The Chinese e-commerce giant will work with ShopRunner to reduce shipping costs to China for purchases on U.S. retailers’ web sites.
Frank Tong , Senior editor, China
China’s leading e-commerce company will use its logistics system and marketing muscle to make it easier for Chinese consumers to buy from U.S. retail web sites.
Alibaba Group Holding Ltd. and U.S.-based ShopRunner Inc. confirmed today that they will work together on the program. The more than 100 U.S. retail sites that participate in ShopRunner’s shipping program will have the option of joining the new program, says Fiona Dias, chief strategy officer at ShopRunner.
When a Chinese consumer arrives at a participating web site, she will be recognized by her IP address. ShopRunner, which already promotes its $79-a-year free shipping offer on the sites of participating retailers, can turn those banner ads and other messaging into Mandarin and explain that the Chinese shopper can sign in with her AliPay credentials to get favorable shipping rates to China. Alipay is an online payment service affiliated with Alibaba, the operator of China’s dominant online marketplaces, which is planning to go public in the U.S. this year.
“We’re building a tunnel between a U.S. retailer and a Chinese consumers so they have an expedited purchase flow, but within the retailer’s site,” Dias says. She says it’s important that the Chinese shopper be returned to the U.S. site so that she can see she’s paying the same price as the retailer is charging U.S. shoppers. The purchase price on the U.S. site will include any customs fees.
Once a Chinese consumer places an order it will be forwarded to the Alibaba logistics service called Cainiao, which has expertise in getting orders through Chinese customs and delivered throughout China. Dias says the cost of shipping through this service will be considerably lower than the typical price for shipping to China because of Alibaba’s size and because “they’re not interested in making money on marking up shipping.” She says the service also will guarantee delivery to the consumer in China within 10 days.
Consumers who sign up for ShopRunner get free shipping on the e-commerce sites of such retailers and brands as Toys ‘R’ Us Inc., No. 34 in the 2014 Internet Retailer Top 500 Guide, The Neiman Marcus Group Inc. (No. 41), Newegg Inc. (No. 17) and Tommy Hilfiger.
The new service will make most sense for the kinds of items Chinese consumers most want to buy from U.S. sites, Dias says. That includes luxury goods and fashion apparel, as Chinese shoppers are more likely to be confident they’re getting legitimate goods from U.S. retail web sites. Other retailers likely to benefit would be those who sell food, cosmetics or vitamins and nutritional supplements, as there have been scandals in China about contaminated products in these categories, Dias says. She would not say if any ShopRunner merchants have committed to the program.
Alibaba will promote the new service in China, Dias says, although she could not provide details. Alibaba was the lead investor last year in a funding round in which Shoprunner raised $206 million.
Many Chinese consumers are already buying from overseas web sites, a development referred to as “haitao,” or “buying from overseas,” in Mandarin. Alibaba, Chinese consumers bought $3.3 billion from overseas web site in 2012, double the sales of the prior year.
More than 1 million consumers, mostly in the U.S. have signed up for ShopRunner, which promises free two-day delivery from any of the more than 100 participating e-commerce sites. ShopRunner competes with the Amazon Prime, the free, two-day shipping service from Amazon.com Inc., No. 1 in the Top 500, that charges a $99 annual fee.