EcommerceBytes-NewsFlash, Number 3175 - October 16, 2013     2 of 3

ShopRunner CEO Scott Thompson on Alibaba-AmEx Investment

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Alibaba and American Express have invested in ShopRunner, a subscription-based service that gives its member shoppers unlimited free two-day shipping from participating stores. The service similar to the Amazon Prime free-shipping concept but works across many online retailers. The $200 million investment gives the two companies about a one-third ownership, following an investment in ShopRunner by Alibaba in August.

We caught up with ShopRunner CEO Scott Thompson, former President of PayPal, to learn more about the investment and what it means for retailers large and small. He also shares his thoughts on ecommerce trends he's observed and their impact on merchants.

What is new since the last time we spoke, and what services do you now offer retailers?

Scott Thompson: Our core value proposition remains the same for retailers: ShopRunner enables its retail partners to offer superior benefits to highly sought-after online shoppers, delivering a significant increase in new customers, orders and gross merchandise sales, while also increasing conversion of existing customers.

The exciting news since the last time we spoke is that we've proven our model for our retailers. Our retailer partners are seeing the value of ShopRunner members: highly engaged online shoppers who enjoy exploring ShopRunner's network of retailers. Our members appreciate the breadth and depth of products and brands that deliver free 2-day shipping and free & easy return shipping through ShopRunner.

In addition to the momentum on the business growth side, our product offering continues to grow as we improve the customer experience and expand the ways consumers can engage with ShopRunner merchants. For example, we recently launched our iPad and Android apps, adding to the mobile experience we've been delivering on the iPhone.

We have a fantastic new product roadmap planned for 2014, which will enable us to deliver even more great new experiences to engage with our consumers through online and mobile platforms.

Can you provide updates on the number of retailers you have and how much they're processing through ShopRunner transactions? Any thoughts on end-of-year projections?

Scott Thompson: We have 80+ retailers on our network today and anticipate having well over 100 by year's end. Furthermore, our membership is about to surpass 1M members, doubling in the past year, and we're on a on a run rate approaching $1B in spend directed through ShopRunner merchants. Our momentum is accelerating and we're looking forward to a very exciting Q4 and 2014.

How does ShopRunner help retailers compete with marketplace services such as Amazon Prime?

Scott Thompson: While Amazon Prime and ShopRunner play in the same space, our model is quite different for retailers. Our underlying belief is that consumers should maintain their direct relationship with the retailer and vice versa. We do not process online transactions; consumers can find what they are looking for through but complete the shopping experience on our partner's website.

We believe it's an important point of differentiation since our offering is complementary to what retailers currently have in the market and our goal is to help our partners attract and retain the best online shoppers.

Can you tell me about the Alibaba investments in ShopRunner and what it means for ShopRunner?

Scott Thompson: This round of investment from Alibaba and American Express is a classic growth equity investment for ShopRunner. As I mentioned before, we've "proven the concept" and the business model is working extraordinarily well. This capital will help us grow more quickly in specific areas including engineering, mobile and business development.

Can you share your perspective on the latest free shipping and ecommerce trends?

Scott Thompson: You bet. There is a lot of buzz and noise lately around free shipping programs and same-day delivery. What we know about our customers is that they value free and fast. "Free" being intentionally first in that phrase.

Every piece of research we've done and I've seen in the past year reinforces that consumers' expectations are changing around free shipping. Abandonment rates on items that don't have free shipping are substantially higher than those that do. Free shipping is a terrific incentive to get a consumer to complete a transaction.

We also know that consumer expectations around "fast" are increasing; consumers expect to receive packages in a few days, and certainly in less than a week. We believe the intersection of those two elements is where ShopRunner is positioned to win.

On same-day shipping, we've spent time looking into this, as you might imagine. Everything we have seen points to same-day being a niche opportunity, in our opinion. Outside of dense urban areas like Manhattan, it's hard to make same-day free to consumers in any economically responsible way for retailers. We also know that consumers are increasingly shopping later in the day and therefore don't expect same day delivery for, say, a purchase made at 8pm on the couch while surfing on their iPad.

Finally, mobile. Mobile is an area in which we are investing heavily because we believe that consumers will increasingly migrate shopping and buying to mobile devices. As an industry, we've been saying this for years but there is a lot of data to suggest we're not delivering anywhere close to consumer expectations.

At ShopRunner, we can help accelerate our retailers' transition to mobile by providing an easy way for them to connect with consumers who want to shop and transact on their mobile device. With ShopRunner Express Checkout, we offer an easy "2 click" purchasing experience using members' registered information (eg. billing information, shipping addresses) to expedite transactions in both online and mobile environments.

Large merchants can use the ShopRunner network, but what about small online merchants and local brick and mortar retailers with an online presence - are your services exclusively for large retailers?

Scott Thompson: The beautiful thing about our model is that it works for all sorts of retailers - big and small, single and omni-channel, local and national. We have some great national omni-channel partners like Toys"R"Us, Brooks Brothers, GNC, and American Eagle Outfitters. We also work with a wide range of pure-play retailers like Blue Nile, eBags, Kule, Jomashop, and

eBay is reaching large merchants through its Enterprise division (formerly GSI Commerce). How has that affected ShopRunner?

Scott Thompson: Obviously, ShopRunner knows GSI Commerce quite well as we were incubated by the team at GSI several years ago. Our inaugural dozen or so retail partners were sourced from GSI in 2010, but since ShopRunner is a platform-agnostic company, the majority of our retail partners are not on the GSI Commerce platform.

You can find more information about the company and its services on the ShopRunner website.

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to

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