selection of Amazon and their powerful first party and third party capabilities.
- Amazon has a 4-5 member jump on ShopRunner
- The offer/value isn't as clear to the consumer as Amazon Prime is, you have to ask yourself - will I shop at X, Y and Z enough to cover the investment in the program?
Amazon Strategies readers - what do you think, should Amazon be concerned or is it game over?
SeekingAlpha Disclosure - I am long Amazon and Google. eBay is an investor in ChannelAdvisor. GSI is a ChannelAdvisor customer as are many of the other retailers mentioned here.