November 1, 2010, 12:00 AM

Challenging Amazon at its own shipping game

More than two dozen retailers and e-commerce technology and services provider GSI Commerce are participating in ShopRunner, a new shipping service that, for a $79 fee, offers consumers two-day shipping and free returns—in direction competition to Amazon.com’s Prime loyalty shipping program.

Thad Rueter

Senior Editor

It may be tough to compete against the massive resources of Amazon.com Inc., but more than two dozen retailers and e-commerce technology and services provider GSI Commerce Inc. are planning to do just that with a new shipping deal they say is designed to outclass Amazon Prime, the big e-retailer's loyalty shipping program.

Retailers such as The Sports Authority Inc., Toys 'R' Us Inc. and Wilsons Leather already are participating in ShopRunner, a new service offered through GSI that, for a $79 annual fee, offers consumers two-day shipping and free shipping on returns. Amazon Prime, which also charges $79 per year, does not cover free shipping when items are returned.

ShopRunner also has other potential advantages over Amazon Prime, says Scot Wingo, CEO of ChannelAdvisor Corp., which helps merchants sell on eBay and other marketplaces, and which also has GSI as a large customer. He says ShopRunner could offer more exclusive deals and discounts than Amazon can on its own. GSI says the program's web site, ShopRunner.com, will offer those deals through a marketplace section, now in beta testing.

"We believe that members of such loyalty programs are inclined to spend significantly more than typical online consumers," says Colin Sebastian, a stock analyst with Lazard Capital Markets. "As such, ShopRunner should provide e-commerce companies with a competitive alternative program."

Participating retailers oversee shipping of their products but share with ShopRunner data about member purchases. Consumers also can go to ShopRunner.com to shop from retailers' web sites, and they can share their memberships with other people in their households.

ShopRunner will have more than five million items available by year's end, GSI says. Amazon says members of its Prime program can get free shipping on "millions" of items.

Online home furnishings retailer CSN Stores LLC plans to start shipping through the ShopRunner program in the first quarter of 2011, says Niraj Shah, the company's CEO and co-founder.

GSI, which spent $5 million to develop ShopRunner, introduced the service last month to take advantage of the run-up to the holiday shopping season and because of the evidence that free shipping has played a big role in Amazon's growth, says Fiona Dias, GSI's executive vice president of strategy and marketing.

By year's end, GSI expects 40 retailers that together operate 240 web sites will be taking part in ShopRunner. Half of those ShopRunner merchants will be GSI clients, Dias anticipates, though she predicts the number of non-clients will steadily grow in 2011.

thad@verticalwebmedia.com

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