January 24, 2011, 3:40 PM

FreeShipping.com gets a financial backer

The free-shipping service used by 1,000 e-retailers wins funding from Norwest Venture Partners.

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Clarus Marketing Group, the parent company of FreeShipping.com, has received a “significant investment” from venture capital firm Norwest Venture Partners, which will have three of its executives on the Clarus board. The companies decline to reveal the amount invested by Norwest, which is Clarus’ first financial backer, Clarus president and chief marketing officer Tom Caporaso tells Internet Retailer.

In addition, FreeShipping.com added 50 client retailers last year, including more than 10 in the fourth quarter, Caporaso says. Among its newest clients are book retailer Alibris.com, apparel and home furnishings merchant AmeriMark.com, and footwear retailer Footsmart.com. The service works with 1,000 online retailers.

“In the past few years, FreeShipping.com has experienced tremendous growth with more than one million visits per month,” says Jon Kossow, a partner at Norwest. “Merchant interest in FreeShipping.com is at a fever pitch and this investment will enable the company to expand further.”

Kossow and Norwest executives John Herr and David Su will join the Clarus board with Clarus founder Vincent Villano. A fifth position on the board is also expected to be filled, Caporaso says.

Clarus plans to use the Norwest funding to continue to grow its free-shipping services, improve the user interface on FreeShipping.com and expand FreeShipping.com’s merchant network, Caporaso says.

FreeShipping.com claims a consumer base of several hundred thousand users, who each pay a monthly fee of $12.97 to get free ground shipping from participating retailers. Most retailers that participate in FreeShipping.com provide a form that customers use to receive a rebate for the shipping charges. But 225 of the participating retailers, members of FreeShipping.com’s Premier Merchant Network, offer free shipping at the point of checkout with no rebate forms required. FreeShipping.com also provides additional services, including free return shipping, coupons good for discounts on participating merchants’ products, a low-price guarantee and product warranties.

Norwest’s other investments in e-commerce include WhaleShark Media’s coupon web site RetailMeNot.com, social networking site MyYearbook.com, textbook rental site BookRenter.com and travel search engine Kayak.com.

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