By Jared Newman | Wednesday, October 6, 2010 at 7:19 pm
In what world does Barnes & Noble join forces with Borders, and Dick’s Sporting Goods team up with Sports Authority? The one in which Amazon.com has 8 percent of the U.S. e-commerce market. You know what they say about desperate times.
A new service called Shoprunner is a direct challenge to Amazon Prime. For $79 per year, members get free two-day shipping on orders from 15 online retailers, with another 27 retailers coming soon. Other perks include free returns and members-only offers. There’s also a universal marketplace, which is open to non-members as well.
ShopRunner is obviously in its early stages, and attracting customers is going to be tough until more retailers are on board and the marketplace is more inviting (some sections are missing now). I’m willing to cut ShopRunner some slack on those issues, but over at American Public Media, Forrester Research analyst Brian Walker points to a bigger problem: Amazon stands to gain more from Prime than individual retailers do from ShopRunner, simply because Amazon gets all the money to itself.
With Prime, Amazon collects the membership costs and benefits from every item purchased. Amazon might even lose some money on shipping, but makes it back on all the products sold. With ShopRunner, sales are divided between every retailer, and the more that sign on, the slighter chance that any individual retailer stands to gain from a single customer. On top of this, the company that owns ShopRunner, GSI Commerce, gets a cut of the revenue from membership fees.
What to do, then? If you’re a frequent buyer from the retailers who’ve signed on, and you love two-day shipping, by all means give it a try. Otherwise, I’d keep a close eye on the list of participants to see if any retailers drop out with time. A fragile alliance is not something you want to be a part of.